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California Life Insurance Lawyer

The Lowdown on Life Insurance Fraud

Life insurance is one of the first things people purchase when they start a new job or strike out on their own. Purchasing a life insurance policy is one of the easiest, most secure ways to plan for your future, and offer you an option to continue to provide financial support for your loved ones, even after your death. But because the life insurance policy business relies on a variety of features, namely equities, investments, and the changing financial market, often, consumers run the risk of purchasing a fraudulent policy and never discovering their mistake until it is too late.

If you or a loved one has been the victim of insurance fraud, it is important to contact an experienced California life insurance lawyer as soon as possible. The Evans Law Firm, Inc. handles insurance and consumer fraud cases and class actions, as well as whistleblower and false claims, elder abuse, and personal injury cases.

What is Indexed Universal Life Insurance?

Indexed universal life insurance is similar to universal life insurance, but with a few key differences. Our California life insurance lawyers note that these differences are key to understanding how an indexed policy could be used against you. Universal life insurance takes a variety of forms, from a basic, no-frills, fixed-rate insurance policy to the variable models which give policyholders more options for investing in a number of equity accounts. In contrast, indexed universal life insurance offers policy holders two options—allocate cash value amounts in either an equity index account or a fixed account. If you opt for an equity index account, there are several popular indexes to choose between (Nasdaq 100, S&P 500, etc.).

An indexed policy allows the owner to decide how much to contribute to fixed and indexed portions, and typically, the provider guarantees the principal amount in the indexed portion, and places a cap on the maximum return that can be earned on that account. Because the policies are considered “hybrids” of the universal life insurance policy world, they are not as costly as others on the market, usually due to the lack of management needed to maintain them. However, the smooth sales pitch of a cheap, profitable universal life insurance policy only goes so far and is ripe for fraudulent activity.

Major sellers of these policies throughout California and nationwide include:

  • Minnesota Life
  • Penn Mutual
  • Midland National Life
  • National Life
  • AXA Equitable Life
  • Lincoln Financial
  • Pacific Life
  • Transamerica Life
  • John Hancock Life

The Risks of Indexed Universal Life Insurance

There may be downsides to IULs as well—especially for more buyers of more modest means. Before purchasing a product from any of the companies listed above you should be fully aware of the risks as well as the benefits.  If you have purchased an indexed universal life policy in California and would like a free legal evaluation of it, please contact a life insurance lawyer at The Evans Law Firm, Inc today.

Given how the cash value of IULs grows through interest credits derived from a financial index, it may be an inappropriate vehicle for those who have a shorter timeline or insufficient discretionary income. And while IULs may offer tax benefits, the advantages of IULs may be difficult to comprehend or fully explain, and careful structuring may be necessary in order to realize them.

Similarly, IULs may not line up with a buyer’s goals or benefit preferences, and policy illustrations may not accurately reflect the realities.  Sometimes the policy illustrations are missing or deceptive to the buyer.  With respect to associated fees and costs, IUL policies often have long surrender periods, in which policy owners can incur surrender charges for ten or fifteen years, or even longer.  In addition, because IUL policies are life insurance products, mortality charges may reduce their value.

Trust a California Life Insurance Attorney at Evans Law Firm

Evans Law Firm has been investigating indexed universal life insurance for a long time, and we have turned up a great deal of information for consumers. If you have purchased an indexed universal life insurance policy, we recommend that you take a look at some of the posts we’ve written about them and the negative effects they can have on consumers’ finances and retirement options.

If you purchased a Minnesota Life Insurance Company, Penn Mutual, Midland National Life Insurance Company, National Life, AXA Equitable Life Insurance Company, Lincoln Financial, Pacific Life, Transamerica Life, or a John Hancock Life Indexed Universal Life Insurance Policy product and would like a free and confidential legal evaluation, please contact a California life insurance attorney at Evans Law Firm, Inc. at (415) 441-8669 or contact us online now.

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