Often yes, if the insured is older, impaired, and the death benefit is substantial. But with a policy in a closed block, the more urgent question is whether you are monitoring the charges the insurer is still allowed to change. Everlake Life Insurance Company is the renamed Allstate Life Insurance Company, acquired by Blackstone in a transaction that closed on November 1, 2021. It writes no new individual life business. Every indexed contract it administers is an Allstate-era policy in runoff, and we cannot confirm the product names in that block, so identify yours from the product name printed on the contract rather than from any website.
Runoff does not weaken your guarantees. Death benefits, guaranteed maximum charges, guaranteed minimum crediting rates, and every rider transferred intact with the legal entity. What runoff does change is who exercises the discretion the contract already gave the insurer over non-guaranteed elements, and on a universal life chassis that discretion is where the money is.
In This Article
- Guaranteed versus non-guaranteed: know which is which
- The four dials on an indexed policy
- How a policy quietly loses ground for fifteen years
- Why the original illustration cannot be used for anything
- The four requests that give you a real picture
- Deciding: keep, restructure, or sell
- Frequently Asked Questions
Guaranteed versus non-guaranteed: know which is which
Every universal life contract has two layers, and confusing them is the source of most unpleasant surprises.
The guaranteed layer is fixed: the maximum cost of insurance rate the insurer may ever charge per thousand of net amount at risk, the maximum expense and administrative charges, the minimum interest rate on the fixed account, and on an indexed policy the guaranteed minimum cap. These cannot be changed by anyone, ever, regardless of who owns the company.
The current layer is what the insurer is actually charging and crediting today, and it sits somewhere between the guarantee and the illustration. Current cost of insurance rates are typically well below the guaranteed maximums. Current caps are typically above the guaranteed minimum cap. The insurer may move either one, within the contractual bands, subject to the terms of the policy and applicable state law.
That discretion is not theoretical. Across the industry over the past decade, several carriers raised current cost of insurance rates on in-force universal life blocks, and a number of those increases produced litigation over whether the stated basis for the change was permissible. We are not asserting that any such increase has occurred on this block, and we would not without checking. We are saying that an owner of a closed-block universal life policy should be reading the annual statement specifically to detect one, because the first sign is a jump in the monthly deduction that has nothing to do with the insured getting older.
The four dials on an indexed policy
Index crediting on these contracts is governed by four settings, each disclosed on the schedule pages or available on request.
The floor, usually zero percent, means a negative index period credits nothing rather than a loss. It protects the credit, not the account value; charges still come out.
The cap is the maximum credit for a segment. Nine percent means an index gain of twenty-two percent credits nine. The current cap can normally be reset by the insurer down to the guaranteed minimum cap, which is often less than half the cap shown at issue.
The participation rate multiplies the measured index change before the cap applies. Anything under one hundred percent reduces the credit.
The spread or asset charge subtracts a fixed percentage from the index change and shows up mostly on uncapped accounts.
Two facts that surprise people every year. Crediting is measured point to point between your own segment dates, not January to December, so a calendar year that finished up can produce a flat segment. And the index used is a price index, excluding dividends, which historically account for roughly two percentage points a year of the S&P 500’s total return. Neither of those is a defect. Both mean the credited average over a decade routinely lands well below the index’s headline performance. The general mechanics are covered at what indexed universal life is.
How a policy quietly loses ground for fifteen years
Cost of insurance is deducted monthly as the net amount at risk, meaning death benefit minus account value, multiplied by a per-thousand rate that rises with the insured’s attained age. The design assumes the account value grows fast enough that the net amount at risk shrinks, offsetting the climbing rate.
Underperformance breaks that. Suppose a policy was sold on a seven and a half percent illustrated credit and has averaged four and a half. Every year the account value comes in short, the net amount at risk stays larger than planned, the charge is bigger than planned, and next year’s account value starts from a lower base. The gap compounds silently for a decade. Then the insured crosses into their late seventies, the per-thousand rate begins climbing steeply, and the decline turns from gradual to fast. The letter demanding a rescue premium several times the original payment arrives around year twenty, not because something broke that year but because that is when the two effects finally overwhelm the account.
The tell is on the annual statement. Track the cost of insurance line across three consecutive years alongside the ending account value. Rising charges with a flat or falling account value is the lapse spiral, and it is far cheaper to interrupt at year fifteen than at year twenty-two. Our explainer on cost of insurance covers the calculation, and what to do when a policy is lapsing covers the interventions.
| Policy element | Guaranteed layer | Current layer the insurer may change |
|---|---|---|
| Cost of insurance | Maximum rate per thousand stated in the contract | Current rate actually charged, typically well below the maximum |
| Index cap | Guaranteed minimum cap | Current cap, often reset annually |
| Participation rate | Guaranteed minimum, if stated | Current participation rate |
| Fixed account interest | Guaranteed minimum rate | Current declared rate |
| Expense and administrative charges | Stated maximums | Current charges |
| Death benefit and riders | Fixed by contract; cannot be changed | Not applicable |
Why the original illustration cannot be used for anything
Illustration rules for indexed life have been rewritten three times, and a policy sold in the Allstate era was almost certainly illustrated under a regime that no longer exists.
Actuarial Guideline 49 took effect in 2015 and tied the maximum illustrated rate for index accounts to a long lookback using the policy’s own parameters, which pulled illustrated rates down sharply from what had been common. Carriers responded with multipliers, bonuses, and proprietary index accounts that produced high illustrated values without violating the letter of the guideline, so the National Association of Insurance Commissioners adopted AG 49-A for illustrations from December 2020 to close that gap. AG 49-B, effective in May 2023, further constrained proprietary and volatility-controlled index accounts and bonus structures.
