Some insurers are terminating life insurance policies
Very low interest rates are causing some life insurers to cancel policies, according to insurance expert Tony Steuer.
The drastic moves have been caused by much lower than anticipated market interest rates. The policies were honestly sold on the assumption that premiums plus earned interest, over the years, would more than pay for the death benefits involved.
The anticipated interest rate never happened. As every saver knows, interest rates have plunged in recent years.
Because investment returns for insurers have fallen short, the fine print on policies also allows them to increase fees, which reduces the cash value.
Ask your insurer for an "in-force illustration" of higher premiums you could pay to avoid having your policy terminated or consider accepting a lower death benefit.
The insurers are not necessarily informing policyholders of what is happening, or they may do so in language that is hard to interpret.
Writing in Bottom Line Personal, Tony Steuer recommends getting information at InsuranceLiteracy.org/insurance-annual-review-guides.
Steuer is the founder of the Insurance Literacy Institute and the author of Questions and Answers on Life Insurance.
