The Ugly Side of Life

What if you bought a life insurance policy thinking you’d be protected for the rest of your life as long as you paid your premium. It was from a reputable financially secure company. What could go wrong? Well many Baby Boomers are now finding out. They are getting notices that their cash value has run out and in order to keep their policy, they must pay thousands more. How could this happen?

Well, back in the 80’s and 90’s when interest rates were 12-17%, Universal Life (UL) policies were sold using projections based on these high interest rates. But when the rates tanked, those policies didn’t make as much as was projected, resulting in an underfunded UL policy that will eventually implode as the individual gets older, forcing the policyholder to let the policy lapse. They lose their cash value, they lose their coverage, leaving them unprotected at an age they really need the coverage.

Don’t let this happen to your policy.  If you have a Universal Life policy, you can learn where your policy stands by requesting from your insurance company two in-force ledger illustrations: one showing the state of the benefits at the current premium; the other showing the cost to keep a policy in force to age 100.  You can review it with your agent, or contact us for assistance. There are some alternatives and options for universal life policyholders, depending on how insurable they still are and other circumstances. In some cases, it’s possible to keep a policy in force at the current premium by reducing the death benefit.

When shopping for life insurance, if you are looking for protection that will be there at the end of life, look for a Guaranteed UL or Whole life policy that will be in force until age 121 (just in case!).