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Reply to UL Clients Approaching 100 Could See Coverage Terminate     
Old 08-22-2017, 11:29 AM   #1
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Brian Anderson on UL Clients Approaching 100 Could See Coverage Terminate
 
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UL Clients Approaching 100 Could See Coverage Terminate UL Clients Approaching 100 Could See Coverage Terminate
A fair amount was written in the press recently about a case where an insured, about to turn 100, is going to see his two Transamerica UL policies with a $3.2 million combined death benefit terminate as he hits the century mark.

Gary Lebbin filed a lawsuit against Transamerica in late July, alleging that for decades carriers such as Transamerica sold permanent universal life policies, marketed as “insurance for life,” utilizing outdated mortality tables that did not take into account that Americans are increasingly living past 100.

The complaint says the result has been “the improper termination of life insurance policies that were originally sold to policy holders as ‘permanent insurance.’ The life insurance industry has left its customers (who faithfully paid their premiums with the expectation that they would have coverage for the remainder of their lives) uninsured. Further twisting the knife, these terminations have exposed customers to adverse tax consequences that are in direct contradiction to the guarantees made when these policies were purchased.”

More on this in the link below. If you have clients who purchased UL policies decades ago, is this issue on your radar and have you addressed it with any potential affected clients?

Insurance Forums | Coverage for life
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Old 08-22-2017, 02:19 PM   #2
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Justin Bilyj on UL Clients Approaching 100 Could See Coverage Terminate
 
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UL Clients Approaching 100 Could See Coverage Terminate Re: UL Clients Approaching 100 Could See Coverage Terminate
My heart goes out for their situation, but not them - read your policy people!
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Old 08-22-2017, 08:23 PM   #3
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UL Clients Approaching 100 Could See Coverage Terminate Re: UL Clients Approaching 100 Could See Coverage Terminate
They get their death benefit ..but that creates a tax liability and a major one at that if they have outstanding loans.
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Old 08-22-2017, 10:27 PM   #4
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UL Clients Approaching 100 Could See Coverage Terminate Re: UL Clients Approaching 100 Could See Coverage Terminate
Not on a ul that ends at age 100. It is why I will not sell a GUL that ends at 95, 100, or 105. For pennies more the can go to 121. Yes if they live to 122 they are sol but only a small handful ever have.
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Old 08-24-2017, 09:16 PM   #5
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DHK on UL Clients Approaching 100 Could See Coverage Terminate
 
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UL Clients Approaching 100 Could See Coverage Terminate Re: UL Clients Approaching 100 Could See Coverage Terminate
This is no different than with Whole Life. Whole life 'endows' at age 100 (if using the older mortality tables, otherwise it's age 121). It's just that with Whole Life, the cash value EQUALS the death benefit at that age. UL does not have that guarantee. So, if you don't die by age 100... you get the cash value... just like you would with whole life.
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Old 08-25-2017, 12:14 AM   #6
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UL Clients Approaching 100 Could See Coverage Terminate Re: UL Clients Approaching 100 Could See Coverage Terminate
Originally Posted by DHK View Post
This is no different than with Whole Life. Whole life 'endows' at age 100 (if using the older mortality tables, otherwise it's age 121). It's just that with Whole Life, the cash value EQUALS the death benefit at that age. UL does not have that guarantee. So, if you don't die by age 100... you get the cash value... just like you would with whole life.
Exactly cash but no benefit. If designed right you are fine. Sadly most were not. Would you you agree? I will admit you know more about us than myself
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Old 08-25-2017, 12:18 AM   #7
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DHK on UL Clients Approaching 100 Could See Coverage Terminate
 
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UL Clients Approaching 100 Could See Coverage Terminate Re: UL Clients Approaching 100 Could See Coverage Terminate
Depends on the assumptions used in the illustration (and the sales process & literature) and how well the policy was maintained & managed.

These people would be understandably upset if they had a million dollar policy and only $50k cash values (for example).
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Old 08-25-2017, 12:34 AM   #8
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UL Clients Approaching 100 Could See Coverage Terminate Re: UL Clients Approaching 100 Could See Coverage Terminate
But would you agree that for most that bought in the 80s and 90s it is not pretty.
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Old 08-25-2017, 05:38 AM   #9
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UL Clients Approaching 100 Could See Coverage Terminate Re: UL Clients Approaching 100 Could See Coverage Terminate
Most of the UL purchased in the 80's and early 90's blew up a long time ago IF the only premium paid was that which was illustrated when the contract was purchased when the illustrated current interest rates were above 10%.
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Old 08-25-2017, 07:17 AM   #10
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Newby on UL Clients Approaching 100 Could See Coverage Terminate
 
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UL Clients Approaching 100 Could See Coverage Terminate Re: UL Clients Approaching 100 Could See Coverage Terminate
Originally Posted by eersfan View Post
Most of the UL purchased in the 80's and early 90's blew up a long time ago IF the only premium paid was that which was illustrated when the contract was purchased when the illustrated current interest rates were above 10%.
100? Tons of these things blow up in their early 80's. I've met more pizzed off people with UL policies that paid a ton of premium into them than I can count.

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