Since the 1980s, universal life policies have accounted for at least a quarter of all new individual life insurance sales. In the last decade, that number grew to more than a third. For decades, carriers pledged that cost of insurance (COI) rates would not increase, leaving policyholders assured that projections wouldn’t vary significantly over time.
Unexpectedly, though, major carriers raised COI rates in recent months, causing many insureds to take a closer look at their coverage and premiums. Policyholders 70 years and older felt the greatest impact from the changes as they approach and surpass expected mortality. However, higher universal life insurance premiums will trickle down to millions of other policyholders over time. According to a recent article in the Wall Street Journal, those who purchased policies as far back as the 1980’s and 1990’s may feel the changes.
As the experts at Trust Life Settlements point out, industry professionals attribute the spike in COI rates to sustained low-interest rates. Unfortunately, the news of substantial rises in rates leaves many questioning the need for their policy and where to go from here. Regrettably, as the National Association of Insurance Commissioner (NAIC) points out, 62% of policyholders who own life insurance do not know what they have or why they bought it. A vast majority of individuals are scrambling for answers without even knowing what questions to ask in regards to their policy.
To better understand specific policy changes and review available options, policyholders should seek to advise from a trusted advisor. A comprehensive policy review not only identifies any issues but also offers potential key outcomes. For policies not currently affected by the COI rate increases, an expert will be able to look for verbiage that allows a possibility for future increases. Moreover, Investment News recommends insureds in the midst of changes to work with their advisor and evaluate the possibility of reducing the policy’s death benefit. If the estate plan has experienced changes, the death benefit of the policy may no longer be needed. In cases such as these, policyholders may start to explore the options of a life settlement – involving the sale of a life insurance policy before its maturity date.
With the recent reform of life insurance policies, individuals should acknowledge their policy as an asset. Periodic checkups will better help protect financial resources. For more information on the news of COI rate increases or the life settlement process, contact Trust Life Settlements at 800-216-2513 or visit trustlifesettlements.com