This is exactly why showing the worst-case scenario on a life insurance illustration is important. A lawsuit could also help enact change in the industry – and stop insurance companies from engaging in … But unscrupulous agents are writing all 1 million in IUL. It is believed that some insurers are using current interest rates and costs to project policy benefits without taking into account how the performance of stock indexes and costs charged to the policyholder can fluctuate over time. Before commenting, please review our comment policy. You may be eligible to join a lawsuit or participate in a life insurance class action lawsuit investigation. They get a fat commission check and leave the policy underfunded, waiting to blow up in a few years. 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. 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. Basics of Indexed Universal Life Insurance What exactly is “universal life insurance”? Additionally, the plaintiffs allege that PacLife knowingly brought the product to market under conditions it knew it had no chance of sustaining and used extremely optimistic assumptions to illustrate values to lure in unsuspecting new policy owners. Is it suitable to sell someone a life insurance contract that lacks the features known to enhance cash value when you the agent know cash value accumulation is the primary goal? The policy in question is very new in relative terms. 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. The same should be done in IUL. Allow me to explain. 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on behalf of a group of universal life policyholders who experienced a sudden 38% increase in monthly deductions withdrawn from their accumulation accounts.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 in-force illustrations provided by PacLife depicted much lower values than the ones Li saw in the original illustration used by agent Xu to sell her the PacLife PDX policy.eval(ez_write_tag([[300,250],'theinsuranceproblog_com-leader-1','ezslot_6',136,'0','0'])); The dramatic change in policy values was the motivation for filing the lawsuit. An IUL class action lawsuit investigation is underway to probe into allegations that people who purchased Indexed Universal Life (IUL) insurance policies were misled into expecting unrealistic rates of return that comes after insurance companies presented used fabricated and false illustrations in marketing literature and sales material. The Thompson case is the second class action lawsuit challenging increases in the monthly charges imposed by Transamerica on universal life insurance policies. 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. 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 … lawsuits can be viewed here. If you purchased an Indexed Universal life insurance policy, read on for more information. information here is for reference only. Some of Transamerica’s universal life insurance policies were payin… Its approach to multipliers and other common IUL features can be confusing and seemingly over-complicated. 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…. A class action settlement has been preliminarily approved in Rodriguez v. Universal Property, No. Let’s say, someone has a $1 million life insurance need. Universal Life Class Action. Simple! A lawsuit could also help enact change in the industry – and stop insurance companies from engaging in these allegedly deceptive practices. While not binding, this illustration serves as an “educated guess” as to what the policy will be worth in any given year. 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. We might speculate on future scenarios using math equations, but that’s all they are — speculations. That’s criminal! We're certainly no strangers to policy blending, and we're big advocates of its use. Due to an extended low-interest-rate environment, companies are struggling to pay policyholders the guaranteed rate. 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. v. Transamerica Life Insurance Company. 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. Please Note: If you want to participate in this investigation, it is imperative that you reply to the law firm if they call or email you. They are both named as defendants in the complaint. Any non-guaranteed element in any policy is necessarily a question mark. There is no denying the notion that PacLife has one of the most complex indexed universal life insurance products on the market. The NAIC amended AG49 this year to eliminate multipliers from sales illustrations. So PacLife could theoretically explain away its underperformance as variability in the market. 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. https://traffic.libsyn.com/secure/insuranceproblogpodcast/An_Ugly_Indexed_Universal_Life_Insurance_Lawsuit.mp3, Violation of Unfair Competition Law Business and Professions Code. Transamerica Life Insurance Co. will pay $195 million to settle a class-action lawsuit alleging the company improperly increased the monthly charges on … When someone purchases a life insurance policy, the insurance company may provide him or her with an “illustration” of the policy’s benefits. 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. The complaint does allege specific wrong-doing on the behalf of agent Xu. Attorneys So regulatory action already removed one of the key pillars of the plaintiffs' case against PacLife. Li agreed to buy the policy and PacLife officially issued the policy effective mid-2018. 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. 16-cv-60442 (S.D. 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 … The objective of this executive summary is to provide a simple, short but comprehensive overview of the sales problems and abuses associated with the Universal Life policies. ClassAction.org is a group of online professionals (designers, programmers and writers) with years of experience in the legal industry. Policyholders who have been affected by universal life insurance policy premium increases have a few options moving forward. Even if you don’t believe the guaranteed rates are “realistic”, the fact is they are a theoretically possible scenario, else they wouldn’t be there. The plaintiffs allege that PacLife designed and marketed this product specifically to skirt the spirit of Actuarial Guideline 49 (AG49). For those seeking out whole life insurance as a retirement option, Infinite Banking® et. 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. 157 (posted April 20, 2016), I wrote about an earlier COI class action lawsuit against Lincoln. We've had our skepticism about the products for a long time. A list of open investigations and 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. 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. An Earlier Lawsuit against Lincoln In No. Agent Xu recommended Li buy a PacLife PDX policy designed to accept five $500,000 annual payments. After making two $500,000 premium payments, Li became suspect of the policy when statements she received from PacLife reported value far different from the figures she anticipated. Universal life insurance policyholders are not covered by the recent Missouri class action lawsuit, but could also be unknowingly affected by these overcharges as they’re not typically detectable due to the complex ways these charges are hidden. 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. Acting on a tip she received from a family member, who holds an insurance license, Li requested several in force illustrations from PacLife depicting varying scenarios premium payment scenarios to the policy moving forward; one of those scenarios included staying the course. 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. Universal life insurance policies have a guaranteed interest rate. 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. Blending allows us to take many of the cash-building advantaged attributes universal life insurance has and give them to whole life insurance. This isn’t just an IUL issue. This class action lawsuit is known as Hanks v. 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. The plaintiff, who owned an "Ensemble II" Lincoln variable universal life insurance policy, filed his complaint in an Indiana state court in … 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. That's a big question many have asked for years. September 10, 2015 Last Updated on April 18, 2019. Others may be representing a higher growth rate of the stock index than what most financial experts would believe to be reasonable. It will also be interesting to see what happens with the agent Tiffant Xu and her insurance agency. In May 2018, Nationwide privately paid a settlement in a similar class action lawsuit over the cost of life insurance. In order to be a class action, the court must approve it as such. What is this lawsuit about? Universal life insurance allows customers to buy policies at a relatively low cost, although the exact premium is variable. UPDATE: Transamerica Pays $195 Million Settlement in Life Insurance Class Action Transamerica Life Insurance Co. will pay $195 million to settle a class action lawsuit accusing the company of increasing the monthly charges on 70,000 universal life insurance policies. It's a weird concept for universal life insurance (since it's effectively term insurance already). The lawsuit also seeks a … 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. Not blending in an IUL is more devastating than in whole life. Some policyholders have filed insurance class action lawsuits against their insurance companies, alleging that the insurers are hiking universal life insurance cost in order to give larger payouts to shareholders. 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. 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. strategy, or any other savings/wealth accumulation plan there are certainly shade of necessity for blending as a crucial component of the plan implementation. According to an Investment News article, the plaintiffs allege the action “constitutes a breach of obligations under the policies and has led to damages against contract holders.” working with ClassAction.org are no longer investigating this matter. New cases and investigations, settlement deadlines, and news straight to your inbox. The Blending exists as a way to manipulate a policy's design and augment the cash value achievable in the policy. 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. On future scenarios using math equations, but that ’ s say, someone a. Illustration serves as an “educated guess” as to what the policy will be worth any. An extended low-interest-rate environment, companies are struggling to pay policyholders the guaranteed rate buy a PacLife PDX policy to! 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