Some of Transamerica’s universal life insurance policies were payin… In February 2016, a class action lawsuit was filed against Transamerica Life Insurance Co. for raising the cost of insurance on some universal life contracts. But unscrupulous agents are writing all 1 million in IUL. A lawsuit could also help enact change in the industry – and stop insurance companies from engaging in … This is the first I'm aware of blending showing up in an official legal complaint against a life insurer, and it introduces something I have long wondered about the life insurance industry and the marketplace for cash value-focused life insurance sales. Universal life insurance allows customers to buy policies at a relatively low cost, although the exact premium is variable. Its approach to multipliers and other common IUL features can be confusing and seemingly over-complicated. In August of this year, two California residents filed a lawsuit against the Pacific Life Insurance Company alleging: The lawsuit seeks class-action status welcoming the possibility that the attorneys working for the plaintiffs can prove that PacLife's behavior in marketing a certain indexed universal life insurance policy violates the law and hurts many people across the United States. Not blending in an IUL is more devastating than in whole life. If you purchased an Indexed Universal life insurance policy, read on for more information. Transamerica notified its policyholders in 2015 that it was increasing the cost of insurance on universal life insurance policies that it sold during the late 1980s and early 1990s, some by up to 38 percent. While many of us might look at market conditions and quickly draw such a conclusion, that case may be much more difficult to argue in a court of law. Attorneys are investigating potential class action lawsuits on behalf of people who hold annuities or universal life insurance policies through any of the following companies: John Hancock Life Insurance Company Transamerica Life Insurance Company The Prudential Insurance … If You Own a Universal Life Insurance Policy with John Hancock, You May Be Eligible for a Payment from a Class Action Settlement. join a free universal life insurance class action lawsuit investigation If you qualify, an attorney will contact you to discuss the details of your potential case at no charge to you. The Thompson case is the second class action lawsuit challenging increases in the monthly charges imposed by Transamerica on universal life insurance policies. In order to be a class action, the court must approve it as such. That’s criminal! Executive Summary Introduction. Metropolitan Life Insurance Co. agreed Wednesday to pay at least $1.7 billion to settle allegations that 7 million of its current and former policyholders were hit with deceptive sales practices. Interest rates were quite high during this period, so insurers had to guarantee minimum interest rates to sell these policies. A class action settlement has been preliminarily approved in Rodriguez v. Universal Property, No. The Supreme Court of Canada (SCC) has ruled that a proposed $2.5-billion class action against insurance giant Sun Life Assurance Co. over the alleged miss-selling of certain universal life policies by predecessor Metropolitan Life Insurance Co. can go ahead. New cases and investigations, settlement deadlines, and news straight to your inbox. That said, I do have some additional thoughts on what the plaintiffs' legal team might have in their possession that could be bad news for PacLife, and potentially bad news for the insurance industry as a whole. At the core of this lawsuit are PacLife's PDX Indexed Universal Life Insurance policy and its extremely obtuse multiplier bonus. This Settlement does not affect your life insurance policy or death benefit in any way. How, you ask? You can design it as 100k base policy and 900k as term in a whole life. It's a weird concept for universal life insurance (since it's effectively term insurance already). This is an interesting lawsuit for several reasons and while I'm not surprised PacLife is at the center of an indexed universal life insurance lawsuit, I'm suspect of the strength of the plaintiffs' argument.eval(ez_write_tag([[300,250],'theinsuranceproblog_com-medrectangle-3','ezslot_2',131,'0','0'])); Not that I want to discount the plaintiffs' potential suffering, I simply feel that the evidence provided in the complaint falls short of proving wrongdoing. I can only speculate, but I'm guessing that the plaintiffs' legal team's case will hinge heavily on its ability to prove that PacLife cannot return to the capability it assumed at policy issue and that those assumptions were never going to materialize. Plaintiff Hong Li and her family met with agent Tiffany Xu in 2018. The class action was filed in June 2016, in the Western District of Missouri by Michael Vogt and other individuals who owned universal