Life Insurance Policyholders of Potential Legal Remedies for Double-Digit Premium Increases


October 12, 2016

Have the premiums on your universal life insurance recently increased dramatically? Recently, some life insurance companies have informed certain policyholders of premium hikes as high as 38% or more taking effect on universal life insurance policies  These sudden cost increases pose serious challenges for these policyholders as they likely purchased their policies years or even decades before. Now many years older, they face losing money expected in retirement and have limited options for securing an affordable replacement policy particularly if they are now in poor health.  

"Universal" life insurance is not the same as “term” life insurance.  Under a term policy, the premiums are paid out if the policyholder dies during the fixed term (often twenty or thirty years). Term policies do not accrue a cash value, so if purchasers live longer than the term, they receive no financial benefit from the policy. By contrast, universal life insurance and other "permanent" policies cover the life of the insured (or at least until advanced age) and include a savings component that accrues value over time.  Although some premium increases are expected over time, the recent significant hikes imposed by some life insurance companies raise important questions. 

Montlick & Associates attorneys are currently evaluating potential lawsuits on behalf of policyholders who have received correspondence indicating that the monthly deductions, the cost of insurance, or premium for their universal life insurance or flexible premium adjustable life insurance policy are increasing.

Class Action Lawsuit Filed against Transamerica for Attempting to Evade Interest Rate Guarantee

A lawsuit filed against Transamerica Life Insurance Company alleges that the insurer is breaching the policy's terms through a sharp increase in monthly deduction rates, as well as other fees and expenses. The lawsuit claims that the subject policies do not allow Transamerica to change monthly deductions in order to recover past losses, and alleges that the increases are intended to deny policyholders the interest rates on the savings component that were agreed to when the policy was purchased.  Transamerica's position is that the amount of the increase does not exceed the maximum allowed under each policy.  The company also claims that factors such as increased mortality rates have contributed to these double-digit premium increases.  

The goal of the class action suit is to force the insurance company to reverse the increased cost, pay policyholders damages, and reinstate the policies of customers who were forced to surrender their policies. 

Transamerica Policyholders Faced with a Dilemma Because of Cost Hikes

Policyholders who have been notified of the drastic increases face a dilemma. While they received the term benefit component of the policy, they could have purchased such policies at a lower cost had they not anticipated receiving interest rate guarantees.

Failure to pay the higher rate eventually will result in depletion of the cash value of the policy unless the higher premium is paid. While policyholders could elect to surrender their policy and accept the remaining cash value, they would likely have to pay taxes on the cash. Further, the policyholders affected are older, so they may have difficulty qualifying for a replacement policy.

If you have received a letter from your life insurance company notifying you of significant and unanticipated premium increases on a universal life insurance policy you have paid premiums on for many years, our attorneys would like to review a copy of your policy, the letter notifying you of the increase, and all available annual statements.  Call Montlick & Associates today for a free consultation to learn about your rights and options.

Put Our Law Firm's Over 32 Years of Experience to Work For You!

Our law firm represents policyholders impacted by unfair insurance company practices. We have been representing plaintiffs throughout Georgia and in the Southeast for over thirty-two years, including but not limited to Albany, Athens, Atlanta, Augusta, Columbus, Gainesville, Macon, Marietta, Rome, Roswell, Savannah, Smyrna, Valdosta, Warner Robins and all smaller cities and rural areas in the state.

No matter where you are located, the attorneys of Montlick and Associates, Attorneys at Law, are just a phone call away, and we will even come to you. Call us 24 hours a day/7 days a week for your Free Consultation at 1-800-LAW-NEED (1-800-529-6333). You can also visit us online at www.montlick.com and use our Free Case Evaluation Form or 24-hour Live Online Chat.

Category: Personal Injury

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Many of our blog articles discuss the law. All information provided about the law is very general in nature and should not be relied upon as legal advice. Every situation is different, and should be analyzed by a lawyer who can provide individualized advice based on the facts involved in your unique situation, and a consideration of all of the nuances of the statutes and case law that apply at the time.