Indexed universal life insurance policies are often heavily marketed to people looking for a life insurance product with an investment component. Many insurance providers and brokers make promises that those who purchase indexed universal life policies will benefit from profitable investment opportunities. Unfortunately, these policies rely on the stock market growing in order to provide the promised returns to investors — and of course, stock market growth does not always occur.
Investors could not only find themselves facing unexpected investment losses when they thought they were making a safe investment, but they could also end up stuck with policies that are reassessed each year so their policy premiums continually rise.
Family members often do not find out that indexed universal life policies fail to provide the promised returns on investments until after the policyholder has passed away. Policyholders may also discover their investment has lost value when they want to cash out or trade in their policy for the cash value. When either of these things occurs and you are left dealing with financial loss due to the purchase of an indexed universal life policy, you should consult with California securities fraud lawyers to find out what options you have for recouping losses and holding insurers and financial advisors accountable for policies that failed to provide promised benefits.
More About Universal Indexed Life Insurance Policies
Many of the biggest insurance companies in the insurance market offer indexed universal life insurance policies, sometimes claiming that these policies are the perfect purchase for those who want to find a safe investment that will allow them to earn income and take care of their loved ones when they pass away. Some insurers that sell universal indexed life insurance policies include:
- Pacific Life
- Minnesota Life
- Aegon USA
- National Life Group
- Penn Mutual
- Old Mutual Financial
- Midland National Life
- Allstate Life
- NACOLAH Life
While not every policy is fraudulent, many insurers fail to adequately disclose downside risks and the potential for rising premiums when policies are reassessed annually.
When universal indexed life insurance policies are sold, owners are given the chance to decide the amount of their investment that will go to fixed portions and indexed portions. Indexed portions of accounts are invested in popular equity indexes, including the NASDAQ or the S&P.
Providers typically guarantee the principal amount that is invested in the fixed portion while capping returns that can be earned on index funds in investment accounts. These policies are considered hybrid policies and they are typically offered as lower-cost policies that allow investors a secure way to benefit from market returns without facing downside risks. Unfortunately, this is not the reality.
It can come as a shock to many to find out that the policy does not have the promised value, and untangling what happened can be a challenge as policyholders or their families look through paperwork to try to determine what was invested and what was put into fixed portions of policies. At Evans Law Firm, Inc., our securities fraud lawyers can help determine if you faced losses due to unscrupulous insurance advertising or investment fraud in your indexed universal life insurance policy. Call 415-441-8669 or toll free at 888-503-8267 to learn more.