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Reinsurance Issues: Rate Increases

At least five major insurance companies have sent letters to policyholders in the past few months informing their policyholders that they should expect increases in premiums for their life insurance policies. Many of the people who received these letters were senior citizens who are age 70 or older. People in this age group are generally very vulnerable because they have few options for securing new life insurance coverage. They are left with the choice of either keeping their existing death benefits and paying the higher premiums OR reducing their death benefits in order to lower their premium costs if they cannot afford the rising premiums OR surrendering their policy or selling it out to try to recoup the cash value.

There is an open question regarding whether life insurance companies actually have the right to raise the costs of non-guaranteed elements of insurance contracts in response to the higher cost of coverage. For example, insurers may try to raise the monthly expense deduction for the cost-of-life insurance in a universal life policy. Some courts have prevented insurers from considering anything other than mortality factors when assessing the cost of reinsurance, while others have not ruled on the issue or have permitted increases. If you find yourself with policy premiums that are going up, you should consult with a San Francisco financial elder abuse attorney about whether your insurer is acting appropriately within the bounds of your policy language or whether you have the option to fight the rise in reinsurance costs.

Insurers Raising Rates on Policyholders

Some popular whole life insurance and annuity companies include:

  • John Hancock Life Insurance
  • Transamerica Life Insurance
  • The Prudential Insurance Company of America
  • Lincoln Benefit Life Company
  • Metlife Investors USA Company
  • Metropolitan Life Insurance Company
  • Genworth Life Insurance Company
  • UNUM Life Insurance Company of America
  • Reliastar Life Insurance Company
  • ING Annuity and Life Insurance Company/VOYA

Many of these policyholders may be targeting universal life policies with a higher face value that are carried by older insureds. Insurers indicate they are responding to recent rate increases by the Federal Reserve in order to justify raising premiums on their policyholders.

Policyholders who have coverage from these or other companies will need to consider the language of their life insurance contracts as well as past court decisions made in their jurisdiction in order to determine if the insurers can implement the desired cost of insurance increases.

If their policy sets rules for factors that can affect changes in policy cost, the insurer may be unable to legally get the desired rate increase. A financial elder abuse attorney can carefully review your policy language to help you determine if you fall within this situation and can fight the rate increase.

If a rate increase is permitted, an attorney can advise you on your options, including surrendering the policy or adjusting your death benefit so you can continue to afford coverage if the rising premiums would be a financial burden. Call today to speak with a legal professional at the Evans Law Firm, Inc. who can offer you the advice you need on responding to a rate increase letter. Call us at 415-441-8669 or toll free at 888-503-8267.

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