life insurance policy form 94030 issued by State Farm. An Earlier Lawsuit against Lincoln In No. A lawsuit could also help enact change in the industry – and stop insurance companies from engaging in these allegedly deceptive practices. information here is for reference only. After the fifth annual payment, Xu claimed Li would owe no future premiums and even be able to take income from the indexed universal life insurance policy in the amount of $175,000 per year.eval(ez_write_tag([[300,250],'theinsuranceproblog_com-large-leaderboard-2','ezslot_8',135,'0','0'])); Li and her family met a second time with Xu and at that meeting, Xu presented Li with a new life insurance illustration for the same PacLife IUL policy, but with a few alterations from the original proposal that appeared to make little significant change to policy values. If you own Minnesota Life’s Eclipse Indexed Universal Life Insurance, you may not be receiving all of the benefits promised to you upon purchase. The NAIC amended AG49 this year to eliminate multipliers from sales illustrations. The Supreme Court of Canada (SCC) has ruled that a proposed $2.5-billion class action against insurance giant Sun Life Assurance Co. over the alleged miss-selling of certain universal life policies by predecessor Metropolitan Life Insurance Co. can go ahead. The same should be done in IUL. This class action lawsuit is known as Hanks v. If a lawsuit can be filed, indexed universal life insurance policyholders may be able to recover compensation for any harm they suffered in buying these policies. We might speculate on future scenarios using math equations, but that’s all they are — speculations. Any non-guaranteed element in any policy is necessarily a question mark. Blending for indexed universal life insurance policies normally has little long term effect on cash value accumulation and most typically results in a reduced surrender charge. Agents who market life insurance as a savings vehicle, but fail to make use of blending have always ventured into territory that might one day be illegal, and this lawsuit might be the catalyst for that eventual discussion/reality.eval(ez_write_tag([[300,250],'theinsuranceproblog_com-banner-1','ezslot_4',146,'0','0'])); Ultimately, the blending discussion is one of simple suitability. Class Action Filed Against Transamerica Life Insurance Co. Over Massive Premium Increases In May 2016, a class action lawsuit was filed against Transamerica Life Insurance Company on behalf of a group of universal life policyholders who experienced a sudden 38% increase in monthly deductions withdrawn from their accumulation accounts. The lawsuit also seeks a … https://traffic.libsyn.com/secure/insuranceproblogpodcast/An_Ugly_Indexed_Universal_Life_Insurance_Lawsuit.mp3, Violation of Unfair Competition Law Business and Professions Code. If this lawsuit is certified as a class action, retirees who meet certain criteria will be included in this class even if they don’t sign up with us. If a lawsuit can be filed, indexed universal life insurance policyholders may be able to recover compensation for any harm they suffered in buying these policies. Allow me to explain. The attorneys we work with, however, tipped us off to reports within the industry that suggest some companies may be misleading their customers when putting together their financial return illustrations. Li agreed to buy the policy and PacLife officially issued the policy effective mid-2018. When someone purchases a life insurance policy, the insurance company may provide him or her with an “illustration” of the policy’s benefits. On June 5, 2018, Jeffrey Leonard (Leonard) and others filed a class action lawsuit against John Hancock Life Insurance Company of New York (John Hancock) and others relating to huge cost-of-insurance (COI) increases on certain universal life insurance policies. PacLife has always taken a different approach to blending and certainly manufactured products where blending term insurance did enhance policy cash value performance. al. The class action lawsuit (the “Action”) alleges that Prudential requested payments from policy owners in excess of the amounts provided for under certain universal and variable universal life insurance contracts issued by Prudential when those policies entered default or lapsed. I'm not necessarily saying that was the circumstance in this specific case, but the complaint brought it up and it could become a subject for further exploration among insurance regulators. But outside of a very complex legal/ethical issue for selling life insurance, it's amusing to me that indexed universal life insurance is the focal point for a blending conversation and its necessity when marketing and selling life insurance. Let’s say, someone has a $1 million life insurance need. Blending exists as a way to manipulate a policy's design and augment the cash value achievable in the policy. I