There has been talk of life insurance in the paper recently, and since we are on the subject, I thought I would remind those who could be at risk of losing their life insurance. The talk was about term and whole life, which both have their benefits. However, no one has spoken about universal life. I am tired of seeing those who have purchased this type lose their coverage.

Universal life is a life insurance policy that is based off of current interest rates. If you purchased this type of coverage years ago, say before 2008, the interest rate your policy was projected to earn may not have earned what it was thought to due to interest rates falling. Then you factor in that the interest rates remained low for a long time, even until today. Therefore your policy may have been under performing and in jeopardy of lapsing in the future.

I will never forget seeing this for the first time almost 20 years ago. The widow was paying $35/month for an extremely long time only to get a letter stating she had to pay over $400/month now to keep it in force. Of course she couldn’t afford it and had to let it go.

If you look at your policy and it says universal life, flexible or adjustable life insurance policy on the first page, please review it with a qualified advisor, since this is not term or whole life.

As you get older, the cost of insurance increases, therefore if returns do not meet protections, you may need to increase your premiums to keep the policy in force.

Be sure to look at the guaranteed section of your policy.

Term is usually good for the term purchased (premiums increase at end of the term usually 5, 10, 20 or 30 years) and even AARP term with NY life policies end at age 80. Buyer be aware.

Whole life is usually guaranteed for your whole life, as long as premiums are paid. But more expensive. Buyer be aware.

Guaranteed issue whole life usually has a waiting period for coverage to be in full force, since you didn’t answer any health-related questions. Buyer be aware.

Universal or flexible/adjustable life is the most complex and needs to be reviewed annually to be sure it is funded properly.

Rocco Foley

Crystal River

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