The recent cost of insurance (COI) increase for certain universal life policies was a wake-up call for
insurance advisors and policyholders to take proactive and remedial actions now.
Orlando, FL, April 18, 2016 – Asset Life Settlements, LLC, today urged insurance advisors and universal life policyholders to prepare an action plan for policies impacted by the recent cost of insurance (COI) increases. For policies not yet subject to the recent round of COI increases, Asset Life suggests it could be just the tip of the iceberg and recommended proactive policy monitoring and other steps to preserve and optimize the economic value of each policyholder’s insurance investment.
“The recent COI increases – which primarily impacted senior consumers age 70 and over – came as a surprise to those owning universal life policies and has set a precedent for what could happen in the future,” said Scott Thomas, co-founder of Asset Life Settlements. “Some increases were substantial enough as to jeopardize the policy owner’s ability to continue making premium payments. Had policy owners realized that language in their policy left open the door to future COI increases, they could have taken a more strategic approach to prepare for the financial impact of those increases,” Thomas added.
Many industry professionals believe that the low interest rate environment that apparently triggered the recent COI increases will continue for the near future. In contrast to this perspective, recent surveys have shown that most universal life policy owners believed their premiums would not increase if they paid their premiums on time.
“To be forewarned is to be forearmed,” said Jeff Hallman, company co-founder. “That’s why we’re recommending that professional advisors and their clients explore all options to prevent at-risk policies from lapsing or surrendering them back to the carriers.” Hallman and Thomas outlined the following five steps:
- Policy holders should contact their agent or financial advisor and request a policy review to discuss the language in the policy regarding potential maximum COI charges.
- The policy holder or the agent should confirm with the carrier whether the universal life product is subject to immediate or future COI increases. Such increases usually occur on a policy’s anniversary date.
- Policy holders should ask their agent or financial advisor to request an updated in-force illustration showing minimum level premiums and level death benefit to age 100.
- Policy holders should discuss with their agent whether downsizing the death benefit would make premiums more affordable.
- The agent or policy holder should ask Asset Life Settlements to evaluate the current market value of any existing life insurance policy(s).
Both Hallman and Thomas agree that the recent COI increases have made the management of in-force life insurance more challenging for seniors. In certain situations, the ability to sell the policy in the secondary market could become compromised. Insurance and financial advisors should regularly monitor each policy’s performance and take proactive steps for policies where COI increases have placed policies at risk.
About Asset Life Settlements, LLC
Located in Orlando, FL, Asset Life Settlements has a proven track record of delivering results as a secondary market advisory firm. The company is an active member of the Life Insurance Settlement Association (LISA) and is committed to assisting policy owners in optimizing the value of unwanted life insurance policies. Learn more at www.assetlifesettlements.com.
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Scott Thomas or Jeff Hallman