I just got a heads up that Transamerica Life will be releasing an order tomorrow to withdraw its’ TransAce no lapse guarantee UL from it’s portfolio effective immediately. It’s unusual for a life insurance company to pull a product immediately, but check the additional details. Any TransAce life insurance application in underwriting will be withdrawn and won’t complete underwriting and won’t be issued. But even more incredible is that even if the policy has been approved and has not been put in force, Transamerica will not accept the premium due to put the policy in force. Even if the policy has been approved and it involved a 1035 life insurance exchange that had been initiated, the 1035 will be stopped and the policy not put in force.
I can tell you that as a life insurance agent if I was representing a client who was adversely effected by this I would be screaming bloody murder. Transmaerica is putting agents in even a worse position than bait and switch. The agent has represented to a client that a product is available and that if the life insurance is approved a policy will be issued and that if a client writes a check for that life insurance they will be covered. To make this whole thing even more ghastly, an A+ rated life insurance company, Transamerica, has represented to their agents and potential clients that this product was available. They accepted the life insurance applications and had clients sign the illustrations for the TransAce product, further representing that this was a product they were offering and would honor. And they, even further, approved the TransAce life insurance applications and let the agents know that the policies were approved, who then let the clients know that they were approved for life insurance. And further yet, in those cases where policies were sent out to the clients, Transamerica is now saying that they will not honor the commitment by accepting money to put the policies in force.
And where are our friends with the big voices at times like this. Money Magazine and the Wall Street Journal should be ripping the hide off of Transamerica for nonsense like this? Where is the NAIC, National Association of Insurance Commissioners? They should be stepping in and, at the very least, force Transamerica to honor its’ acceptance of applications. To say that this is counter to the very idea that customers should trust life insurance companies is mild. Transamerica should feel a backlash from this. No matter what their reason for this move, if I held a Transamerica policy I would cancel it. If anyone I knew owned a Transamerica policy I would recommend that they cancel their policies and replace the policies with one from an ethical and responsible life insurance company immediately.
Bottom line. This sets a scary precedent if Trans is allowed to get away with this. In the past life insurance companies have always given a deadline for discontinuing products and they have always honored applications in process and certainly policies that have been approved. This whole thing seems like it must be illegal, but then who will take on a life insurance company like Transamerica whose best paid employees are their attorneys. If you have questions, or had a TransAce application pending or policy approved that will be affected by this, call or email me directly. My name is Ed Hinerman. Let’s talk.