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Improving the Lives of Your Clients

Recent Cost of Insurance Increases 5 Questions and Answers

Some of your clients may have been affected by the recent decision by several major insurers to increase their Cost Of Insurance rates on certain UL policies. Press attention in The Wall Street Journal and a recent class action lawsuit filed against AXA may bring additional scrutiny to the matter, whether your clients are directly impacted by the COI increase or not.

Here are a few questions
that your clients or you may have.

Increases so far have been announced on certain Universal Life policies from Transamerica (select UL policies issued between 1987 – 1998), Banner Life / William Penn (select UL policies issues between 1995 – 2010), Voya (select UL policies issued before 2009) and AXA (certain Athena Universal Life II policy holders age 70+, $1 million in face value).
The COI increase varies by carrier and policy, but they look to be falling anywhere between 29-70%. This means both a material and unexpected need for your client to come up with the funds to pay these increased premiums and a significant drop in your client’s policy value. For example, a COI increase of just 25% for an 81 year old male could decrease the value of the policy by as much as 14-25%.
By the stated terms of the policies, COI increases can be implemented when mortality rates change or investment returns are lower than expected. In most of these cases, lower interest rates have driven down returns on premium investments, lowering overall profitability. This has been cited as the reason for premium increases.
The class action complaint was filed on February 1, 2016, based on what the plaintiff claims is discriminatory repricing against a specific subset of nearly 1,700 universal life policy holders. The lawsuit claims that AXA is pushing a COI increase on these specific policies (whose holders pay minimum premiums as permitted under their universal life terms) in a manner that violates the specific terms of the policies in the hopes that the insured will either agree to pay higher premiums or lapse/surrender their policy altogether. AXA has stated that these increases relate only to worse than expected mortality performance; the suit argues that these AXA claims are not justified and are discriminatory against a subset of policy holders.
In order to escape rising costs, it may be prudent for some policy holders to look for alternatives. If a client’s health has declined, or if they are a senior with a diagnosed medical impairment, they may be able to access immediate funds and relieve themselves of the premium payments by utilizing Fifth Season’s Funds for Living Program. Short of selling their policy, Fifth Season can advance funds to policy holders based on the face value of the policy, while still maintaining the policy and preserving funds for beneficiaries. Contact Fifth Season to learn more.

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Resources

We’ve provided the following resources to help you and your clients learn more about their options.

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Funds For Living Program
Brochure

Informative 6-page brochure outlining the Funds For Living Program, sharing success stories and answering common questions.

Click Here
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FSF Advisor
One-Pager

To help start the conversation with your clients about financial costs, review our financial one-sheet document.

Download Now
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FSF Advisor
Presentation

View the Funds For Living presentation to learn more about how this financial option can benefit your clients.

View Presentation

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