As an evolving industry, we need to focus on correcting past errors.

Permanent life insurance policies issued throughout the 1980's and 1990's have been plagued by a common problem: interest credited to cash values declined while mortality charges increased.  This creates an underfunded situation within the policy. 

What does Underfunded mean

An underfunded life insurance policy is simply any policy that is not performing to original projections.  The problem with an underfunded policy is that it will actually expire  without value before the policy reaches maturity(usually age 95 or 100), which means a loss of coverage, cash values, and premiums paid.

These situations have been caused primarily due to a sharp decline in interest rates over the life of the contract.  Many policies were sold with interest rate assumptions of anywhere from 7-13% and have seen the interest cut by more than 50%. 

An underfunded situation should be addressed and corrected immediately.  As time goes on, the problem becomes more difficult and more expensive to fix.  Most certainly, you should not wait until the policy is near expiration to begin addressing the situation.  Contact us so we can give you options. 

We can then do a comparative analysis of your current situation versus currently marketed insurance plans, looking at things like mortality charges, interest rates, policy projections, cash values and secondary guarantees.  Over 65% of the Policy Audits we have conducted have yielded room for improvement.