Transamerica Life Insurance, formerly Transamerica/Occidental Life may have just taken over the coveted position in the life insurance industry that Protective Life has held for years, the Turd In The Punchbowl Award. They sent out the this email today announcing that I, and other conscientious life insurance agents, have not been the boys and girls that cried wolf, but right on target with our warnings about the collapse of traditional universal life policies of the 80’s and 90’s. The chicken has come home to roost. The fat lady is lubricating her throat for that long awaited song. Many long term loyal Transamerica clients are about to have their pot of gold magically turned to fool’s gold.
The email addressed to agents who were greedy enough to sell clients NON guaranteed policies will announce that they are going to raise rates on most traditional universal life insurance policies sold between 1987 and 1998. These are policies that were sold on the premise that just sticking with them was going to be your answer to retirement. The agents that sold you this bridge to no where might have mentioned that the policies were absolutely not guaranteed and not likely to live through a low interest period, but I’m kind of thinking that isn’t the case. They provide in the email a link to a sample client letter that suggests clients call their experts to see what kind of beating would be most suitable for them, but let’s not mince words about this beating. You will lose life insurance and cash value or you will pay more money and postpone losing your insurance and cash value.
They’re giving plenty of warning though. Agents get the email today and this change in rates (or loss of insurance and cash value) happens next month. And this will affect hundreds of thousands of life insurance clients. With one month to go I expect the Transamerica help line will work about like the Obamacare website fiasco. I’ve thought this through and the one suggestion that would work best for you is to roll whatever cash value you have left into a no lapse guarantee UL, but wait……Trans discontinued that product a few months back leaving you with only other cash value products where your 1035 exchange will lose a lot in the translation. I wonder why they did away with their TransAce UL before they dropped this bomb. Funny thing, timing! Called bait and switch where I come from. Better to 1035 that money into a solid no lapse UL with a company that won’t pull this nonsense.
If anyone with Transamerica says they didn’t see this coming years ago, they are either stupid, lying or, what a combination, both. They didn’t even have to listen to me. I’ve been screaming about this tsunami for at least 7 or 8 years and have helped bail out a lot of people, but they knew this. They are now trying to claim that mortality charges are the culprit even though you would have to be snoozing pretty heavily not to know that people are living way longer than they were 15 to 20 years ago. But they poo pah the idea that a life insurance policy sold on 12% projections isn’t going to hold together in a 3% economy.
Bottom line. WAKE UP PEOPLE!!!! The same people that are killing the retirement promise of the traditional universal life policy have retooled and ready to do it all over again with indexed universal life. I would blame this on the consumers, but these unscrupulous life insurance agents are trained to make you believe. Shame on every agent who never showed their clients what happens in the worst case scenario. Shame on any agent that sells IUL’s without showing clients what happens if it really doesn’t earn 8% or 9% annually, which it won’t. If you have questions, well, great because I’ve got answers beginning with never, ever buy life insurance as an investment or buy an investment as life insurance. My name is Ed Hinerman. Don’t call that Transamerica toll free help line. Call or email me directly. Let’s talk salvage.