Why You Should Think Twice about Equity Indexed Universal Life Insurance
Equity Indexed Universal Life Policies
Chances are, if you haven’t already, you may well hear in 2017 from a life insurance agent selling indexed life insurance, whether you live in Marin County or not. That is, life insurance where the death benefit (and accruing value) is tied to a market index. He might say something like, “The Dow’s hit sixteen historic highs since the 2016 Presidential election! It’s a great time to get in via your life insurance plan and watch your policy value grow!” Better advice is: it’s a great time to be careful!
The Problems with Equity Indexed Universal Life Insurance
Indexed universal life insurance has, frankly, always been sold with tantalizing return expectations. And, yes, over time, the stock market has been a winner. But that’s far from the full picture when it comes to indexed life insurance. Commissions, custodial and management fees, withdrawal penalties, liquidation charges, advisory and fund fees all may be buried in the fine print and can significantly erode, if not wipe out, the rosiest of returns. And those expenses are in addition to the normal risk factor of stock market investing. Equity investing is ALWAYS risky and a limited performance record doesn’t mean a thing. We all know how easily records can be rigged just by tweaking start and finish dates. Not to
The premiums on universal policies are high and represent a really large commitment of assets. A really large ANNUAL commitment. And that commitment remains (and increases as the insured ages) whether or not the return is as promised. You might easily find yourself, with a very real case of throwing good money after bad. The policies are in the early years particularly virtually illiquid – you cannot get out without losing a ton of money. This is so because in the first year or two your premium payments go almost entirely to commissions. Market risk and fees hold you in a double bind: the upside may be devoured by fees and the downside…well, you’re on your own. And the fees still have to be paid first. Bottom line: please be wary of indexed universal life as the below piece examines in detail.
The Bottom Line
At Evans Law Firm, we have seen these types of policies prove to be very damaging and misleading. We are hopeful that potential investors in these products understand the possible risks associated with the purchase.
Some of the major whole life insurance providers in California are:
- Northwestern Mutual Life Insurance Company
- New York Life Insurance Company
- State Farm Life Insurance Company
- Massachusetts Mutual Life Insurance and Casualty company
- Guardian Life Insurance Company
- Penn Mutual Life Insurance Company
- American Family Life Insurance Company
- COUNTRY Life Insurance Co.
- MetLife Insurance Co. USA
- State Farm Life & Accdt Assr
- American United Life Ins Co. Company
- Sec Mutual Life Ins Co. of NY
- Ohio National Life Ins Co.
- National Life Insurance Co.
Evans Law Firm, Inc. handles whole/universal life insurance fraud lawsuits in Marin, CA and in all other counties in California as well. If you have purchased a whole life insurance policy, or are considering purchasing one, and would like to know whether it is a suitable investment for you, contact Evans Law Firm, Inc. at 415-441-8669 or via email at firstname.lastname@example.org.