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Sep 21, 2022 by |

San Francisco Financial Elder Abuse Attorney: Disadvantages For Older Consumers With Indexed Universal Life Policies


Undisclosed Risks

Indexed Universal Life Insurance Is “Massively Complex” 

Fees Can Drain The Policy

Indexed universal life insurance (IULs), like certain types of deferred annuities, generate significant sales commissions for the agents who sell them.  For that reason, some agents, eager to make a sale, may pressure consumers for quick decisions based on inadequate information on these complex policies.  Evans Law Firm, Inc. generally cautions against certain forms of indexed universal life insurance for senior consumers because IULs are expensive, complicated, and tie up invested money for long periods of time.  Premium formulas are also complex, and failure to keep paying premiums even if the premiums increase dramatically, may result in a lapse of the policy altogether. Dubious sales tactics, inadequate or misleading information, and sales of unsuitable insurance to seniors constitute financial elder abuse and violations of the California Insurance Code and – when the salesperson is a registered financial advisor – Financial Industry Regulatory Authority (FINRA) regulations.  Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse); Cal. Ins. §§ 790 et seq. (Unfair Insurance Practices Act) and 10509 (policy replacement disclosure rules); FINRA Rule 2111(suitability standard for financial advisor recommendations).  If you are over 60, live in San Francisco or elsewhere in California and own an indexed universal life insurance policy, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy. 

IUL Premium Payment Problems

Premiums on most IULs increase over time.  Premiums may also be set at different levels such as a “minimum” premium and a “target” premium. Paying the minimum premium, less than the target premium, or skipping payments will negatively affect the policy’s cash value. Doing these things may:

  • Cause the policy to not build cash value — paying the minimum premium only covers the cost of the policy; it doesn’t provide any excess premium to build cash value.
  • Slow down or lower the policy’s cash value build up — the insurance company sets a “target” premium that it estimates is enough to cover the cost of coverage while also building cash value. Paying less than the target means less money will contribute to the cash value portion of the policy. When you skip a payment, the cash value is used to cover the cost of providing you with insurance. If you do this a number of times, this will lower the cash value.
  • Make the policy lapse — Only using the cash value to cover the premium will eventually make the policy run out of cash value, at which time the policy may lapse and your coverage may end.

Fees And Surrender Charges

IUL policies can include significantly more fees and costs than an average life insurance policy. One insurer charges upwards of 8% of the premiums and cash value in the policy in the first year alone, according to one industry analyst. That’s more than most hedge funds. These fees drain your policy’s cash value. If fees cause the policy account value to drop too much, your policy will lapse unless you pay more in premiums to keep the policy in force. If you don’t keep paying the higher premiums to keep the policy in-force, you risk losing all previously paid premiums, as well as the death benefit going forward. If you surrender the policy, substantial withdrawal penalties may apply.  This way the carrier – not you – recovers the commission cost paid to the agent who sold the policy.  Surrender periods may last for more than 10 years after the policy was taken out.

Contact Us

If you are over 60 and live in San Francisco or elsewhere in the State of California and have an indexed universal life insurance policy, we can review your contract for free.  You can reach Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669, or toll free at 1-888-50EVANS or by email at <a href=””></a>.

Some significant issuers and distributors of indexed universal life insurance in California are listed below.  We are not in any way suggesting that any of these carriers or distributors has done anything wrong.  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

Athene Annuity & Life Assurance Company

Athene Annuity and Life Company

Athene USA

Aviva Life Insurance Company

AXA Equitable Financial Services, LLC

AXA Equitable Life Insurance Company/AXA US

AXA Advisors, LLC

Brighthouse Financial, Inc./MetLife

EquiTrust Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Genworth Financial, Inc.

Genworth Life and Annuity Insurance Company

Genworth Life Insurance Company

Guggenheim Partners, LLC

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

Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.

Minnesota Life Insurance Company

Nationwide Investor Services Corporation (NISC)

Nationwide Life and Annuity Insurance Company

Nationwide Life Insurance Company

New York Life Insurance Company

Northwestern Mutual Investment Services, LLC

Northwestern Mutual Life Insurance Company

Northwestern Mutual Wealth Management Company

Pacific Life & Annuity Company

Pacific Life Insurance Company


Security Benefit Corporation

Security Benefit Group, Inc.

Security Benefit Life Insurance Company/Guggenheim Partners

Security Investors, LLC

Security of Denver Life Insurance Company/Voya

Transamerica Life Insurance Company

Voya Financial Advisors

Voya/Reliastar Life Insurance Company

World Financial Group Insurance Agency, Inc.

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