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I have brought up several times in the last two days the fact that those who have guaranteed policies don’t have anything to worry about in the whole AIG shake up. On the other hand, those with non guaranteed universal life policies, policies that rely on assumptions or external indexing, need to visit with an agent sooner rather than later.

Just so everyone is clear on the difference, I am pulling out my old friends, good UL and bad UL. I have used these two samples numerous times to illustrate what happens when a person focuses on all of the big numbers on the non guaranteed side of the illustration and takes their eye off the prize, the guarantee.

good-ul

bad-ul

It is the bad UL’s that are subject to “adjustment” in bad times. If a companies profits aren’t what they would like them to be, they have the right to make changes on the non guaranteed side of the policy. They can’t touch the guaranteed side, but they can blind side you on the non guaranteed side with a huge increase in premiums. The result is usually a lapsed policy.

Bottom line. If you’re still not sure, get a review of your policy from an independent agent.