Universal Life Insurance, a 1980s Sensation, Has Backfired

Universal life insurance, popular in the 1980s and '90s, worked as advertised for years, when interest rates were in the high single digits and above, reports the Wall Street Journal . Now, rates are completing a decade at historically low levels, crimping the savings accounts that together with insurance make up the products. Meanwhile, the aging of the earliest customers into their 70s and beyond has driven the yearly cost of insuring their lives much higher. The result is a flood of unexpectedly steep life-insurance bills that is fraying a vital safety net. Some find they owe thousands of dollars a year to keep modest policies in effect. People with million-dollar policies can owe tens of thousands annually. Some retirees are dropping policies on which they paid premiums for decades.