Question regarding my universal life insurance policy !

[janesc]

I have had a universal life insurance policy for the last 24 years, recently I was contacted by the insurance company and was told that the insurance was going to burn itself out. I have no idea what that means. But the agent that came to my house(from the same company) tried to tell me my policy was worthless and I should get a new one with premiums for at least 2 to 3 times as much per month. The original agent told me my policy would only need to be paid for 30 years and than it would be in full effect with no further payments needed for life. All of which appears to be a lie. Is there any real Good reason to have one of these policies?

[Big Dog]

It may be that the carrier is headed towards liquidation, but knowing who the carrier is will help to better answer that question. Once known, better advice as to what direction you should pursue can be provided.

Universal Life policies were sold with a whole bunch of promises that many agents knew might not ever come true. One being that all you could pay the premiums for x number of years, and after that, wouldn't have to worry.

[d's insurance store]

Twenty four years ago, Universal Life Insurance policies were relatively new and prevailing interest rates were historicaly very high and that combination made for some very impressive issustrations for future values of the policy cash.

If the insurance company is still in business and your original agent is now flipping burgers or washing cars as a career, then you need to question the company as to why the policy is about to burn itself out...it could just be as simple as interest rate assumptions from two and a half decades ago not providing enough cash to pay the insurance portion of the UL policy...and this assumes you've been making payments all along.

You don't get off free and clear with me however...UL policies are supposed to generate an annual financial status update, and if you haven't been keeping up with those notices, then shame on you. Those documents provide an indication as to the financial position of the policy...cash value and cost of insurance. Blame the salesperson or the company or the industry if you wish, but if you don't care enough to pay attention to your own policy, then who else will?

[manny79]

I am 50% agree with that. That’s the reason why you have an insurance agent, you want to have an agent that can be there not just to sell you the policy but to serve and educate you. They are different reasons for this happening to your policy. As mentioned before you were" promise" a 30 pay life and it didn’t happened, the major problem there is that policy (apparently) didn’t have a guaranty cash value so it indeed changed and now you don’t have enough to cover the cost of the policy and your premiums haven’t change a bit for the last 24 years. I see these two big problems:

1- An agent who didn’t worry enough to let you know BEFORE this happened.
2- a client(you) who over trust that agent and didn’t check what he has and more important yet in 24 years never took 5 minutes to check the renewal policy that he received.

Your initial question.
Could this happen? Absolutely, this is a VARIABLE product meaning that it changes with time you better get on top of it and if you don’t have an agent to do so, find one.....One question for you, did you even know what coverage’s do you have on your auto or homeowner policy? ........I figure, then you should start worrying a little more about what you pay for and who you pay it too.

This are my two cents, thanks

[pecosins]

As an agent being in business for years, I would suggest you to get in-force illustration to see how long the policy will last based on current interest and payments etc factors. You can call your company to do so, they may refer you to an agent who did not write your policy. That person will not get a penny for providing service work to you. You are older (sorry) and cost more nowadays if you get a new policy.

Universal Life Insurance is a flexible premium policy. it can be designed to pay certain years, you still need to review it periodically to make sure it has enough cash value to support the policy when you stop payment. Current interest is major problem when it comes to cash value. 10 or 12% interest were used to illustrate cash accumulation before the stock market crash. We use about 7 to 8% now.

[Big Dog]

Gotta love it when the original poster never comes back to respond.....

[NYagent301]

Save us some time and at least tell us the name of the company?

[yoyowordup]

Do you still need life insurance? How old are you? How much life insurance do you need? For how long? Are you healthy? Would Term Life insurance work for you or are you looking for an investment vehicle (that didn't work out so well for you before).

One of the reasons I prefer to sell Term (if it fits) is because you have to pay attention to UL and most policyholders don't/won't. Many UL agents say that policyholders will not "invest the rest", so Term doesn't work.

You need to sit down with an agent that you know and trust that has been around for awhile. They will be able to tell you what happened to your original policy. You might want to talk to someone that doesn't sell life insurance so there is no conflict.

[92builder]

Great responses. It's clear we've all seen this before. The problem I've seen with UL policies is that the client goes for that low premium and fails to fully fund the policy. Then, we get here to this problem. I don't care for UL's, and I try not to sell them at all. If I can help you in any way, please let me know. Sorry this has happened to you.