“Universal Life Insurance, a 1980s Sensation, Has Backfired”

Universal Life Insurance, a 1980s Sensation, Has Backfired,” by Leslie Scism, Wall Street Journal

“Universal life was a sensation when it premiered, and for some years it worked as advertised. It included both insurance and a savings account that earns income to help pay future costs and keep the premium the same. That was when interest rates were in the high single digits or above. Today, rates are completing a decade at historically low levels, crimping the savings accounts. Meanwhile, the aging of the earliest customers into their 70s, 80s and even 90s has driven the yearly cost of insuring their lives much higher. The result is a flood of unexpectedly steep life-insurance bills that is fraying a vital safety net. Some find they owe thousands of dollars a year to keep modest policies in effect. People with million-dollar policies can owe tens of thousands annually. Some retirees are dropping policies on which they paid premiums for decades.”

LTC Comment (from Stephen A. Moses, President, Center for Long-Term Care Reform):

The same ideologically biased muckraker who sandbagged LTC insurance now blames the insurance industry for a problem caused entirely by irresponsible government policy that forced interest rates artificially and arbitrarily low.