Beware of Universal Life Insurance!

Life Policyholders Unaware of Impending Lapse
Henry Benjamin
Henry Benjamin

Beware of Universal Life Insurance! Life Policyholders Unaware of Impending Lapse

by Henry Benjamin

Okay, here it is another insider secret to the life insurance industry.

I’m going to explain to you why yours and so many other Universal Life insurance

policies are failing. You might ask why they are failing. It’s easy to see how a UL policy will fail the person who bought it when they get a letter in the mail that say, that they owe more money. How is that for a surprise?

There are also failing insurance agents everywhere because bad news travels faster

than good news and all insurance agents then have to pay the price for the one who

sold the policy. Maybe he or she sold it chasing commissions, maybe they didn’t know what they were doing or maybe they just didn’t understand how the policies work.

Whatever it may have been the rest of the insurance people pay the price. It is failing for the insurance industry because it perpetuates people’s negative

feelings about insurance. It gives them a big reason to not put life insurance in place. Most importantly it fails the dependents; it fails the spouse, the children and loved ones that need the financial help if something were to happen. Due to the failure of the policy it just might not be there when the payout is needed most.

Consumers are feeling the impact of the poor market and low interest rates in

numerous ways, but one way many people are not yet aware of is the adverse impact

on their insurance policies.

Did you know that your life policy could lapse even when you continue to pay

your premiums timely?

There are two popular types of life insurance sold during the 1990s

were universal life and variable universal life. Universal life policies became

popular in the over 44-age group because investment returns paid to the policy account, could be applied to help pay the premiums instead of accumulating cash

value. The policyholder knowingly sacrificed the savings component of the policy to instead make the premium payments a¦ordable and level, and still have the policy face amount remain constant.

However, the ability of a premium to remain constant depends on the investment returns of the policy doing, as well as what was projected when you first bought the policy. The investment strategy of these policies heavily depends upon a continuing bull market and/or high interest rates. With the advent of the bear market and the federal funds interest rate plummeting to a 46-year low of one percent, many universal life policies are badly underperforming.

Consider the solvency actions necessary when a stock or mutual fund purchased on margin, takes a nose dive from the purchase price. If you want to keep the stock or mutual fund, you must continuously add money to the account.

So too with these insurance policies—unless you increase your premiums, the policy will lapse well short of the planned in-force period. Policy Statements May Contain Alerts of Impending Lapse Many consumers are now receiving statements, which notify them that their policies will lapse much earlier than expected. These

financial predictions have been made using the prevailing market conditions and interest rates, assuming no increase in premium payments. Unfortunately, numerous people fail to understand these warnings or do not notice them because they are placed lower on the statement or in footnotes.

Request an In-Force Illustration If you own a life insurance policy, do not delay

in reviewing the policy’s financial performance.

Immediately ask your insurance company for a

current in-force illustration.

I will be happy to assist you in obtaining an in-force illustration and explain the results. This will show how the policy is expected to perform

in the future under current market and/or interest-rate conditions. This, in turn, will let you know if the policy is soon to lapse or if the policy

reserves are critically low.

If you have any questions or want reviews call Henry Benjamin Allstate Agent @ (773)723- 0400.

Disclaimer: “The following is a guest column, submitted to Citizen Newspapers. Citizen

Newspapers is please to run selected guest columns to further educate our readers. Citizen Newspapers provides these columns as a service to our communities. Citizen Newspapers does not endorse or recommend any services or products suggested in our guest columns, and urges all readers to research suggested products and make wise decisions.”

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