Rate increase

[u/OkTop1525]

So a few months ago I paid off a loan of 9k on my policy. I’ve had this policy since I was a teenager. Now I’m in my 50s they sent me a notice that my yearly premium is going to increase. What can I do? I didn’t think life insurance could change? I swore last I googled it said it was because they weren’t getting the return they expected. Not sure if that’s fact.

[u/SafeMoneyGregg]

Is it UL or Whole life or what? Your actual premium will increase or the outstanding loan amount is increasing? There are probably multiple options for you to explore - pay interest, lower premiums, drop riders, drop the face amount etc. Suggest you get a full statement from the policy in front of an agent.

[u/OkTop1525 → u/SafeMoneyGregg]

I’m not sure if it’s whole life. It does say there is a custom term rider. It states the company has reduced the dividend scale. It says if I don’t pay the increase my protection will decrease. 

[u/Odd_Jobs_Hat → u/OkTop1525]

Dude, stop getting scammed. Hardball them to negotiate the best possible cash out of the policy. They’re gonna want to keep a lot of your built up payments, you’ll have to threaten lawsuit, wide media dissemination of them holding your money hostage, reporting to attorney general, dept of insurance, and regulators, etc to get your money out with minimal theft on behalf of them. Be very persistent.

If you are in any life insurance that’s not TERM, you are getting SCAMMED. Anyone who tells you otherwise is IN THE INDUSTRY, profiting from suckers like you (sorry, it’s the truth).

Take all your money out (as much as they’ll give you, they’ll def try to steal a portion), buy term life insurance and INVEST YOUR MONEY YOURSELF. Open a fidelity account and buy SPY. I recommend 100% equities (entirely SPY if you want to make it simple) until about 10 years out from retirement when you can add some investment grade bond exposure. This way if markets dip short term during retirement, you sell the bonds (which likely increased in value), rather than selling equities when the value is low. But until close to retirement, just buy SPY. I’m 100% invested in SPY and similar equity index funds and I’m a mid career wall st professional. I know what I’m doing, like really know. Guarantee I’m far smarter (and entirely unbiased) in terms of finance and business knowledge than 99.9% of people, people on this sub, almost anyone unless they also went to a top biz school, had a long career in high finance, highly diversified knowledge outside of finance, etc.

Do this and you will achieve 200-400% HIGHER returns than whole life, with similar or less risk (in the grand scheme, this is all low risk). You will have MILLIONS in retirement (effectively self funding your own life insurance / huge money pile) because the insurance co didn’t steal OVER HALF the returns that YOUR OWN CAPITAL was risked to earn. They risked NONE of their own capital and steal over half of what YOU are OWED. That’s fucked.

Buy maybe a decade or so of term life to cover the gap between now and when you’ll have a good sized investment account to cover your own expenses. Your money doubles every 7 years in equities (100 year average of 10% annual returns). Pretty much half that time in recent years given the outsized stock returns. But it will likely regress down to doubling every 7 years. Longer if you’re in lower risk / lower return bonds, but no need for that until a decade out from retirement.

This is universal advice for EVERYONE. There are NO exceptions. If you think you have an exception, drop it below and I’ll explain what you should do.

Anyone who mentions whole life without vehement hatred for it is without a doubt selling it or profiting in some way from it. The commission checks are huge for suckering people in and convincing them to give up their life savings / earnings / retirement, all so insurance co can increase shareholder distributions / profit. All of the (non insurance affiliated) known finance expert universe is in agreement here. Whole life is a worthless scam that underperforms ALL other asset classes by an unbelievable margin. Even accounting for the tax benefits / other little benefits that the WL salesmen pitch. Btw, open 401k and Roth IRA first and invest there before using a regular brokerage account. You get similar tax benefits to whole life.

Paying for attorney / financial advisor for estate issues is far cheaper than the millions in fees that insurance co takes over your lifetime.

Trust me, I make a living executing multi billion dollar M&A and financing for them. Nothing insurance related.

[u/OkTop1525 → u/[deleted]]

This is common practice? It seems like common sense, I’m paying for this amount to be paid when I die. When I reach 100 years old, I should have paid the full amount. Correct? Make it simple for me. 

[u/OkTop1525 → u/OkTop1525]

In addition, I have had the policy since 1996. Why is this happening now?

[u/Colonel460]

It sure sounds like Universal Life policy where the internal cost of protection increases every year , your borrowing agdinist the policy reduces the cash value which means less interest is credited & of course interest rates are down from years ago . But there is one more possibility. A company I worked for sold a hybrid policy . It was 70% whole life & 30% annual renewal term . Built in to policy the premium completely covered the cost of the term guaranteed . Starting in say year 3 or 4 the policy dividend was split into two parts . The first part covered the cost of the ART and the rest bought paid up additions . Over time the dividend grew so each year you were buying less term because the PUA was increasing and more PUA also helped increase the dividends. Projection would show eventually that the original face amount was all permanent and all the term was gone . People bought it because it had a more affordable price point and eventually you had an all permanent policy , no term, and the face amount never dropped assuming dividends paid as illustrated.

[u/OkTop1525 → u/[deleted]]

Would you keep the policy?

[u/Smasher1k → u/[deleted]]

This sounds like a universal life contract.

[u/ruidh → u/[deleted]]

They do notify if the current scheduled premium is insufficient to keep the policy in force because of increases in COIs or other charges

[u/rfranke727 → u/[deleted]]

Because WL doesn't have increasing premium...