RELIASTAR LIFE INSURANCE, BANNER LIFE, AND WILLIAM PENN UNIVERSAL LIFE
Over the past three years, a number of insurance carriers have raised the
cost of insurance rates on universal life insurance policies, resulting
in dramatic increases to premium payments required to prevent the policies
from lapsing. Current policyholders now claim that these rate increases
are in violation of the contracts they have with the insurance companies,
which restrict insurance carriers from increasing the cost of insurance
with the exception of a few enumerated reasons.
Golomb & Honik, P.C. is currently reviewing claims from universal life
insurance policyholders who have had their rates dramatically increased.
If you are a universal life insurance policyholder of
Reliastar Life Insurance Company, Banner Life, or William Penn—Request an evaluation today!
HOW DO UNIVERSAL LIFE INSURANCE POLICIES WORK?
In a universal life insurance policy, a policyholder is required to make
premium payments into an accumulation account to ensure that the account
has a positive balance and thus stays active. The required premium payment
is considered to be the “cost of insurance.” However, any
amount paid into the account in excess of the minimum premium payment
is considered to be the cash value portion of the policy. Similar to a
savings account, a universal life insurance policy can accumulate cash
value. This cash value earns interest at a rate not less than the guaranteed
interest rate specified in the policy contract and is available if needed
by the insured.
At the end of each policy month, the insurance company withdraws a “monthly
deduction” from the policyholder’s accumulation account, which
serves as the cost of insurance to the policyholder. Each policyholder
contract includes enumerated scenarios in which an insurer is able to
increase or decrease the monthly deduction rate for a policyholder. Monthly
deduction rates are the most important piece of a universal life insurance
policy, as the higher the monthly deduction rate, the higher the premium
payments become to maintain a positive account balance.
UNAUTHORIZED RATE INCREASES
Starting in 2015 and moving into 2016, Reliastar Life Insurance Company,
Banner Life, and William Penn announced unilateral increases to their
monthly deduction rates resulting in massive increases to the monthly
deductions taken from policyholders’ accumulation accounts. Some
policyholders across the country have seen monthly deduction rates rise
as much as 40% resulting in immense increases in the premium payments
required to prevent the policy from lapsing. These extreme rate hikes
have made the universal life insurance policies cost-prohibitive to many
of the current policyholders.
Thus far, Reliastar Life Insurance Company, Banner Life, and William Penn
have given vague and generalized reasons for the rate increases, alluding
to anticipated increases in future costs of providing coverage. Policyholders
are crying foul. It is believed that insurance companies are implementing
these rate increases to be able to meet the high interest rates they promised
to contribute to policyholders’ accumulation accounts and to recoup
past losses suffered. In sum, insurance carriers are using cost of insurance
increases to maintain their own profits leaving many policyholders in
jeopardy of losing the life insurance coverage they have paid into for years.
WORK WITH OUR LAWYERS
If you are a universal life insurance policy holder of Reliastar Life Insurance
Company, Banner Life, or William Penn and have recently been informed
that your life insurance rate is being unilaterally increased, please
Philadelphia class action lawyers at Golomb & Honik today at 1-800-355-3300 or 1-215-985-9177 or fill
out our confidential
Contact Form for yourfree consultation. Our consumer class action attorneys welcome clients from the greater
Philadelphia area, throughout Pennsylvania and New Jersey, and nationwide.