The Cost of Insurance


Over the past three years, a number of insurance carriers have raised the cost of insurance rates on universal life insurance policies, resulting in dramatic increases to premium payments required to prevent the policies from lapsing. Current policyholders now claim that these rate increases are in violation of the contracts they have with the insurance companies, which restrict insurance carriers from increasing the cost of insurance with the exception of a few enumerated reasons.

Golomb Legalis currently reviewing claims from universal life insurance policyholders who have had their rates dramatically increased. If you are a universal life insurance policyholder of Reliastar Life Insurance Company, Banner Life, or William Penn—Request an evaluation today!


In a universal life insurance policy, a policyholder is required to make premium payments into an accumulation account to ensure that the account has a positive balance and thus stays active. The required premium payment is considered to be the “cost of insurance.” However, any amount paid into the account in excess of the minimum premium payment is considered to be the cash value portion of the policy. Similar to a savings account, a universal life insurance policy can accumulate cash value. This cash value earns interest at a rate not less than the guaranteed interest rate specified in the policy contract and is available if needed by the insured.

At the end of each policy month, the insurance company withdraws a “monthly deduction” from the policyholder’s accumulation account, which serves as the cost of insurance to the policyholder. Each policyholder contract includes enumerated scenarios in which an insurer is able to increase or decrease the monthly deduction rate for a policyholder. Monthly deduction rates are the most important piece of a universal life insurance policy, as the higher the monthly deduction rate, the higher the premium payments become to maintain a positive account balance.


Starting in 2015 and moving into 2016, Reliastar Life Insurance Company, Banner Life, and William Penn announced unilateral increases to their monthly deduction rates resulting in massive increases to the monthly deductions taken from policyholders’ accumulation accounts. Some policyholders across the country have seen monthly deduction rates rise as much as 40% resulting in immense increases in the premium payments required to prevent the policy from lapsing. These extreme rate hikes have made the universal life insurance policies cost-prohibitive to many of the current policyholders.

Thus far, Reliastar Life Insurance Company, Banner Life, and William Penn have given vague and generalized reasons for the rate increases, alluding to anticipated increases in future costs of providing coverage. Policyholders are crying foul. It is believed that insurance companies are implementing these rate increases to be able to meet the high interest rates they promised to contribute to policyholders’ accumulation accounts and to recoup past losses suffered. In sum, insurance carriers are using cost of insurance increases to maintain their own profits leaving many policyholders in jeopardy of losing the life insurance coverage they have paid into for years.


If you are a universal life insurance policy holder of Reliastar Life Insurance Company, Banner Life, or William Penn and have recently been informed that your life insurance rate is being unilaterally increased, please contact our Philadelphia class action lawyers at Golomb Legal today at 1-800-355-3300 or 1-215-985-9177 or fill out our confidential Contact Form for yourfree consultation. Our consumer class action attorneys welcome clients from the greater Philadelphia area, throughout Pennsylvania and New Jersey, and nationwide.