How Important Are Guarantees In Permanent Life Insurance?

I’ve written multiple times on the need for guarantees in life insurance. “Make sure the insurance you have has a guaranteed rate for as long as you’re going to need it”……”Don’t buy any insurance that doesn’t have a guaranteed level premium”!!! “If you are buying permanent life insurance, make sure there is no way you can outlive it.”

The selling of “permanent” life insurance that isn’t guaranteed is, I believe, one of the worst practices in our industry. You deserve to know that your permanent policy will never fail you. You deserve to know the death benefit will always remain the same and the premiums will never go up….guaranteed!

Don’t listen to agents who sell non guaranteed rate products, whether term insurance, universal life, whole life, health insurance or long term care when they tell you, “No, it’s not guaranteed but our company has a long history of not raising rates”. I may have written that in 2011, but hundreds of thousands of non guaranteed life insurance policies that were sold with that same logic have failed. When a policy fails you lose the potential death benefit and all of the premiums you’ve paid in over the years.

John Hancock sent an urgent message out to agents today saying, “In an unexpected move with enormous implications given its position as a leading LTC (Long Term Care) carrier – John Hancock is signaling that it plans to raise rates on its in-force policies by as much as 40%. Hancock is also suspending sales of its group long-term care product as it undertakes a review of claims in that market. This same kind of bad news can, and does come with life insurance products that don’t have an absolute guarantee. My friends, this isn’t like Swamp Life of Vermont raising rates a little bit. This is one of the biggest companies in the country raising their rates a lot. If you were paying $8000 a year for your Hancock LTC policy, you may shortly be paying over $11,000 a year.

I know that message wasn’t about life insurance, but expect the same kind of action on any non guaranteed universal life or whole life policy. Our best estimate industry wide is that 60% of all universal life policies in force today are depending on non guaranteed assumptions to keep the premium from going up. While the percentage is lower with whole life, you would be well counseled to get an in force illustration on any kind of permanent life insurance as soon as possible. Replacing it with a guaranteed product before it implodes is a fairly simple process. After the implosion you are basically starting from scratch. That can be disastrous.

I am passionate about people knowing if their permanent life insurance is guaranteed. Every permanent policy I’ve sold over the last 20 years is guaranteed for life

Bottom line. Review your insurance coverage! Ask Questions! Demand straight forward answers in writing! Shop and find a new product if the one you have can’t be guaranteed! My name is Ed Hinerman and I can help.