OK. So I’m starting from a place of disliking Protective Life with a passion. In my career I have never seen a company that has consistently and persistently screwed their customers more than Protective Life along with all of the other companies it has managed to swallow up. In fact, on a scale of 1-10 I don’t think any other company I use would rate a 2 on the customer abuse scale while Protective is a solid 10. They have no conscience about the impact their decisions have on the lives of their customers and their families. Succinctly put they are exactly why insurance companies don’t get more respect.
Just a quick review of the issues that led up to Protective and West Coast Life discontinuing my contract. They used to be a top notch impaired risk term life insurance company and had one of the most competitive no lapse universal life insurance policies on the market. It was an awesome combination, the best term policies convertible to the best no lapse UL’s. Combine that with aggressive underwriting and suffice it to say they captured a huge market share of the term business. About four years ago while collecting premiums on this glut of business they very quietly and secretly (they never told clients or agents) changed the conversion option on all of their term products to a product that was simply stupid. It was only guaranteed for 10 years. I called them on it in this forum and in person and in every way I could shout out loud. I pushed and pushed and Protective and West Coast Life lied and lied. After about a year of intense battle they fired me.
That freed me up to take the gloves off and I have not cut them an ounce of slack on anything since. And today is just another one of those days as I found out that Protective is once again lying to their customers and trying to blame it on the IRS. At the first of 2009 IRS rule 7702 went into effect requiring life insurance companies to use the more recent of the two CSO mortality tables available. Prior to that most companies were sticking with the 1980 version when people didn’t live so long. It allowed them, since they had the choice, to charge more for life insurance that than the 2001 CSO mortality table suggested.
Now comes Protective saying that because of that law they will no longer allow those who purchased policies prior to 2009 to make any change in their policy, such as lower the death benefit amount. They say the law doesn’t allow them to do that anymore. The truth is they never had to do that at all since with all companies lowering the face amount isn’t contractually guaranteed, but can be allowed if the company wants.
In reading IRS 7702 it is very clear that if Protective Life wanted to they could still allow face amount changes, and even better, if the policy predated 7702 they could still choose to use the 1980 mortality table that the policies were written under. There are a couple of important points that need to be noted. If a company allows a client to reduce the face amount of their policy, the company wins. They collected the higher premium for however many years and now a client wants to voluntarily put the company at less risk. So, for instance, the company is now on the hook for a $250,000 policy when for years they have been paid for a $500,000 policy. I’m not sure what part of that deal a company wouldn’t want. The other point is really part of the first one. Companies are always wanting to retain business and customers ask to lower the face amount when they can’t afford the full amount or no longer need it. You can say OK and retain the business or say no and lose it. What am I missing here?
Bottom line. Protective Life is once again lying to their customers by laying blame for this stupidity on the IRS. If I could sell Protective again, I wouldn’t. If you have a chance to buy from them I highly recommend you look at all of the facts and all of your other options before proceeding. If you have any questions or would like help looking into Protective alternatives, call or email me directly. My name is Ed Hinerman. Let’s talk.
Just an update for the agents that follow this blog, especially any of you who may doubt my sincerity when it comes to Protective Life. I just heard from an agent friend of mine this morning who said that he called Protective to get a conversion illustration on an old Federal Kemper policy and was told by the Protective home office that if they had to run the illustration, there would be no commission on the sale. There’s a bit of a catch 22 in that one. If you don’t have the home office access to information such as the rate class and what Protective rate class that would translate to in 2013, you can’t run an illustration. If you ask them for the information you don’t get paid for servicing your client all of those years and bringing them to the point of deciding to convert some portion of the policy. I wish they would just make all of their products non comissionable and get it over with.