Variable Universal Life Horror Stories

Stockbroker Law - Tuesday, May 07, 2013
Variable Universal Life Horror Stories

The replacement of paid-up whole life insurance policies by Variable Universal Life (VUL) insurance policies has seen many retirees lose a lifetime of savings in a matter of years, due to various of the hidden cost features of Variable Universal Life insurance.

 

Whole life insurance policies offer life insurance coverage for the lifetime of the policyholder, with guaranteed premium, death benefit, and cash value schedules.  The underlying value of these policies is generally based on long-term, predominantly stable, and fixed-income holdings.

 

Variable Universal Life insurance policies, on the other hand, can include various sub-accounts and investments based upon the performance of the stock market, with sales pitches oftentimes utilizing sales illustrations assuming a gross investment return of as much as 12% -- an amount which history has shown is generally unsustainable for long-term whole life policies and likewise unsustainable in the equity markets. 

 

The cash value of a Variable Universal Life insurance policy is based upon the investment performance of the underlying investments, such that there is generally no assurance of a guaranteed cash value.  Also notable, Variable Universal Life insurance policies are deemed to be securities for purposes of the federal securities laws, given their underlying holdings in securities.

 

Unfortunately, many seniors have been talked into replacing paid-up, guaranteed whole life insurance policies, with considerable cash value, by Variable Universal Life insurance given the favorable rate of return illustrations (as high as 12%), without being advised of the lack of guaranteed cash value, lack of a guaranteed death benefit, and no assurance of fixed premiums to keep the policy, cash value, and death benefit in place.

 

We offer a free consultation to investors who feel they have been victimized with the sale of Variable Universal Life insurance policies, based upon the recommendation of the representation of an existing whole life insurance policy.

 

The Law Offices of Timothy J. O’Connor is one of the only law firms practicing securities law in the Tri-City Capital District of Albany, Schenectady and Troy.  We also represent victimized investors throughout the rest of New York State, including Buffalo, Binghamton, Syracuse, Watertown, Utica, Kingston, New York City/Manhattan, Long Island, and everywhere in between, as well as in the surrounding states of Massachusetts, Vermont, New Hampshire, Connecticut, and New Jersey.

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