State Agency Warnings About Rising Premiums
Risk Of Policy Lapses
Low Rates Of Return
Evans Law Firm, Inc. recommends 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. Typically, deferred annuities are sold as single premium policies but with universal life insurance the premium payments are periodic and increase over time. This can be a real struggle for seniors as discussed below. Always get a second opinion from an investment advisor with nothing to gain from any sale of a deferred annuity or life insurance and talk to your tax advisor as these products have significant tax consequences on purchase, replacement, or surrender. If you have already purchased a deferred annuity or universal life insurance policy and have experienced an economic loss and live in Los Angeles or elsewhere in California, call us today at (415441-8669 or toll free at 888-50EVANS (888-503-8267).
State Insurance Agency Warnings About Universal Life
One of the greatest dangers with universal life policies especially for older consumers is that premiums increase over time. In New York State, the insurance department has received over 1400 complaints in a the last few years regarding universal life policies – higher than for any other form of insurance. The Department issued this alert:
“The Department has seen many cases of consumers who purchased universal life insurance and who made payments for years, thinking their premium payment would not change or that their coverage would remain in effect. But many found that their policies had lapsed (were no longer in effect) with little to no [cash] value due to declines in interest rates, market volatility and other factors, or they were required to pay large additional premium payments to keep their coverage in effect.”
As the alert warns, policies will lapse if the increasing premium payments are not made. Only using the cash value to cover the premium will eventually make the policy run out of cash value, at which time the policy will lapse if additional premiums are not paid. Other disadvantages to these policies include:
- You do not fully participate in the market. 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.
If you have sustained a loss on an indexed universal life insurance policy, contact Ingrid M. Evans at Evans Law Firm, Inc. 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.