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Mar 21, 2018 by |

Santa Clara County and California Life Insurance Attorney: Indexed Universal Life Insurance


Beware the Sales Push on Indexed Universal Life Insurance

Life Insurance and Retirement Savings

Indexed universal life insurance policies (IULs) have been around for years. The sales pitch is always better, tax-deferred, returns on investment.  Some insurance carriers are shifting focus entirely from indexed annuities to IULs as recommended investments for retirement saving.  The Santa Clara County and California insurance and financial elder abuse attorneys at Evans Law Firm represent consumers who have incurred losses from unsuitable IULs, whole life policies, and annuity investments, including on the surrender of those policies.  We advise caution.  All of these insurance products are commission-driven; the selling agent receives a substantial upfront commission which comes directly out of your initial premium investment.  If you or a loved one is over age 60 and live in California and has sustained a loss from surrender charges, rider fees, or any other contract charges under life insurance and/or annuity policies, or have been the victim of financial elder abuse call Evans Law Firm today at (415)441-8669 and we can help. 

Be especially cautious when an agent promotes an IUL as a retirement savings vehicle. There are three main negatives to consider.

First is the cost. You will pay a big sales commission upfront; even if returns are good, it will be years before you recoup that money, if ever.  In addition, IUL fees can be three to four times higher than other savings options. The costs add up quickly and may destroy your return. Perhaps worst of all, there are very heavy surrender charges if you take your money out early.  This is an especially heavy burden on seniors with fixed income.  Direct investments in money market accounts, CDs, or stocks and bonds do not incur these costs, and if made in your IRA or 401(k) are also tax-deferred.

Second, you must continue to pay annual premiums until the policy is fully funded. Conversely, you can always stop contributing to retirement plans, like an IRA, if you have a bad year. If you stop paying premiums on your IUL, the policy will lapse.  This can be an especially big concern for seniors who may need the funds they had been paying premiums with. We at Evan Law Firm have seen clients incur heavy losses when a life policy lapsed for nonpayment.

Third, always consult your tax professional.[1]  It may not make sense to consider any further retirement savings options until you have contributed the maximum allowable to your 401(k), IRA, or any other established retirement plan.  And remember that your savings in 401(k)s and IRAs are already tax deferred, so IULs and annuities offer nothing with respect to tax deferral that you can’t get elsewhere.  Social Security and common pension plans are also tax-deferred so you may already own all the tax-deferred retirement savings and annuities you will need.  If college savings is your goal, then you can consider a 529 College Savings Plan to accumulate savings tax-deferred.

Life insurance may be a consideration if you have dependents who rely on you for support, a home, their education, and the like. Avoid sales talk that spins life insurance as an investment for you.  Think of it rather as protection for your dependents.  If you are beyond the stage of life where you have dependents, then life insurance may not be appropriate at all.  Indexed universal life insurance is expensive and complex.  It may not be suited to your financial situation.  Always consult your tax professional and an advisor who does not stand to gain from any purchase.

Some of the leading providers of annuities and life insurance in California are listed below. We do not suggest in any way that these carriers have issued unsuitable contracts.  Rather, the list is provided solely for our readers’ reference.

Allianz Life Insurance Company of North America

Allstate Life Insurance Company

American Equity Investment Life Holding Company

American General Life Insurance Company

American National Insurance Company

Ameriprise Financial/RiverSource Life Insurance Company

Athene Annuity and Life Company

AXA Equitable Life Insurance Company

Bankers Life Insurance and Casualty Company

EquiTrust Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Guggenheim Partners/First Security Benefit Life Insurance Company

Global Atlantic/Forethought Life Insurance Company

Genworth Life Insurance Company

Guardian Life Insurance Company

ING USA Annuity and Life Insurance Company

Jackson National Life Insurance Company

John Hancock Life Insurance Company

Life Insurance of the SouthWest/National Life Group

Lincoln Financial Group/The Lincoln National Life Insurance Company

MassMutual/Massachusetts Life Insurance Company

MetLife/Metropolitan Life Insurance Company

Midland National Life Insurance Company

Mutual of Omaha/United of Omaha Life Insurance Company

National Life Group/Life Insurance of the SouthWest

New York Life Insurance Company

Pacific Life Insurance Company

Principal Life Insurance Company

Pruco/Prudential Life Insurance Company

RiverSource Life Insurance Company/Ameriprise Financial

Security Benefit Life Insurance Company/Guggenheim Partners

Symetra Life Insurance Company

Transamerica Life Insurance Company

United of Omaha Life Insurance Company/Mutual of Omaha

Unum Life Insurance Company of America

Voya/Reliastar Life Insurance Company

Contact Us

If you are over age 60 and live in California and have questions about an indexed universal life insurance policy you purchased here in Santa Clara County or elsewhere in California, or sustained a loss on a policy surrender, contact Ingrid Evans and the other Evans Law Firm insurance attorneys at (415) 441-8669, or by email at <a href=””></a>. Our attorneys have experience with complex indexed universal and whole life policies and annuity contracts and cases against 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, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.

[1] We at Evans Law Firm do not provide tax or investment advice.

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