Life Insurance Customers Push Back Over Surprise Cost Increases

via Wall Street Journal

Several big insurers have notified thousands of customers of higher costs to keep their policies in force, with increases ranging from midsingle-digit percentages to more than 200%. Shown, the Transamerica Tower in Baltimore.

Americans are starting to fight back against a wave of insurance-price increases on decades-old life policies. Over the past year, several major insurers have notified tens of thousands of people of higher costs to keep their policies in force, with increases ranging from midsingle-digit percentages to more than 200%, according to financial advisers. To justify the increases, they blamed the impact on their investments from the Federal Reserve’s decision to keep interest rates lower for longer.

At least a half-dozen lawsuits have been filed in federal courts against insurers including Aegon NV’s Transamerica unit and Legal & General Group PLC’s Banner Life.

In many of the suits, which seek class-action status and damages, the plaintiffs contend insurance firms are hiding behind little-used contract provisions to rummage up cash for shareholder dividends. They also argue that increased lifespans have offset the negative impact on profits of lower bond yields.

Read the full article here

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About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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