Your Options When Life Insurance Premiums Are Raised UnreasonablyPosted October 6, 2016
Many people decide to purchase universal life insurance policies so that if anything happens to them, their families will be taken care of. But what do you do when your life insurance company decides to undergo massive rate increases? Policyholders are often caught in a tricky situation, as they may not be able to afford those rate increases, but if they do not continue to pay their policies, all of their payments throughout the years would be rendered useless, and finding an alternative, given their ages, would be challenging.
What kind of premium raises are these families dealing with? Significant ones. For example, one couple who purchased a life insurance policy for $250,000 in 1992 is looking at their monthly premium quadrupling, bringing their payments up to approximately $3,000 per month (a rise in rates close to 40 percent). As a result, several of them have filed a class action bad faith life insurance lawsuit against their life insurance company, Transamerica Life Insurance.
Types of Life Insurance Policies
Universal life insurance policies are what are known as “permanent policies,” whereby the policy lasts for their entire lifetime and they receive both a death benefit and a savings component, which accrues in value over time. In contrast, “term” life insurance covers a period of time (20 to 30 years), whereby policyholders pay fixed premiums and receive a payout if they pass away during the term of the policy. However, if they do not pass away during the term, they do not receive any benefits.
Bad Faith Litigation
The lawsuit contends that, because the interest rates were high when many of these permanent policies were purchased in the 1980s and 1990s, companies are raising monthly deduction rates in order to avoid paying out the interest rates agreed to when the policies were sold. Policyholders are asking that the court to force Transamerica to reverse the premium increases, reinstate any policies for individuals who decided to surrender their policy due to the increase in premiums, and cover damages to policyholders.
Contact Us Today
An insurer’s failure to fulfill its duty of good faith and fair dealing concerning your life insurance policy can have devastating consequences for your family. Oklahoma features a series of laws and regulations which allow victims to hold insurance companies liable for their actions, thus, if you or a loved one have reason to believe that your insurer acted in bad faith, it is important to contact an experienced bad faith insurance attorney who can help you right away. Our firms specialize in representing victims of bad faith insurance claims. Contact us today at 405-272-0303, or online, for a free consultation.