About 20 years ago, many people were encouraged to buy “universal life insurance,” adding extra cash to the policy, which would grow tax-free at a projected interest rate. Another variety was “universal variable life,” which allowed investment choices such as mutual funds for the extra cash within the policy. The growth of your cash value would vary depending on your choice of investments. When these policies were purchased years ago, many of these projected premium “illustrations” were based on the assumption that interest rates on universal life policies would continue to be 8 percent to 10 percent — and that enough extra cash value would build up to help pay premiums in future years. But illustrations are not promises. Interest rates have dropped to the minimum guaranteed rate and have stayed low for years. So now there is not enough cash inside many policies to pay the annual premiums. If you want to keep your policy in force, now that you’re older and closer to needing it, you might be asked to pay huge annual premiums to keep the policy going. (And you might not be healthy enough to qualify for a new, less expensive policy.) —Insurance charges skyrocket. The insurance companies can’t change the face amount of their policies.

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