If you have a life insurance policy begun in the 1980s, 1990s or the 2000s, you owe it to yourself to have it reviewed by an agent. Do not assume you have whole life, and do not assume your coverage is permanent and will automatically cover you to age 100 and beyond. 80’s and 90’s policies are generally universal life (UL), and you may be on a ship with a hole below the water line. Companies put out UL annual statements that vary in quality. The key information should be something like this:
Based on guaranteed assumptions, your policy will expire on (xx/xx/20xx)
Based on non guaranteed assumptions your policy will expire on (xx/xx/20xx)
Unfortunately, some carriers don’t put these key facts clearly in your annual statement. One’s eye is naturally drawn to the cash value figures. What you need to do is to request an in force illustration also called an in-force ledger statement. An experienced agent, like myself, can analyze the viability of your coverage to last the rest of your life and to meet your goals. Many policies from the ’80s and ’90s were poorly designed, the cash value of your policy may run out, and the company will ask you to pay a higher premium, on a year to year basis, to keep the policy going.
Don’t just file away your annual statement, take a close look. Send it to an independent agent and broker for a check up.
Case example: Woman in her early 90’s with a $100,00 life insurance policy began in 2003, paying $230 a month. The 2022 annual statement showed over $30k in cash value accumulation and growing, but did not provide projections, except that the policy was not due to lapse in the next 12 months. I requested an in force illustration: solve to age 100. The resulting illustration solved to age 100, which was to maturity or lifetime with this policy, for $160 a month. The guaranteed savings is $70 a month.
Since this is a level death benefit universal life policy, the death benefit is $100,000 regardless of cash value accumulation. There was no advantage to overpaying the policy, if receiving the death benefit is the goal. Lowering the premium saves $70 a month without any downside. Since the policy has significant cash value accumulation, running an in force illustration at zero premiums would show guaranteed and project non guaranteed how long the policy would last without further premiums payment. This information would be useful if the policy owner was in failing health. The policy would likely last for years with no further payments, and as long as there was some cash value to offset premiums, the policy would not lapse and the beneficiaries would receive the full $100,000 death benefit.
Any level death benefit Indexed Universal Life (IUL) or Universal Life (IUL) policy with significant cash value accumulation is over funded, if the policy holder is in poor or failing health. Policies that have an increasing death benefit IUL, UL or Whole Life are a different story because the death benefit increases along with the cash value.
Please contact me for a policy review.