DFS is alerting consumers who own or are thinking about buying universal life insurance policies to carefully review their policies, the sales illustrations describing how the policy works and all required information disclosures. Over the last five years, DFS has received almost 1,400 complaints from New York consumers about universal
life insurance policies. Many consumer groups and media organizations have also reported consumer issues with universal life insurance. What is Universal Life Insurance? Universal life insurance is a type of “permanent” life insurance coverage, meaning that it will provide coverage for the policyholder’s entire life. This is unlike term life insurance, which provides coverage for only a limited amount of time (for example, 20 years). Universal life insurance comes in many varieties, including fixed universal life insurance, variable universal life insurance, indexed universal life insurance or guaranteed universal life insurance. Permanent life insurance policies like universal life often build a modest cash value that could be returned to the policyowner if the policy is cancelled. The policyowner can also take a loan from the insurance company against the policy’s cash value, which accrues interest. Beware of Increasing Charges The internal charges of universal life policies can increase every year. Ongoing premium payments, the policy’s existing cash value and ongoing interest credits (or, investment performance in the case of variable universal life insurance) are all used to cover the policy’s internal charges, which increase each year as the insured gets older and can be very high in later years. The Department has seen many cases of consumers who purchased universal life insurance and who made payments for years, thinking their premium payment would not change or that their coverage would remain in effect. But many found that their policies had lapsed (were no longer in effect) with little to no value due to declines in interest rates, market volatility and other factors, or they were required to pay large additional premium payments to keep their coverage in effect. Recommendations for Consumers:
Learn More Every insurer must provide a Life Insurance Buyer’s Guide to consumers before or when you apply for insurance. For more information, see the guide you should have received from your insurer, or contact your insurer.
Which of the following statements about variable universal life is true?52) Which of the following statements about variable universal life insurance is (are) true? I Variable universal life insurance guarantees a minimum interest rate or case value.
What is universal life insurance quizlet?Universal life insurance. an extremely flexible life insurance policy. A policy owner can increase premiums, reduce premiums or cancel premiums. Same to the death benefit. unbundled.
What is the purpose of universal life insurance?Like whole life, a universal policy can provide lifetime protection while building cash value with tax advantages. UL also gives you the flexibility to raise or lower premiums within certain limits, so it can cost less than whole coverage.
Which of the following statements is true about term life insurance?A term life insurance offers both insurance coverage and a savings feature. The premiums associated with a term insurance policy are fixed payments computed as an average of the premiums required over the expected life of the insured person.
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