by Guest » Mon Jul 30, 2012 10:40 am
I have a Allstate UL Premiere policy. I took the policy out in 1990. My question is: why is the Year of Expiry (2043) different than the "coverage will cease date " (03/26/2026) That is if current premiums are paid and coverage remains the same.
Pdm
Pdm
Posted: Wed Aug 01, 2012 11:35 am Post Subject:
The year of expiry is the year in which you turn age 100. The lapse date in 2026 is because you are not paying enough money in premiums to cover the actual current cost of insurance and other charges in your policy, and your policy will run out of money at least 17 years before 2043 (when you are only 82-83). Your "current premium" (probably the same premium you've been paying for the last 22 years) is too low now.
In all likelihood, on next year's statement, your lapse date will be even sooner, unless you start paying the correct -- higher -- amount of premium now. The longer you wait to pay the correct premium, the more costly your policy will become in the future to maintain. Your initial "planned premium" was most likely based on an interest rate of about 8%. Your policy has not been credited with that much interest for years. Today, it is probably being credited with somewhere in the 4% range. Your policy is probably way off track.
Your cash value is being eroded and will eventually be gone (perhaps within the next 5-7 years, not the 14 you see today), leaving you with no cash and no life insurance unless you pay huge premiums thereafter (with little or no cash accumulation to show for it). I'm willing to bet your most recent statement shows less cash value at the end of the policy year compared to the beginning of the year. If so, that is a definite sign that your policy is in trouble.
You should request an "in-force illustration" from Allstate, asking to see the proper amount of premium that needs to be paid to keep the policy in force to age 100 based on the GUARANTEED COSTS built into your policy, not the CURRENT ASSUMPTIONS. Numbers based on the Current Assumptions can still change in the future and your premium might need to be increased several times in the future.
You may also want to have an independent policy analysis performed to determine what the actual performance of your policy is and has been. Universal Life policies purchased in the 1980s and 1990s can be problematic -- many policies issued in that time period had serious design defects.
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