The consequence is simple and worth being firm about. If you are holding a projection produced before 2015, it could not lawfully be produced today. It is not evidence of what the policy will do, it cannot be compared to a current illustration, and it should play no part in any decision to keep, restructure, surrender, or sell. Anyone using it to argue a position, in either direction, is using the wrong document.
The four requests that give you a real picture
Ask Everlake’s policy service center in writing for all four of these, and follow up if only one arrives.
One: an in-force illustration at current charges and current caps, assuming the premium you are actually paying. Two: an in-force illustration at guaranteed maximum charges and guaranteed minimum crediting. Three: the premium required to carry the policy to age 100 under current assumptions. Four: the current and guaranteed minimum cap and participation rate for each index account, plus every change to current cost of insurance rates and current caps since the policy was issued.
That fourth request is the one specific to a closed block, and it is the one service centers are least accustomed to fielding. Ask for it anyway and ask in writing.
Then read the guaranteed column and find the year the account value reaches zero. That is not a prediction; it is the outer boundary of the insurer’s contractual discretion, and it tells you how much risk you are carrying. Lapse at insured age 78 with a 71-year-old insured is an urgent situation. Carrying past 95 on guarantees means you own something solid. Our guide to reading an in-force illustration goes column by column. If the contract is declared-rate rather than indexed, the same requests apply but the diagnosis differs; see our Everlake universal life page.
Deciding: keep, restructure, or sell
Keep when the guaranteed column carries past the insured’s realistic life expectancy and the coverage still serves a purpose. Re-review every three years, and read every annual statement for changes in the deduction.
Restructure when the policy is failing but the insured is not. Reducing the death benefit is the most effective single lever, because charges are assessed on the net amount at risk and a smaller face amount cuts the drain immediately. Moving funds to the fixed account, increasing premium while account value still exists, and repaying an outstanding loan are the others. Loans in particular cause more surprise lapses than any other factor, because the interest compounds against the very account value that has to carry the charges.
Sell when the insured is roughly 70 or older, the death benefit is well above $100,000, health has declined materially since underwriting, and the illustration shows premiums the owner will not pay. Buyers price the required premium stream against a life expectancy estimate, which means a policy with a heavy carrying cost fetches less than an identical face amount with a light one. Market value on an impaired insured frequently exceeds cash surrender value by a wide margin, which is why surrendering before checking is an irreversible mistake. Our page on what a policy is worth explains the variables buyers weigh.
One tax note: a contract that failed the seven-pay test under Internal Revenue Code section 7702A is a modified endowment contract, which changes the treatment of lifetime distributions and loans and the basis arithmetic in a sale. That is a question for your own accountant, answered before an offer is accepted rather than after.
Pine Lake Life Solutions provides education and a free policy review. We do not purchase policies and are not licensed in every state. Whether a settlement is permitted where you live is set by your own state’s insurance law, not Illinois’s, even though Illinois supervises Everlake. Nothing here is legal, tax, or investment advice. Send the policy cover page and the in-force illustration once you have it.
Frequently Asked Questions
My policy says Allstate. Is Everlake the right company to call?
If the contract names Allstate Life Insurance Company without a state qualifier, yes. That entity was sold to Blackstone in a transaction closing November 1, 2021 and renamed Everlake Life Insurance Company. Allstate Life Insurance Company of New York is different; it went to Wilton Re and was renamed Wilton Reassurance Life Company of New York.
Can a company that bought my policy block raise my charges?
It can change non-guaranteed elements within the bands the contract already permits, such as current cost of insurance rates and current caps, but never beyond the guaranteed maximums and minimums stated in your policy. Those guarantees transferred with the legal entity. Read each annual statement for a jump in the monthly deduction that is not explained by the insured’s age.
What should I ask for that most people forget?
The history of changes to current cost of insurance rates and current index caps since your policy was issued. Service centers routinely provide illustrations but are rarely asked for change histories. That record tells you how the block has been managed and whether a recent increase is driving the account value down. Request it in writing and follow up if it does not arrive.
Why did my policy lose value in a year the market went up?
Two effects combine. Index credits are measured point to point between your own segment dates, exclude dividends, and are limited by the cap, so a strong calendar year can produce a small credit. Meanwhile monthly cost of insurance and expense charges are deducted regardless. If the charges exceed the credit, the account value falls even in a positive year.
Is surrendering the policy ever better than selling it?
Only when the insured is healthy enough that no buyer would offer more than the cash surrender value, or when the policy is small enough that no buyer will review it. On an impaired insured with a substantial death benefit, market value frequently exceeds surrender value by a wide margin. Get an offer before surrendering, because surrender cannot be undone.
Does being a modified endowment contract block a settlement?
No, but it changes the tax treatment. A contract that failed the seven-pay test under Internal Revenue Code section 7702A is handled differently for lifetime distributions and loans, and the basis calculation in a sale follows different rules. Because the outcome depends on your funding history and personal circumstances, take it to your own accountant before accepting an offer.
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Related Reading
- Can I Sell An Indexed Universal Life Policy
- What Is Indexed Universal Life
- What Is Cost Of Insurance
- What Is An In Force Illustration
- What Is A Modified Endowment Contract
- Sell My Everlake Life Universal Life Policy
- Policy Lapsing What To Do
- How Much Is My Policy Worth
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.