VULs and Surrender Charges (Ameriprise)

[mikes2012]

Hi All,

just found this forum, looks awesome!

Seems I too fell for the "here the greatest investment" strategy from an AMP FA, and just got into several VULs a couple months back...

I'm now understanding the complexity of them, and have read through James H. Hunt's (consumerfed.org) reviews of them, etc...along with all of the pro's/con's of Ameriprise.

All in All, I'm very nervous about continuing with these VULs, I'm only 37, and just started several of them two months ago, so I'm only two premium payments in.....

These things are so complex, and so riddled with charges, stipluations, etc....let along the variance in the Net Death Benefits depending on your age....

What I really want to be 100% sure of, If I just decide to bail/surrender/lapse or whatever these contracts (ie just stop any further bank withdrawals), I will be entirely negative in the cash value versus surrender charge..

ie each VUL only has let's say average $300 or so in them (some more), and say the average SC for each is over $10k...

Is there any way shape or form AMP can come after me for the difference, or will they just take my money from each VUL to drain it to $0, and that's it??

I certainly don't remember signing any contract stating this agreement, but I want to make sure 100% this is the case??

Thanks so much in advance for any help!!

[2B]

My condolences on your experience with Ameriprise. I believe in a recent thread I commented to someone that called them "pimps" that calling them pimps was an insult to pimps everywhere.

Unfortunately, I can't comment on whether they can come after you if you cancel these policies. You'll have to carefully read the VUL contract to see what you signed. You may or may not be liable but if you are liable you can be very sure these blood suckers will come after you. It's not beyond them to act like you are liable even if you aren't.

If you aren't liable for any net balance, it would probably be in your best finacial interest to let these lapse even if you lose your prior contributions.

One thing you might try is to call up their "service center" and say you're having some financial problems right now. See what they tell you will happen if you stop making payments for "awhile." I'd avoid getting with the person that sold you the VULs if you can because even if it was a legitimate option it would be their sales commission that would be at risk.

[FIREd]

My condolences.

I too was sold a VUL by Ameriprise more than a decade ago. I only found out how much of a mistake I made some time later. In my case though, I decided to stick with it until there was no more surrender charges (10 long years) and then cashed in my chips. The damage to my finances was quite minimal in the end, despite the high fees.

I put about $38,800 in and got $34.400 out. Accounting for the bad stock market between 2000 and 2010, I think I made out OK. And no taxes to pay at surrender since there was a loss.

YMMV.

Here is an article offering a good overview of your options:
$10,000 Lesson On Variable Universal Life (VUL)

[mikes2012]

Thanks everyone,

so far I see no actual explanation of very early cancellation, regarding the Surrender Charge being greater than the account value. I only see mention about taking the SC.

I would think you would have to be signing some fairly hefty legal documentation if an investment company can come after you for money you truly don't owe them?

This may be a question that needs to be put past someone with a legal back in the finances area....

[2B]

Post your same question on Bogleheads. They have some pretty good experts on annuities there and some have some legal/regulatory backgrounds. They might be able to help but you will ultimately have to go back to whatever you signed. Be aware that one of their moderators (may not still be a moderator) used to sell annuities. He can be rather "sensitive" to the language I typically use to when discussing annuities and those that sell them.

[FinanceDude]

Quote:

Originally Posted by 2B Post your same question on Bogleheads. They have some pretty good experts on annuities there and some have some legal/regulatory backgrounds. They might be able to help but you will ultimately have to go back to whatever you signed. Be aware that one of their moderators (may not still be a moderator) used to sell annuities. He can be rather "sensitive" to the language I typically use to when discussing annuities and those that sell them.

Wow they have an annuity hack as a mod? How has he not been tarred and feathered yet?

