Life Insurance Customers Push Back Over Surprise Cost Increases

[marindependent]

From the Wall Street Journal:
"Policyholders are filing suit, as big U.S. life insurers blame the Federal Reserve’s decision to keep interest rates lower for longer"
Dated Sept 1st, 2016

"Americans are starting to fight back against a wave of insurance-price increases on decades-old life policies.

Over the past year, several major insurers have notified tens of thousands of people of higher costs to keep their policies in force, with increases ranging from midsingle-digit percentages to more than 200%, according to financial advisers. To justify the increases, they blamed the impact on their investments from the Federal Reserve’s decision to keep interest rates lower for longer.

At least a half-dozen lawsuits have been filed in federal courts against insurers including Aegon NV’s Transamerica unit and Legal & General Group PLC’s Banner Life."

You can read the full WSJ article here.

 

[DHK]

Link didn't work.

Here it is:
Life Insurance Customers Push Back Over Surprise Cost Increases - WSJ

 

[Jerard]

I assume they're talking about ULs?

 

[rousemark]

I assume they're talking about ULs?

Yes...And they have to shoulder a part o f the blame because they wanted to pay less than what a gtd. WL plan would cost. Plus, you had agents claiming that interest rates would never drop to the guarantees.

But, it is not limited to ULs. I recently received word that the DB will reduce on a par plan that had a dividend supported term rider that I own.

 

[pfg1]

I doubt it will fly....but who knows. Many of those policies were illustrated really high, and when you pay a cheap premium for a good amount of db, counting on high interest rates to hold the policy together... well here we are.

Rousemark, what company/product are you talking about? Is it that the dividend can no longer afford to pay the cost for the term rider (assume the term portion is like ART that goes up)?
I guess I could see that potentially happening due to the low interest rate environment we've been in... if the dividend is not very large and the costs increasing every year.

 

[rousemark]

I doubt it will fly....but who knows. Many of those policies were illustrated really high, and when you pay a cheap premium for a good amount of db, counting on high interest rates to hold the policy together... well here we are.

Rousemark, what company/product are you talking about? Is it that the dividend can no longer afford to pay the cost for the term rider (assume the term portion is like ART that goes up)?
I guess I could see that potentially happening due to the low interest rate environment we've been in... if the dividend is not very large and the costs increasing every year.

State Mutual. A portion of the dividend paid for the term which worked like an ART. BTW, the company now is primarily in the Med Supp business and no longer sells traditional PAR plans.

 

[MGBAgency]

From the Wall Street Journal:
"Policyholders are filing suit, as big U.S. life insurers blame the Federal Reserve’s decision to keep interest rates lower for longer"
Dated Sept 1st, 2016

"Americans are starting to fight back against a wave of insurance-price increases on decades-old life policies.

Over the past year, several major insurers have notified tens of thousands of people of higher costs to keep their policies in force, with increases ranging from midsingle-digit percentages to more than 200%, according to financial advisers. To justify the increases, they blamed the impact on their investments from the Federal Reserve’s decision to keep interest rates lower for longer.

At least a half-dozen lawsuits have been filed in federal courts against insurers including Aegon NV’s Transamerica unit and Legal & General Group PLC’s Banner Life."

You can read the full WSJ article here.

Indexed Universal life plans do not have guaranteed premium. Life sucks, but you get what you pay for. Most agents sell these policies without even knowing that.

 

[marindependent]

Try this:

or copy paste this

Life Insurance Customers Push Back Over Surprise Cost Increases - WSJ