Do you have a universal life policy?
You might be surprised to learn that it’s not quite as strong as you thought when you bought it.
Universal life policies were heavily promoted in the 1980s. These policies were the “grown up” version of the same policies that helped our previous generations get through the sunset years, so why shouldn’t they work? Many families have held onto these policies unsuspecting that their retirement is at risk.
There’s just one problem – unlike our grandparents retirement plans, these universal policies place the policyholders at risk instead of the insurance company.
How They Work
The intent behind whole life policies was good. The goal was to take high interest rates and rising stock prices as a way to reduce premiums and grow the bottom line cash value of the plan. In essence, it’d operate as a savings plan. The policies would offer a higher rate of return on the investment.
The only downside was the increased premiums that came with the territory as the policyholder aged. To mitigate that concern, the insurance companies promised high returns on stocks and bonds to cover the rising payment.
On the surface it sounded promising. That’s why so many families snatched these policies up as quickly as they could. However, the basic assumptions that’d make the policy a success did not pan out. It’s this failure that’s costing policyholders big time.
The Ticking Time Bomb
If you have a universal life policy, when was the last time you reviewed the fine print? If you’re like most policyholders, chances are it’s been a few years.
In the fine print that’s never read or reviewed lies a clause. If the projected investments fail to produce the expected returns, the insurance company has the right to pull the lowered cash value straight from the policyholders account. If funds run dry, the policyholder and his survivors would be expected to pay the difference.
With the stock market taking tumble after tumble, many policyholders who continue to pay premiums into this account are finding themselves worried. Unfortunately, for most policyholders, this worry comes too late – after they need the money they planned on receiving upon retirement.
Alternatives
The positive ending to this story is that alternatives might be available. If you have a universal life policy, let us take a look at it for you. You might be surprised to see where you stand and what you can realistically expect from your retirement funds. If it’s not in line with what you had in mind, we’ll work with you to explore other options.
Contact us today to get your policy reviewed by someone who knows how personal this nest egg is to you and your family.
