Southbourne Group Singapore, Tokyo Japan A Universal Life Insurance Can Hold a Dire Problem | Page 2

majority of investors, life insurers included. This led to minimal returns for insurers who invested their money
heavily.
As a result, life insurers started protecting their investments and hiked premiums on policies bought in the not-
so-recent past. (Many of the policies offered in recent years are tied to the stock market and offer no
guaranteed returns of a minimum of 4%.)
How Policyholders and Insurers Respond
Justifiably, many universal life policyholders who got assurance that their premiums would remain fixed are
not happy about all this development. According to The New York Times, a dozen lawsuits have been filed
against insurers who had sold such policies.
Feeling some pressure from public opinion, some insurers are said to have reimbursed, in part, some
determined holders who had complained after they were being required to drop their policies. From the looks
of it, there seems to be no positive outcome to this trend in the insurance sector.
Safeguarding the Rights of Universal Life Policyholders
Steps are being made by several regulators and consumer advocates to seek protection for universal life
policyholders.
A recent by the New York Department of Financial Services seeks to require insurers to inform the agency not
more than 120 days before instituting any “adverse change” in “non-guaranteed elements of an in-force life
insurance or annuity policy.” The rule likewise requires insurers to inform policyholders not more than 60 days
before any change. The regulation may serve as a precedent regulation for other state insurance agencies.
Moreover, in 2016, the Consumer Federation of America sent a letter to all state insurance commissioners
requiring them to evaluate and prevent any unjust price hikes being implemented on holders of universal life
policies.
In case you are one of those who has an older universal life policy and have not experienced any premium hike,
expect it to come soon. The better approach is to become proactive and find out ways to avoid being hit by an
adverse increase.
Recommendations for Longtime Universal Life Customers
Be prepared by taking the following steps:
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Get in touch with your insurer and ask the exact value of your policy‟s cash reserves. Based on the
amount you have accumulated from the start, you might be in a position to weather any premium hikes
in the future.
As an alternative, try asking your insurer to reduce the policy‟s death benefit, and subsequently, your
premiums.
Ask if you can change your policies. Perhaps, they have other policies they can offer you. If you are in
your 60s or more, however, it might be quite difficult to get approval for a life insurance policy.
Failing all else, find a life insurance firm or agent who could purchase your policy in exchange for
getting the death benefit in the future.