We have a new Variable Universal Life (VUL) insurance case in the office, and it comes at a time when lots of people seem to be searching for information about variable insurance products and variable annuities. This case involves New York Life, as did our last case, but there are plenty of other carriers who sell the stuff.
Anyway, it seems like an appropriate time to revisit the subject, so we’ll ask you to consider this question. Why would you buy life insurance?
Some people might have reasons involving estate planning or business succession, but if you’re like the vast majority of people, you buy life insurance for only one reason – to be certain that upon your death, someone you care about will receive insurance benefits.
To be certain that upon your death the “someone” you care about will receive insurance benefits, you need two guarantees. First, you need the insurance company to guarantee that it will pay your beneficiary a pre-selected sum of money if you die. Second, you need a guarantee that the cost of your insurance won’t become unaffordable during the time it must remain in force.
VUL insurance policies don’t guarantee either of these things. That’s why most people shouldn’t even think about buying them.
If you want to know more about what’s wrong with VULs – i.e., the obscene fees, the early surrender charges, the outrageous commissions — we have a more detailed page on our website. But in a nutshell, here’s the big problem. Unless the VUL is adequately funded from the outset, it almost certainly will fail eventually. What do we mean by fail? Premiums you may have been paying will skyrocket. Or premiums you thought had vanished forever might suddenly reappear. Your policy will eventually become so expensive that you won’t be able to afford to keep it in force.
Many life insurance agents neglect to explain how this really works. In fact, life insurance agents often actively mislead customers or misrepresent how VULs work.
If you own a VUL policy and have already been told by the company that you need to increase your payments or decrease your coverage, we can tell you your options and help you secure your future benefits or seek appropriate compensation. If you bought a variable life insurance policy from any of these companies (or others) and are wondering whether there may be trouble ahead, we can review your policy and answer those questions at no charge:
Hartford; American General; AXA Equitable; Lincoln Financial; MassMutual; John Hancock; Northwestern Mutual; ING; Metropolitan Life (MetLife); New York Life (NYLIAC); Prudential; Sun Life; AIG; Protective Life; Nationwide; Ohio National; Thrivent Financial; Farmers; Transamerica; State Farm.
Contact us through our online form, email us at hdb@mccarthylebit.com, or call us at 866-932-1295.
Hugh Berkson is a Securities Attorney with McCarthy, Lebit, Crystal & Liffman, Co. LPA. Hugh is rated AV® Preeminent™ by Martindale-Hubbell®.
He obtained a business degree in Finance from the University of Texas at Austin in 1989, and is a 1994 graduate of Case Western Reserve University School of Law, where he was a member of the Order of the Barristers and received both the American Jurisprudence Award, (National Mock Trial) in 1993 and the Jonathan M. Ault Mock Trial Prize for 1993-1994.
