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Dec 27, 2021 by |

San Francisco Financial Elder Abuse Attorney: Problems With Indexed Universal Life Policies For Senior Consumers


Questionable Tactics In Selling Indexed Universal Life Insurance

Complicated Equations For Calculating Returns

Fees Can Drain Policy

Insurance companies and agents make billions of indexed universal life insurance (IUL) policy sales every year.  Often those policies are sold to persons over age 60.  Evans Law Firm, Inc. generally cautions against indexed universal life insurance for senior consumers because these insurance products are expensive, complicated, and tie up invested money for long periods of time.  Critics say that in many instances indexed universal life insurance is being sold dishonestly. “They are complex products sold with false promises and deceptive marketing,” says Birny Birnbaum, director of the nonprofit Center for Economic Justice. “Stay away from them.”  Questionable sales tactics and sales of unsuitable insurance to seniors constitute financial elder abuse and violate the California Insurance Code and 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 (suitability requirement); FINRA Rule 2111(suitability standard for financial advisor recommendations).  If you are over 60, live in San Francisco or elsewhere in the Bay Area or throughout the State of 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. 

Questionable Marketing Information

Indexed universal life insurance, unlike stocks and bonds, is exempt from regulation by the U.S. Securities and Exchange Commission (SEC).  Insurance agents typically aren’t required to undergo the same SEC training as stockbrokers to sell so-called “derivative products” such as options based on an underlying index like the S&P 500. Their only requirement is to be licensed by the state as an insurance agent.  Thus, even though an IUL operates like derivative investments, agents are not trained in how derivative investments work. In short, the agent may not understand what he or she is selling you.  The agent may use optimistic projections, or “illustrations,” to show the gains these policies can earn over the years. The problem is that these projections are not guaranteed, and may not come to fruition. People will buy IUL policies based on a fictional future and hit a hard reality when they have to pay substantially more than they expected in order to keep the policies in-force.

Fees Can Drain the Policy

With an IUL, the issuing carrier invests in options on one or more indices chosen by the policyholder. To budget for the money management involved in options trading, and compensate the insurer and its agent, 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. That’s more than most hedge funds. These fees threaten to drain your policy’s cash value during adverse periods when the market—or whatever index the policy is tied to—plunges. If internal costs cause the policy account value to drop too much, your policy is at risk of lapsing and you’ll have to pay more in premiums just to keep the policy intact.

Pay Up or Lose Out

Premiums on universal life insurance increase over time.  If you don’t keep paying the higher premiums to keep an IUL in-force, you risk losing all previously paid premiums, as well as the death benefit going forward.  When a policyholder tries to 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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