We know that the Protective Life group of companies, which includes acquisitions such as Chase Life Insurance and wholly owned subsidiaries like West Coast Life and Empire General, have been decidedly customer unfriendly for years. It was four of five years ago that they very quietly removed their GUL, guaranteed universal life, products from their customer options for term conversion. It was done so quietly that many customers are still just finding out when they move to convert their policies. It was so quiet that they neglected to tell the agents in the field about the change. There is no question in our group that the change was done quietly and secretly because it was a genuine fatal blow to the policies of, exclusively, their long time loyal customers.
They have since reintroduced an option for a guaranteed permanent policy, a whole life Frankenstein. This product, while certainly guaranteed permanent, has never run into the term cost effective. Protective stacked the deck so heavily in their favor with the product that I suspect they have something like the wave at a football game around the home office any time someone actually converts to it. They also still offer a universal life product with a 10 year guarantee at a price that is higher than a newly acquired guarantee to age 121 GUL. It’s apparent that they want to discourage any kind of conversion when all the options they offer wouldn’t meet a prudent financial adviser’s recommendation.
Now Protective is using a law that went into force in 2009 to make any other changes you might want to make to your policy essentially another slap in the face. To measure the force of the slap consider this. The change in the law, “any policy changes processed after December 31, 2008, must adhere to the 2001 CSO mortality table”. This means that if you have a term policy for, say, $1 million and you no longer need that much insurance, you can’t reduce the face amount of the policy. They justify this by claiming that the law could jeopardize the tax status of the policy,
Now note that reducing the face amount of a policy is not contractually guaranteed in your policy, but virtually all companies will do it because, gosh, that means they have had the advantage of higher premiums for years and now they get to reduce their risk. No other companies we know of are hiding behind this law. “Effective January 1, 2009, all life insurance products sold in the United States will be re-priced using the 2001 CSO Mortality Table. As a result, most , if not all life insurance companies have and are in the process of redesigning their life product portfolio to meet this legal requirement. Some carriers have elected to discontinue some of their products, and some have created new products to fit the new parameters”. All that is needed to make a face reduction is to issue a new policy, which they should do anyway, and determine the new premium (which should be a lower cost per thousand) and issue it. Section 7702 of the IRS code actually allows Protective to make the change if they want to and either leave the policy at 1980 CSO mortality levels or change it. Protective has just chosen to ignore that option.
But this is Protective Life who, apparently at any cost, would rather screw their long time faithful customers than do what is right. It’s their historical stance and it appears they are willing to make it their lasting legacy. We may be just one small voice in the big world of life insurance, but if you can hear us, DON’T DO BUSINESS WITH PROTECTIVE LIFE.
If you’re too late and they already have your business, call or email and we may be able to help you find an alternative that doesn’t limit your options in the future.
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