Life insurance price increases come under fireRelease Date: 02/05/2016 Source: lifehealthpro.ca Staff Reference: Jennifer Omstead
By Paul Lucas
Rates on some life insurance policies are being raised unfairly, according to one consumer group.
Criticisms have been fired at several insurers south of the border, including Transamerica, AXA Equitable and Voya Financial, after the Consumer Federation of America found that it had increased its “cost of insurance” schedules that are linked to the policyholder’s age.
Stating that it was concerned that insurers were using their right to increase rates as a way of preserving their profitability, the federation has now written to state commissioners about the issue claiming that the impact on policyholders could be “extraordinarily high”.
The controversy has arisen over universal life insurance policies. They work similarly to whole life policies in that a fixed premium steadily increases the cash value of the policy so that the death benefit is reached by 100: however, these policies differ in that they give the buyer the chance to make changes to premium costs and the benefit.
However, such concerns over price rises do not need to arise in Canada due to a fundamentally different pricing model.