[FinanceDude]

Quote:

Originally Posted by mikes2012 Hi All, just found this forum, looks awesome! Seems I too fell for the "here the greatest investment" strategy from an AMP FA, and just got into several VULs a couple months back... I'm now understanding the complexity of them, and have read through James H. Hunt's (consumerfed.org) reviews of them, etc...along with all of the pro's/con's of Ameriprise. All in All, I'm very nervous about continuing with these VULs, I'm only 37, and just started several of them two months ago, so I'm only two premium payments in..... These things are so complex, and so riddled with charges, stipluations, etc....let along the variance in the Net Death Benefits depending on your age.... What I really want to be 100% sure of, If I just decide to bail/surrender/lapse or whatever these contracts (ie just stop any further bank withdrawals), I will be entirely negative in the cash value versus surrender charge.. ie each VUL only has let's say average $300 or so in them (some more), and say the average SC for each is over $10k... Is there any way shape or form AMP can come after me for the difference, or will they just take my money from each VUL to drain it to $0, and that's it?? I certainly don't remember signing any contract stating this agreement, but I want to make sure 100% this is the case?? Thanks so much in advance for any help!!

I would most likely forfeit the premiums you have paid into each of them. They could not collect more than what you have paid in, generally. However, the contract should spell out what happens under the "cancellation provisions". You answer lies in there.

Is the VUL from Riversource?

[pb4uski]

The surrender charge is typically a percentage of the account value, so you will likely get something back. Call Ameriprise policyholder services and ask them for the surrender value of all your accounts and see what they say.

[Lisa99]

Congrats on realizing this so early. We were also with Ameriprise and had a VUL (yes, with RiverSource).

We had 'invested' about $50k, the market tanked so the value was down to $42k, and then on top of that we had to pay a surrender fee of $5800 IIRC.

I consider the lost money 'investment education tuition'. We moved all of our investments to Vanguard 18 months ago and have never regretted it.

[Independent]

I've looked at multiple life insurance contracts, I've never seen one that allows the company to get more than the premium you've already paid.

If these are new contracts, look for the "free look" provision. I believe all states require that insurance companies refund 100% of the premium if the buyer changes his mind (for any reason) within 10-30 days of receiving the policy. In most cases, the clock starts when you physically receive the policy, not when you apply or the company issues it.

[nun]

My rule is never to mix insurance and investment. If people stuck to that there would be a lot less pain in the world.

[mickeyd]

Quote:

I certainly don't remember signing any contract stating this agreement,

If you feel that you were defrauded by the agent, write a letter to the LI company and the state department of insurance. Ask for refund of all premiums paid.

[mikes2012]

Thanks so much everyone for all of your feedback!

To answer "FinanceDude's" response from above, these ARE all indeed
RiverSource VULs...


The "fees" AMP charges for these VULs are quite pathetic....so much out of your monthly payment for the VUL just "disappears" into the overhead....

[FinanceDude]

Quote:

Originally Posted by mikes2012 Thanks so much everyone for all of your feedback! To answer "FinanceDude's" response from above, these ARE all indeed RiverSource VULs... The "fees" AMP charges for these VULs are quite pathetic....so much out of your monthly payment for the VUL just "disappears" into the overhead....

It is weighted to repay the agent's commission in the first 5 years or so. Not that you are not soaked in the next 20 years either, but you are really soaked in the first 5 years..........

Amerprise reps are pretty much told to sell Riversource or else.......even if others have a better product and lower fees..........

[FinanceDude]

Quote:

Originally Posted by mickeyd If you feel that you were defrauded by the agent, write a letter to the LI company and the state department of insurance. Ask for refund of all premiums paid.

A letter to the LI company will do nothing. If you lodge a formal complaint with the department of insurance in your state, the ball WILL start rolling.....

[pb4uski]

Quote:

Originally Posted by FinanceDude A letter to the LI company will do nothing. If you lodge a formal complaint with the department of insurance in your state, the ball WILL start rolling.....

I once worked for an LI company and any complaints that were addressed to the CEO or President were flagged for special handling and response.

The problem in this case is that it is unlikely that it will be a crystal clear case of misselling so I agree that it would be better to start out with the insurance department, but the insurance department may ask if mikes has tried to resolve the issue with directly with the company and may even insist that mikes attempts to do so before they will intervene.