In August of 2017, we notified you of the pending COI increase from Phoenix Life (A Nassau Re Co.) regarding the Phoenix Accumulator Universal Life and Phoenix Estate Legacy products. While litigation and a class action settlement restricted Nassau from COI increases until after 12/31/2020, the original message indicated that “there will be an overall increase to cost of insurance rates, as well as progressive increases to cost of insurance rates beginning when an insured reaches age 71 through age 85”.
With the end of 2020 fast approaching, we have recently begun to receive letters from Nassau announcing cost of insurance increases. Unfortunately, in addition to the previously deferred increase (stage one), Nassau has announced a second stage of increases. All Accumulator and Estate Legacy policies will experience Stage one increases beginning on January 1, 2021. Stage two increase will impact individual policies on the next anniversary following January 1, 2021.
As to why this increase is taking place, the October letter indicates the following:
What’s Changing and Why
The monthly deduction from your policy value includes the cost of insurance charge, which is calculated using a cost of insurance rate, a non-guaranteed element of your policy. As reflected in your policy, we periodically review our cost of insurance rates to determine whether they should be changed based upon expectations of future costs of providing the benefits under your policy. Future anticipated experience factors identified in your policy include, but are not limited to, mortality, persistency, and investment earnings. Our review has determined that certain anticipated experience factors are now less favorable than we anticipated when we established the cost of insurance rate schedule. As such, there will be an increase to cost of insurance rates on your policy. This is an adverse change. This cost of insurance rate change will reduce your policy’s accumulation value and may increase the risk that your policy will lapse based on continued payment of current premiums.
In a separate communication, Nassau responded to our team regarding recent requests for updated inforce illustrations in an effort to gain greater insight to the pending increases. Nassau has indicated that there will be a delay in providing the illustrations as they are currently in the process of upgrading their system. Illustration request will be processed by the end of November. Nassau’s customer service team has indicated that requests should be made on or after December 1st.
We will continue to follow up on this issue with Nassau and we will provide additional updates as they are available.