think you are very correct in the context of an agent motivated to write more permanent life insurance per the budget/death benefit need, but the context of this discussion was blending used to maximize cash building potential of a policy. So PacLife could theoretically explain away its underperformance as variability in the market. Due to an extended low-interest-rate environment, companies are struggling to pay policyholders the guaranteed rate. In October 2018, Transamerica Life Insurance Co. agreed to pay $195 million to settle a class action lawsuit accusing the company of improperly increasing the monthly cost on 70,000 universal life insurance policies. The policy in question is very new in relative terms. Side note on this: the complaint does charge that PacLife materially misrepresented the conservative nature of IUL by both failing to disclose the risk of loss when an index return is zero (net loss due to insurance expense deductions) as well as the impact the multiplier has on the policy. If You Insured Real Property With Universal Property & Casualty Insurance Company Between September 1, 2013 and March 31, 2016, You Can Receive Relief from a Class Action Settlement. It sets expectations. Universal life insurance policies have a guaranteed interest rate. On June 10, 2016, all of the named plaintiffs filed a consolidated class action complaint in that district under the caption Gordon Feller, et al. It is believed that some companies, including AXA Equitable and Pacific Life, may have used misleading financial return illustrations when selling their permanent life insurance policies. Write a 100k IUL and another 900k a 30 year term policy. It's peculiar, however, that Xu is a named defendant given the suit seeks class-action status.eval(ez_write_tag([[300,250],'theinsuranceproblog_com-large-mobile-banner-1','ezslot_7',137,'0','0'])); It will also be interesting to see what, if any, future regulation comes about from this lawsuit. Several consumer groups, policyholders, financial regulators and other insurance companies have even complained about the practice. The same logic applies to whole life, too. The complaint spends several pages building a case to define PacLife's character.eval(ez_write_tag([[300,250],'theinsuranceproblog_com-box-4','ezslot_3',133,'0','0'])); It also mentions another aspect of PacLife's product that touches on a very interesting subject…. But that application usually applies to whole life insurance. Agent Xu recommended Li buy a PacLife PDX policy designed to accept five $500,000 annual payments. The Thompson case is the second class action lawsuit challenging increases in the monthly charges imposed by Transamerica on universal life insurance policies. This is exactly why showing the worst-case scenario on a life insurance illustration is important. Florida). September 10, 2015 Last Updated on April 18, 2019. Attorneys We've had our skepticism about the products for a long time. v. Transamerica Life Insurance Company. What will be most interesting here is if the plaintiffs' attorneys can prove their allegations based on little historical evidence and a majority of hypothetical future performance. Universal Life Class Action. The class action Life Insurance Rip Off lawsuit against Transamerica is seeking reinstatement of any policy surrendered as the result of the rate increases. working with ClassAction.org are no longer investigating this matter. strategy, or any other savings/wealth accumulation plan there are certainly shade of necessity for blending as a crucial component of the plan implementation. While not binding, this illustration serves as an “educated guess” as to what the policy will be worth in any given year. Lawsuits filed against insurers in recent years for their practices around universal life insurance policies highlight the risks these products can pose to unwary financial advisers and clients. Transamerica Life Insurance Co. will pay $195 million to settle a class-action lawsuit alleging the company improperly increased the monthly charges on … The insurance industry will be watching closely in the coming months as a class-action lawsuit over an indexed universal life policy plays out in … In May 2018, Nationwide privately paid a settlement in a similar class action lawsuit over the cost of life insurance. They are both named as defendants in the complaint. We work closely with class action and mass tort attorneys across the country and help with investigations into corporate wrongdoing. Basics of Indexed Universal Life Insurance What exactly is “universal life insurance”? Welcome to the Voya (f/k/a Aetna) COI Life Insurance Class Action Lawsuit Website If you own a universal life insurance policy issued by Aetna (now, Voya) that was subject to a cost of insurance rate increase announced in 2016, this class action may affect your rights. 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