Understanding Risks and Downsides
Insurance carriers and agents and financial advisors push life insurance in any form: term life insurance, whole life insurance, and universal life insurance. Whole life insurance and universal life insurance pay higher commissions than term life insurance (the premiums are higher too) so pay extra attention when you’re offered whole life insurance or universal life insurance, especially if you’re a senior as the policies may be inappropriate for you. One of the newer life insurance products aggressively marketed by agents is indexed universal life insurance sometimes sold as equity indexed universal life insurance.
Our lawyers recommend caution when considering equity indexed life insurance and want to review just some of the risks you should consider, particularly if you’re an older consumer. If you’re over 60 and live in California and have suffered a loss due to cancellation, replacement, full or partial surrender, or high fees on an equity indexed universal life policy, call the attorneys at Evans Law Firm, Inc. today at 415-441-8669 for a free review of your policy. A list of major carriers in California appears below.
Here are some of the risks and downsides to equity indexed universal life insurance that you should consider:
- Pay close attention to any illustrations of projected returns. Historical stock market returns may skew projections upward. Illustrations may assume a given rate of return will recur every year for long periods of time. Market indexes do not operate that way and long-term assumptions can be misleading.
- Life insurance and annuities are illiquid and tie up your money for a long time. Policy loans and surrenders (on which you’ll pay a penalty) are expensive.
- Cap and participation rates limit your return. If your policy has a 9% cap rate and the market index raises 15%, the most you will receive for the crediting period is 9%. If your policy has an 85% participation rate, you will only see 85% of any index growth (subject also to the cap).
- Your money is invested in indexes not stocks so you do not receive any dividends on individual stocks included in the chosen index.
- Interest on your money is not credited on a daily basis but only on the policy’s established anniversary dates. Any surrender prior to an anniversary date will forfeit all interest that may have been earned since the prior anniversary date.
- Costs for insurance and administrative expenses are deducted from policy value every month. When a carrier’s costs go up, the carrier passes those increased costs on to you.
- Be wary of guarantees. If chosen indexes do not perform as projected, your policy value (and “guarantee”) could end up being far less than advertised.
- Death benefits fluctuate and are not guaranteed. If you miss or delay making premium payments or loan repayments, or make a partial surrender, that can reduce your death benefit guarantee or eliminate it altogether.
- You bear all the risk under the policy. If returns are low, your premiums may skyrocket leaving you the choice of paying higher premiums or allowing the policy to lapse and losing everything you’ve paid in.
Bottom line is, beware. Equity indexed life insurance is costly, complicated, and risky. Always consult a qualified professional who does not stand to gain from your purchase and review any proposed investment or change in investments with your tax advisor before making any purchase, replacement or surrender.
If you or a loved one has suffered loss on an equity indexed universal life insurance policy in California, contact San Francisco and California life insurance, annuity and financial elder abuse attorney Ingrid M. Evans and the other attorneys at Evans Law Firm at (415) 441-8669, or by email at <a href=”mailto:email@example.com”>firstname.lastname@example.org</a>. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.
Annuities and life insurance, including equity indexed universal life, 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
Ameriprise Financial/RiverSource Life Insurance Company
Ameriprise Financial/Securities America, Inc.
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
Bankers Life Insurance and Casualty Company
Berkshire Hathaway Group
Berkshire Hathaway Life Insurance Company of Nebraska
Brighthouse Financial, Inc./MetLife
Citigroup Global Markets, Inc.
Crump Life Insurance Services, Inc.
CUNA Mutual Group/CMFG Life Insurance Company
Delaware Life Insurance Company
EquiTrust Life Insurance Company
Fidelity & Guaranty Life Insurance Company
Forethought Life Insurance Company/Global Atlantic Financial Group
Genworth Financial, Inc.
Genworth Life and Annuity Insurance Company
Genworth Life Insurance Company
Global Atlantic Financial Group/Forethought Life Insurance Company
Guardian Life Insurance Company
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
Merrill Lynch Life Agency Inc.
Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.
Minnesota Life Insurance Company
National Life Group
National Life Insurance Company/Equity Services, Inc.
National Western Life Insurance Company
Nationwide Life Insurance Company
New York Life Insurance Company
North American Company for Life and Health Insurance
Northwestern Mutual Investment Services, LLC
Northwestern Mutual Life Insurance Company
Northwestern Mutual Wealth Management Company
Oxford Life Insurance Company
Pacific Life Insurance Company
Principal Financial Group
Prudential Life Insurance Company
Raymond James Insurance Group
Reliance Standard Life Insurance Company/Tokio Marine Group
RiverSource Life Insurance Company/Ameriprise Financial
Securities America, Inc./Ameriprise Financial
Security Benefit Group, Inc.
Security Benefit Life Insurance Company/Guggenheim Partners
Security Investors, LLC
The Standard Life Insurance Company
Symetra Financial Corporation
Symetra Life Insurance Company
Transamerica Life Insurance Company
The United States Life Insurance Company in the City of New York
Unum Life Insurance Company of America
USAA Life Insurance Company
The Variable Annuity Life Insurance Company
Voya/Reliastar Life Insurance Company
Wells Fargo Advisors
Western & Southern Financial Group
The Western & Southern Life Insurance Company
World Financial Group Insurance Agency, Inc.
 The attorneys at Evans Law Firm do not provide investment or tax advice but our litigators represent senior policyholders who lose money through cancellations, surrenders or fees on these contracts or as the result of insufficient disclosures by insurance agents and carriers.