• (p71) - Richard Blumenthal (D-CT) - And I think you and we have a special responsibility here given that we’re talking about life insurance. We’re talking about insurance people buy in the expectation their sisters, their brothers, their children, and their spouses are going to rely on it to survive, to live, and to reap the benefits of that life.
  • A lengthy article in the New York Times last year detailed a new and disturbing trend in the whole life industry. I’m sure you’re aware of it.
    • 2016 0813 - NYT - Why Some Life Insurance Premiums Are Skyrocketing, by Julie Creswell and Mary Williams Walsh - [link-Paywall Free]
  • Insurance companies have jacked up premiums on whole or universal life policies and have shifted the burden of dividend payments from the insurance company to other policyholders.
  • People who bought universal life policies in the 1980s and 1990s, some of which guaranteed annual returns of 4 percent or more, are seeing their premiums now soar.
    • So the new exorbitant rates have left many older Americans with no choice but to drop coverage and lose, you guessed it, the entire value of their policy after years and years of investing in it.
  • And I am raising this issue. I know we’re not going to have final answers today, but I want to ask Ms. Weintraub, realizing that many whole life policies were underwritten during a decade of high interest rates that could support more generous dividends.
  • I also understand these insurance policies gave a guarantee, and policyholders seem to have kept their side of the bargain.
  • Are these exorbitant increases in premiums fair and justified, or are they simply a way for insurance companies to reduce their liability and eliminate the most expensive policies, I understand they’re expensive, but don’t they have an obligation to do better?
• CFA - Rachel Weintraub, Legislative Director and General Counsel, Consumer Federation of America - It certainly seems unfair to a consumer who has been paying into this policy and then only to find that it is unaffordable for them and they can’t get the benefit of what they’ve been paying for.
  • Certainly that has an unfair result.
  • It’s entirely the reason why consumers have insurance to begin with, and being unable to use it in the way that they’ve been paying for, for years and years is certainly problematic.
  • And I would definitely recommend more research looking into how the disproportionate effect it has on especially older Americans and their ability to obtain coverage, and the investment they put into it.   

2017 0803 - GOV (Senate) - Insurance Fraud in America: Current Issues Facing Industry and Consumers, Jerry Moran (R-KS)  ---  [BonkNote]