Desperate need for help on Transamerica transmax policy

[Heather1966]

My late ex-husband had a Transamerica transmax life insurance policy plan code ul1x59. He paid $1,500 a year since 1988. It's a $500,000 universal life policy. Transamerica Jacked their premiums up so high and deducted from cash value to pay riders and monthly base premiums so there was no cash value to pay the premiums. my ex husband got so frusterared he let it lapse on June of 2017 and died November of 2018. I see there was a class action lawsuit and got ahold of the attorneys that won the 195 million lawsuit against Transamerica...he said we didn't really get much for the policyholders. Due to my divorce I am not a beneficiary but my two sons are. I would hate to think we paid in over 37,000 since 1998 and then Transamerica has a humongous rate increase that no one can afford and we have to drop it. I do see on the illustrations they were charging about $1,000 a year on a riderr that I was told was for waiver of premium for disability, I always thought that was kind of included in most life insurance policies. if anyone knows anything about this policy or company or solutions please I would greatly appreciate to hear from you

 

[billyb]

There are many underfunded UL contracts still out there sold by agents who projected policy performance based on much higher interest rates. Rates fell and instead of the policy gaining cash value it took those values to pay rising cost within the contract. When these values are exhausted you either pay more premium or your coverage is canceled.

In my opinion the agent that sold the policy is more at fault than the company. He may have stayed in touch with the insured though and the policyholder chose to do nothing until it was too late. Who knows. Good luck trying to sue Transamerica. In most class action suits the lawyers get most of the award and the claimants get pennies on the dollar.

 

[billyb]

Also riders like ADB and PW do have a cost. They are not included in the contract unless the applicant wanted it.

 

[DHK]

TransAmerica has already been sued:
Transamerica sued for cost increases on universal life insurance contracts

Policies are set up to either "fund the box or pay the curve":


Unfortunately, the vast majority of UL policies sold in the 70's and 80's were set up to "pay the curve" rather than funding the box. $1,500 a year for a $500,000 policy is very low - probably the minimum payment required.

California is requiring a 90-day notice before premium increases become in-effect:
Commissioner-sponsored life insurance bill signed by Governor to protect California consumers

 

[Heather1966]

Thank you for your replies.....yes billyb I spoke with one of the attorneys that won the hundred ninety-five million dollar class action lawsuit. He pretty much admitted they don't really have so much set aside for the policyholders. It seemed like he said something about getting 60% on the dollar for cash value. Yes DHK.... It really wasn't $1,500 a year for over 30 years, it's absurd what they were taking of a monthly base policy and he brighter of if you become disabled you don't have to pay the premiums the writer alone between 600 to $1,000 a year. They deducted from your cash value so you don't really notice because you're just paying the premium oh, they also deduct that additional bass policy premium, so not only are you pay me premium . They seem to be robbing you of your cash value and charging outrageous fees for a disability Rider that is almost the same price we were paying for the premium but they were taking out of our cash value

 

[Heather1966]

Rider.... Should have read above. on top of that my husband took out a $4,000 loan in 2002 and thought he was just paying his 1500 + $300 interest every year on that ridiculous loan. I got his actual annual policy statements for 2012 and 13 on that ridiculous $4,000 loan from way back in 2002, it r showed in 2012 policy loan deducted was $1,300 from cash/accumulation value.... on top of our premium of $1,500 and paying $300 interest every year 2013 there was only $600 left on the $4,000 loan from 2002....yep...took it out of our cash/accumulation value. I'm pretty sure between about 15 to $17,000 just on a $4,000 policy loan. Not to mention between 600 to $1,000 every year for a rider that said if you become disabled you won't have to pay these premiums. I literally have all of this from their letterhead their statements. forgive me if I'm wrong but a Rider that forgives you on your premium payments if you become disabled,that is almost expensive as your monthly premium for the 500,000 life coverage seems quite excessive?

 

[pfg1]

That sounds bad. Most riders that I've seen... waive the premium completely for disability, not pay the premiums from the cash value. And they cost a fraction of the premium, like very small. Thats insane and I can't imagine the rider language justifying that. ?? Why do you need the rider then? You can use cv to pay premiums yourself. Sorry you are going through that.

 

[junkman]

OP needs to look at the contract. Carriers live & die by contract verbiage. All else is speculation. It may be that he qualified to have the premium waived AND I've never seen a contract written with WP that simply deducted the premium from cash value. A routine option is for the policy owner to either surrender part of the contract for cash or borrow against the policy. This money deducted may be used to pay premium or for anything else. It would also drastically affect the cash accumulation and death benefit.

Policy holders frequently ask "CAN I borrow" with a resulting answer of "Yes, you can." Hopefully they ask the agent "If I borrow/surrender, what are the effects." The second question frequently isn't asked - or answered.


edit: "forgive me if I'm wrong but a Rider that forgives you on your premium payments if you become disabled,that is almost expensive as your monthly premium for the 500,000 life coverage seems quite excessive?"


Another thing you're dealing with is technology changes. Computer systems have changed drastically and old policies no longer being sold may not have been transitioned to the new system and errors in calculations can abound. I have a retired actuary friend who at 1 point was setting up Excel spreadsheets to handle old policy calculations that weren't included in the current system.

Many UL contracts are underfunded and mortality charges are high and it is very likely that the policy would have lapsed given the loans alluded to and the drop in interest rates. The mortality charge schedule can change from the original illustration which also affects the policy.


Edit: "forgive me if I'm wrong but a Rider that forgives you on your premium payments if you become disabled,that is almost expensive as your monthly premium for the 500,000 life coverage seems quite excessive?"

Disability insurance is expensive and premiums are set to cover expected claims. Also, carriers frequently underestimate/overestimate actual claims and make adjustments later to generate enough premium to cover claims.

Another example of relatively expensive premium is ADD. It is almost as expensive as the normal death benefit premium especially at younger ages. Since how an insured dies doesn't affect how much money is needed at death, an argument can be made that one should never buy ADD and should simply put the extra money into increased DB.