Universal Life Insurance?

[buildmybudget]

Yesterday I received my life insurance policy in the mail and after asking for a term policy, they gave me a universal life policy. Reading the fine print it says that they can adjust the insurance rates as time goes by. Doesn't this defeat the purpose of buying term?

[disneysteve]

You signed up for a term policy and that's not what they actually put you in? I'd be on the phone raising hell today. Do you have copies of the agreement you signed?

As for the rate adjusting over time, that can happen with term depending on the type of policy. For example, there can be an inflation rider so that the death benefit rises each year based on inflation and the premium adjusts accordingly.

[buildmybudget]

Thanks for the reply DS--I haven't signed the policy yet. It just showed up in the mail for me to sign. So what do you think, scrap this policy and go find term? I told geico explicitly that I wanted term policies for my wife and I and despite my request this is what the agent returned to me.

[disneysteve]

Thanks for the reply DS--I haven't signed the policy yet. It just showed up in the mail for me to sign. So what do you think, scrap this policy and go find term? I told geico explicitly that I wanted term policies for my wife and I and despite my request this is what the agent returned to me.

I certainly wouldn't sign it. I'd call the agent and complain. I wonder how many people they scam into universal life that way. And I definitely wouldn't go back to them. Search online at accuquote or zander and find a good cheap term policy.

[Robert742]

Call your agent and ask for an explanation before you get upset. I know Genworth has a universal life policy that works just like a 20 or 30 year level-premium term policy at a very good price.

Find out if there are any guarantees about the premium for what you expected the term to be.

Get a second opinion from an experienced life insurance agent to make sure what you were sold meets your need and you are not being misled.

I hope this is simply an issue of miscommunication, because an intentional bait-and-switch like that is unacceptable.

[buildmybudget]

Robert, you're right--even thought the policy says all over it that it is a UL policy, there are several inserts and supplements attached that indicate this is their equivalent of a term policy. I called Genworth to verify and they confirmed it is a term policy with a fixed premium over the 30 year term. It's just irritating they don't do a better job packaging all that stuff up--the supplements were inserted randomly into the package so it was really unclear what exactly was there.

Thanks for the help!

[disneysteve]

That's really odd. Before signing, I would absolutely verify the terms of that policy. I would also make sure you got good competitive quotes to be sure the rate is decent.

[littleroc02us]

Why would anyone do their investments on a universal policy, when you can invest yourself and not have to pay the same commissions? Also, if you were to die, the insurance company gets to keep the investment. Term is the only way to go.

[disneysteve]

A universal has living benefits as well as death benefits and if funded properly can be a valuable investment type vehicle.

Let me guess. You are an insurance salesman.

Let's make this clear. Insurance is NOT an investment vehicle. It will ALWAYS underperform comparable investments held independently because of the incredibly high commissions and fees associated with the account and the fact that when you die, the insurance company keeps the money. They only pay out the death benefit, not the accumulated cash value.

[littleroc02us]

Let me guess. You are an insurance salesman.

Let's make this clear. Insurance is NOT an investment vehicle. It will ALWAYS underperform comparable investments held independently because of the incredibly high commissions and fees associated with the account and the fact that when you die, the insurance company keeps the money. They only pay out the death benefit, not the accumulated cash value.

True that DS