Understand The Costs And Complexity Of Universal Life Insurance
Premium Payments Continue Until Death
Investment Risks And Caps On Growth
Indexed Universal Life Insurance is a complicated life insurance product often sold by insurance agents as a retirement savings or estate planning investment. Agents sell universal life policies with much the same approach as deferred annuities. We recommend against indexed universal life insurance and deferred annuities for senior consumers because both insurance products are expensive, complicated, and tie up invested money for long periods of time. Do not allow an agent to pressure you into any kind of sale including of universal life insurance or deferred annuities. At best, these are extremely complex contracts that take time to read and understand; always get a second opinion from an investment advisor with nothing to gain from a sale. If you have already purchased a deferred annuity or universal life insurance policy and have experienced an economic loss, we can help. Evans Law Firm, Inc. represents clients who have suffered losses on indexed universal life insurance. If you or a loved one has suffered a loss on surrender or cancellation of an indexed universal life policy her in San Francisco or elsewhere in the Bay Area or California, call us today at (415441-8669 or toll free at 888-50EVANS (888-503-8267) and we can help.
Downsides of Universal Life Insurance
Agents sell Indexed Universal Life (IUL) as a product with upside market potential and downside risk. Sound too good to be true? Exactly. Here are some important disadvantages of IUL contracts to keep in mind:
- Fees Are High. Indexed universal life insurance charges fees for: premium expenses; cost of insurance; administrative expenses; and, surrender charges.
- Premiums increase over time. Aging policy owners are seeing their premiums on universal life insurance skyrocket. Lawsuits continue to mount from policy owners who feel they have been misled. Some realize their “permanent” policies will expire before they do! Others realize their policies will lapse if they cannot make ever-increasing premium payments.
- Most universal life insurance policies require you to pay increasing premiums until you pass away to keep the policy in force because universal life insurance is a type of permanent life insurance. That could make it difficult to many of us. While we can keep up with premium payments when we are still working, it will become much more difficult for us to do so when we stop working and start withdrawing from our retirement fund. Premium payment will become a big expense in our retirement years and this will put the policy at risk. Only using the cash value to cover the premium will eventually make the policy run out of cash value, at which time the policy may lapse and your coverage may end.
- You do not fully participate in the market. The amount of return you receive is based on market indexes not real investments in stocks. Your participation rate in the index is not 100% and you do not receive the benefit of reinvested dividends as you would in a direct mutual fund investment,
- You will lose money if you need to withdraw your funds. Surrender penalties and other adjustments are imposed for as long as 15 years on some IULs.
- Your return will be capped. Even if the index you chose grows, your growth will be subject to a cap so that you do not receive the full benefit of the growth in the index. This would not be the case if you made a direct investment in a fund for the index.
Always consult a professional with nothing to gain from the sale of an IUL to you before you buy. Also, for any IUL or annuity or similar product, consult your tax advisor before any purchase or surrender. Annuity and IUL transactions will have tax consequences.
If you have sustained a loss on an indexed universal life insurance policy, contact Ingrid M. Evans at Evans Law Firm for a free evaluation of your policy toll free at (888)50-EVANS (888-503-8267), or by email at <a href=”mailto:firstname.lastname@example.org”>email@example.com</a>.
Annuities and life insurance produce large sales commissions for brokers but are often inappropriate products for consumers, especially seniors. Leading providers and distributors of life insurance and fixed, variable and fixed indexed deferred annuities in California are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong. Rather, the list is provided solely as a reference for our readers.
AIG/American General Life Insurance Company
Allianz Life Insurance Company of North America
American Equity Investment Life Insurance Company
American General Life Insurance Company/AIG
American International Group, Inc. (AIG)
American National Life Insurance Company
Athene Annuity & Life Assurance Company
Athene Annuity and Life Company
Aviva Life Insurance Company
AXA Equitable Financial Services, LLC
AXA Equitable Life Insurance Company/AXA US
AXA Advisors, LLC
Brighthouse Financial, Inc./MetLife
EquiTrust Life Insurance Company
Fidelity & Guaranty Life Insurance Company
Genworth Financial, Inc.
Genworth Life and Annuity Insurance Company
Genworth Life Insurance Company
Guggenheim Partners, LLC
Guggenheim Partners/Security Benefit Life Insurance Company
ING USA Annuity and Life Insurance Company
Jackson National Life Insurance Company
John Hancock Life Insurance Company
Lincoln Benefit Life Company
Lincoln Financial Group
Massachusetts Mutual Life Insurance Company
Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.
Minnesota Life Insurance Company
Nationwide Investor Services Corporation (NISC)
Nationwide Life and Annuity Insurance Company
Nationwide Life Insurance Company
New York Life Insurance Company
Northwestern Mutual Investment Services, LLC
Northwestern Mutual Life Insurance Company
Northwestern Mutual Wealth Management Company
Pacific Life & Annuity Company
Pacific Life Insurance Company
Security Benefit Corporation
Security Benefit Group, Inc.
Security Benefit Life Insurance Company/Guggenheim Partners
Security Investors, LLC
Security of Denver Life Insurance Company/Voya
Transamerica Life Insurance Company
Voya Financial Advisors
Voya/Reliastar Life Insurance Company
World Financial Group Insurance Agency, Inc.