Southbourne Group Singapore, Tokyo Japan A Universal Life Insurance Can Hold a Dire Problem

Southbourne Group Singapore, Tokyo Japan on a Universal Life
Insurance Can Hold a Dire Problem
If you are involved at present in a tussle with your life insurer over
the escalating costs of their universal life premiums, you may need
this article like a shot in the arm.
Within the past couple of years, scores of universal life insurance
policyholders have been adversely affected by the double-digit
premium increases from firms such as Axa Equitable,
Transamerica and Voya Financial. And more premium increases,
particularly to long-time policyholders, are still coming.
Universal life was developed in the 1970s and accounted for one-
fourth of all of life insurance policies bought from the „80s to the
„90s. This development will affect tens of millions of people who
will have to eventually deal with huge premium increases.
What is Universal Life Insurance?
What is happening? To fully understand, let us start from the beginning.
If you are not familiar with universal life, it is a permanent (for as long as you pay the premiums promptly) and
rather flexible, crossbreed life insurance policy that mixes the sensibly affordable properties of term
insurance with a savings component similar to whole life insurance.
A universal life insurance policy provides holders a “cash value” savings account that brings them tax-free
interest, including the flexibility to modify premiums and to raise or reduce death benefits. The policy‟s
investment account earns cash when interest rates rise but can also deplete it when rates dip low, as in the
present. During the „80s and the '90s, the most accepted guaranteed rate in universal life policies was 4%;
although some insurers offered more, says James Hunt of Consumer Federation of America.
Premium Increases of More than 200%
In the past two years, numerous universal life policyholders have been warned that their insurers are hiding in
the fine print of their contracts their option to substantially raise their long-steady monthly premiums. And so,
more than a few customers have suffered hikes of more than 200%.
It means that some people who are aged from 60 to 80 or more, many of whom receive fixed salaries, are being
told to pay up amounts ranging from a few hundred dollars to thousands of additional dollars monthly for
policies they bought many, many years back. The consequence of not doing so will be the lapse of their policy or
the surrender of the policy and withdrawing any cash value remaining (with some possible taxes on that value).
In any case, no death-benefit will be in sight.
An 82-year-old retiree, Nicholas Vertullo of Long-Island, told The Wall Street Journal last August that his
premiums for 3 universal life policies more than 200% hikes, reaching a staggering $30,000 yearly premiums
(for a death-benefit of $500,000). And he had promptly paid premiums for about 3 decades. We wonder where
all the goodwill in return for all the years of loyalty shown went.
Why the Unimaginable Rise of Universal Life Premiums?
How could this thing happen -- and why is it happening at all?
It is because of the economy, according to life insurers. In the 1980s, interest rates gradually declined and
suddenly plunged during the 2008 recession as the Federal Reserve took some measures to enhance the
economic situation by providing easy access to borrowed money. However, low interest rates adversely affected