Over the past few years a number of life insurers have raised annual cost of insurance charges (COI) in ways that many consumers once thought impossible.  For the most part, COI increases have targeted flexible premium universal life policies – the kind of life insurance policies that the insurance industry marketed as retirement savings vehicles.  Now, it turns out that flexible premiums are not so flexible after all.  Life insurance companies such as AXA, Voya Financial, Tranamerica, and William Penn/Banner have increased COI charges on universal life policies by as much as 200% sending shock waves through retirement communities across the nation and irking the life settlement industry, the secondary market purchasers of life insurance policies.

While the insurance companies point to contractual provisions in their policies permitting these increases as a justification for the hefty premium increases, more scrutiny is required and will inevitably follow.  Some of the recent lawsuits allege discrimination; others highlight the insurance industries infatuation with “shadow insurance” – a sneaky way for insurers to hold fewer assets in reserve by transferring liabilities to wholly owned captive insurers located in “regulation light” jurisdiction.

If you own a universal life policy and were suddenly hit with an unreasonably large premium increase contact us at (203) 504-8425 or via email at eddie@edwardstonelaw.com.  We may be able to help.

In an excellent article in Life HealthPro on July 25, 2013 entitled “Another blight on the bruised annuity industry’s reputation – When will the industry clearly explain itself to the public?” life insurance news editor Michael Stanley analogizes the annuity industry’s recent attempts to renege on the generous income and death benefits they promised to the restaurant that hawks free appetizers to bring in more customers and then fails to deliver.  Unfortunately for the Executive Life (ELNY) victims who face looming benefit reductions, there is a great deal more to be lost than some fried calamari.  Insurers lurk in the shadows, in D.C. and the state legislatures across the country, spending lavishly to protect themselves from real regulation by hiding behind McCarran Ferguson, gutting the federal insurance oversight office and fighting the “too big to fail” designations so that they don’t have to expain things like wholly owned captive insurance companies and affiliated transactions.  Michael Stanley is right when he says “Americans love repentence, we laud a good public apology”.  Instead of Executive Life of New York (ELNY) standing out as a black mark on the insurance industry, it could have been one of those shining moments where the life insurance industry came togther and did the right thing for those who matter – the policyholders.