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If you purchased an indexed universal life insurance policy (IUL) believing it was a safe way to build wealth or generate income, you’re not alone—and you may not be to blame for your losses. Many consumers were misled by agents and financial advisors who exaggerated returns and downplayed risks.
The Securities and Investment Fraud lawyers at Levin Papantonio in Pensacola, Florida, are helping victims recover financial losses from indexed universal life insurance policies.
Contact us today for a free, confidential, no-obligation Case Evaluation.
Universal life insurance is a form of permanent life insurance that combines a death benefit with a cash value component. Unlike term life insurance, which covers a specific period, universal life insurance stays active as long as you pay premiums. The cash value portion grows over time based on credited interest rates.
While UL offers flexible premiums and adjustable death benefits, it also carries significant risks. If the credited interest doesn’t keep up with rising policy costs, the cash value can shrink. When this happens, policyholders may face unexpected premium increases—or worse, a policy lapse that leaves them with no coverage or savings.
Indexed universal life insurance links your policy’s cash value growth to a stock market index, such as the S&P 500. When the market performs well, your cash value may grow. When it doesn’t, the policy typically guarantees a minimum “floor” (usually zero percent) so you don’t lose money from negative returns.
However, these policies come with “caps” that limit how much of the market’s gain you can earn and “participation rates” that restrict how much of the index return is credited to your account. This means that even if the market jumps 15% or 20%, your policy might only credit you 6% or 8%. Over time, those limits can dramatically reduce your actual returns.
In addition, IULs typically require large annual premium payments, often continuing for a period of 10 years or more. These premiums are essential to keep the policy active and to cover internal costs and insurance charges. If you miss a payment or reduce your contributions, your policy can lapse, wiping out the entire investment. When an IUL lapses, you lose all the premiums you’ve paid unless the policy has been in force long enough to generate significant internal returns—which is rare. Even then, the surrender value after fees and charges may be minimal or zero.
IUL policies are marketed as the perfect blend of life insurance protection and market-based growth. They promise tax-deferred growth, flexible premiums, and access to your cash value through loans or withdrawals.
IULs are complicated, high-fee products. Policyholders often don’t realize that management costs, commissions, and insurance charges steadily drain cash value. Even modest fees can erode growth over time, especially when market performance is flat. Many investors discover too late that their policy hasn’t grown as expected—and their so-called “safe investment” has turned into a financial nightmare.
If you believe your IUL policy was misrepresented or is underperforming, contact Levin Papantonio today for a free consultation.
The risks associated with IULs are multi-fold:
Unrealistic Projections Many IULs are sold using “illustrations” that show double-digit returns. In reality, caps, participation limits, and hidden costs make these numbers impossible to sustain. When actual credited interest falls far below projections, the cash value stagnates or declines. Over time, you may end up paying higher premiums just to keep the policy active.
Rising Premium Costs As the insured person ages, the cost of insurance within the policy increases. If the cash value underperforms, those costs eat into your remaining value. Eventually, you may face a “premium shock,” forcing you to pay thousands more to keep the policy alive—or let it lapse altogether, losing your investment.
Early Cancellation Penalties If you decide to surrender your IUL early, you’ll likely face steep surrender charges. These penalties can wipe out years of savings, leaving you with far less than you contributed. Some policyholders even owe taxes on the limited amount they get back, adding insult to injury.
Misrepresentation and Fraud Agents and financial advisors sometimes market IULs as “guaranteed,” “risk-free,” or “better than the stock market.” Those statements are false and deceptive. In some cases, agents fail to disclose crucial details about caps, participation rates, or policy fees. That kind of omission can amount to fraud or negligent misrepresentation—and you have the right to pursue compensation.
Although indexed universal life insurance is technically an insurance product, it’s often sold as an investment. When advisors use performance charts, rate projections, or “retirement income” pitches to sell these policies, they blur the line between insurance and securities.
Misrepresenting IULs as low-risk, high-return investments can violate state and federal securities laws. Regulators like FINRA have warned consumers about the complexity and high costs of these policies, especially when they’re sold to retirees or conservative investors who can’t afford to take on risk.
The attorneys at Levin Papantonio have decades of experience holding financial professionals accountable for misconduct. We thoroughly review your policy, sales materials, and communications to identify false statements, hidden fees, or unsuitable recommendations.
If we find wrongdoing, we can pursue claims through arbitration, mediation, or litigation. Our goal is to recover your principal, lost growth, and damages. Whether your case involves a local Pensacola agent or a national insurance firm, we have the experience and resources to fight for your rights.
If you have suffered financial losses from an IUL policy, consider taking the following steps:
If you suspect your IUL losses were caused by deceptive sales tactics, contact Levin Papantonio today for a free review of your case.
Since 1955, our law firm has fought for the legal rights of people who suffer loss at the hands of another individual, corporation, or entity. Our clients trust us for multiple reasons.
Indexed universal life insurance policies are complex, high-risk financial products that have left many Florida investors facing devastating losses. If your agent or financial advisor promised you strong returns or “market gains without risk,” you may have been misled.
The investment fraud lawyers at Levin Papantonio are here to help. We understand how these policies work, how they fail, and how to hold responsible parties accountable. Call us today or submit our online form for a free, confidential case review.
Don’t let deceptive financial practices define your future. Let Levin Papantonio fight for you.
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