Posted by Since 2015, there have been many cases of targeting insurance companies in the United States.Universal insurance(English Universal Life, referred to as UL) insurance policy litigation.Such litigation cases warn of the risks that such products may bring to financial advisers and policyholders who are not detailed and professional.As policyholders, what can we learn from these legal proceedings?The following isAmerican Life InsuranceReports brought by the guide.
(American Life Insurance Guide Online News)National Life Insurance(Transamerica, also translated asPan American Life),AXA Life Insurance(AXA) andLincoln Life Insurance(Lincoln National Corp) These three companies are examples of such cross-litigation cases.The reasons why these companies got into lawsuits are all because in certainUL(Universal Insurance) In the insurance policy, the insurance cost is increased to the insured.
National Life InsuranceThe company (Nationwide Life Insurance Co) was still in May, with two customers on VUL (Investment universal insuranceThe lawsuit initiated by) was settled.John Hancock Life Insurance (John Hancock Life Insurance) settled a lawsuit related to UL (Universal Insurance) premium costs for US$7 million in July.
Difficult choice: maintain the policy or break it
Universal Life (Universal Life), and Term Life Insurance (Term) And Savings Participating Whole Life Insurance (whole life) Is different, it is a life insurance that is valid for life and has cash value.Because of these characteristics, it allows policyholders to make payments flexibly.Specifically, this flexibility lies in that policyholders can maintain the policy at a lower price than savings and dividend-type whole life insurance.However, once the cost of premiums rises, policyholders face a painful choice: pay more money out of their pockets, maintain the policy, or terminate the insurance.
"Customers don't know what they can do," said James Hunter, a life insurance actuary at the American Consumer Federation. "They paid the premium, and they thought the money was guaranteed for a lifetime. Now, they suddenly received a very high premium bill, saying that they can maintain the policy."
The interest rate issue has become the main incentive, and consumers are unwilling to pay for it
Experts said that the sudden wave of insurance lawsuits that began around 2015 was mainly for the sale of goods in the 1980s and 1990s.Universal insuranceInsurance policy.Due to the high benchmark interest rate of the federal government at that time, insurance companies provided policyholders with a guaranteed minimum interest rate of about 4% to 5%, which was quite attractive.
But after the 2008 financial crisis, the bond market’s lowest interest rate in ten years reduced the rate of return of insurance companies’ investment in the bond market—and bonds are the core underpinning product of insurance companies such as insurance policies—and therefore consumed insurance companies. The profitability of the insurance company, and even the income is inverted (the return rate of the national debt invested by the insurance company is 3%, and the guaranteed return promised to the policyholder is 4%).As a result, some insurance companies have increased the prices of some UL insurance policies. (Editor's note: In the same period, compared with the US S&P500 indexIndex Universal InsuranceThe yield of IUL policy products has been rising during the past ten years. )
Although the UL (Universal Insurance) policy contract allows insurance companies to adjust insurance costs up to a capped maximum rate based on certain factors, plaintiffs generally claim that insurance companies raise costs to compensate for the failure of gambling in the interest rate market. Loss.The insurance company claims that price increases are necessary because death factors will increase the frequency of their claims.
Increase in the number of class action cases
The Consumer Federation of America wrote to the insurance commissioners of all states in the U.S. in 2016, stating that many UL insurance policies "When the interest rate is not high enough, you are in trouble or will be in trouble. "
The number of recent class-action lawsuits triggered by the increase in the cost of insurance (COI, Cost of Insurance) has climbed to 2 to 3 digits.
"This is malicious behavior," said Joseph Gaintier, the attorney representing the plaintiff in the Lincoln Life case, when talking about the increase in this number. "(Price increase) This is not linked to factors such as mortality or compensation at all. It is linked to factors such as changes in interest rates. The actuary of the insurance company made the wrong price at the wrong time."
National Life Insurance(Transamerica, also translated asPan American Life) Spokesperson Hank Williams andLincoln Life Insurance(Lincoln National Corp) spokesman Jay Russo said that it is not convenient to comment before the court ruling.AXA Life InsuranceA spokesperson for (AXA) did not respond.
John Hancock Life: An Alternative Lawsuit
The legal proceedings of John Hancock Life Insurance are a bit different from others.
The plaintiff sued the insurance company. With the current mortality rate falling, the insurance company continued to use the wrong mortality calculation company and did not reduce the cost of the insurance policy.
according toAmerican Life InsuranceGuidance Network reporter heard that in this case, John Hancock Life submitted a settlement in the Federal Court of New York on July 2018, 7, and agreed to pay more than US$20 million to end the class action.
Expert advice, keep learning and safeguard your rights
Gregory Olsen, a partner of Lenox Consulting Group, said: "Since the financial crisis broke out, many brokerage companies and brokers have lost their pants. YoursUniversal insurance(UL) insurance policy orInvestment universal insurance(VUL) Insurance policy costs may soar, you should learn and fight back.If you haven't learned anything from this thing, then you still pretend that you don't know anything and bury your head in the sand. "
To hold a UL insurance policy, you must first fully understand the market situation when an insurance company pays the lowest guaranteed income on the one hand, and generates the highest insurance cost as agreed in the contract on the other hand.The lawyer in the Lincoln Life case, Gayntier, said that for a very flexible policy, the wisest way to maintain the policy is to consider both of the above-mentioned situations when paying premiums.
insurGuru©️ AcademyRecommend for you:
(Update) The latest report in October 2018.10: "Transamerica pays policyholders US$1.95 million to seek settlement"
