According to the companys announcement, these new policies build on the structure of the first PDX policies with an added Enhanced Performance Factor Rider that allows policyholders more options for their policies. Subscribe for original insights, commentary and analysis of the issues facing the financial advice community, from the InvestmentNews team. current list of Class Actions and Class Action Investigations, here. Theres good and bad about many things are on the internet, as well as people misrepresenting things. But indexed universal life would not be increasing in popularity if millions of long-term planners and families were not finding the cost of owning the product to be a good value, says ACLI spokesperson Jack Dolan. Our number one goal was to get as much money as we could back to these policyholders as quickly as possible, Mr. Rosenfield said. No. Insurers often use low-cost loans in order to sell IULs, and have lenders lined up to offer loans to potential IUL buyers, he says. The three plaintiffs purchased Minnesota Life IUL products from Shurwest producers. Nationwide privately settled a case in May relative to variable universal life insurance costs, and John Hancock Life Insurance Co. settled a lawsuit in July for $91.25 million. The structured payment company that was responsible for investing the money of clients and generating the payment streams needed to fund all the IUL policies is NO LONGER PAYING! No. The primary issues are as follows: There is no telling that this complaint will be successful, but it may have a dramatic affect (win or lose) on our industry. Rather than fueling it into a vendetta, I fuel that into protecting consumers, because I believe then and I believe today that these individuals are not acting in the consumers best interest.. "The plaintiffs claim that the insurer created a product with a feature in it that is called a 'performance factor' that is designed to be within the letter, perhaps, of AG 49 while also aggressively illustrating a profit," Kimmerling explained. This makes it appear as if the policy will be costless in certain years, or you wont need to pay as much into it as other types of life insurance. In the IUL sales structure Im covering in this newsletter, the payment streams were coming from Federal employees (from their pension payments). Axa Equitable Life Insurance and Lincoln National Corp. are also facing litigation for raising the costs of their universal life policies. If you have purchased an IUL policy, you may be entitled to compensation by joining this Indexed Universal Life Insurance False Marketing lawsuit investigation. ", Although a class-action filing, the Li/Lui lawsuit names the agent along with the insurer. The IUL Class Action Lawsuit is Hong Li v. Pacific Life Insurance Company, et al., Case No. Go on and tell us about your poor consumer experience. They apparently dont have the money! New IUL products featuring "multipliers" or "bonuses" prompted the IUL Illustration Subgroup to consider . Im guessing that the lawsuits I got my hands on are only three of many. Stocks dip after inflation data, Fed economists' warning, Security Benefit enhances its Foundations Annuity, RetireOne partners with Pension & Wealth Management Advisors to help clients protect retirement income, Texas lawsuit: Lincoln Financial annuity fell far short of illustration promises. Similarly, please check out ourcurrent list of Class Actions and Class Action Investigations, here. Our advisors are taught how the product works so our clients are fully aware how the product functions. When a life insurance claim goes on for too long, without the family being paid, a lawsuit is the only way to make the life insurance company comply with the law and pay the policy. So the sales were mainly to older clients and some who used money from IRAs (this alone is a problem since older people should not be buying life insurance as a retirement tool and you should NEVER take money out of an IRA or qualified plan to fund an IUL for tax-free borrowing (its a mathematical loser)). Indexed universal life policies are unique forms of life insurance which tie interest rates to a market index such as the S&P 500 or Nasdaq 100. Get breaking news, exclusive stories, and money- making insights straight into your inbox. Lets face itthere are a lot of different programs in the marketplace you can use to illustrate the value of IUL (Indexed Universal Life) insurance. But one lawsuit is not like the others. Are you sure you want to rest your choices? We have to rely on the employees to received their paychecks and then turn around and give it to the trust company. These cases were consolidated and put together in the class action lawsuit. People will buy IUL policies based on a fictional future and hit a hard reality when they have to pay substantially more than they expected in order to keep the policies in-force. Use of editorial content without permission is strictly prohibited|All rights reserved, Universal life insurance lawsuits underscore product risk, Transamerica sued for cost increases on universal life insurance contracts, Carson Groups Varghese maintains upbeat outlook on the economy, CalSavers on hunt for new leader as executive director Selenski departs, Slott urges moving money from traditional IRAs and their tax stench to Roth IRAs, Beacon Pointe buys $1 billion RIA to expand operations in New York City, Advisor Group RIAs add alts, and fresh conflict, to platform. All Rights Reserved. Attorneys If a market index performs poorly, interest rates will sharply fall meaning that a consumer may miss out on significant interest gains. Its not good business to work with an insurance company you cant trust! Send us your story with as much detail as possible to fill out our investigation. I was asked by an IMO owner to review the structure and give my opinion. This meant some consumers entering retirement were forced to choose between losing the policy, which promised monthly interest payments of at least 5.5% annually, or paying the higher premiums, Mr. Rosenfield said. Besides the questionable history of the person behind the structure, the structure itself has such glaring flaws to it that youd have to be an idiot to recommend this to clients. This website is not intended for viewing or usage by European Union citizens. Consumers consider owning life insurance a vital part of financial wellness including aging Americans who want to ensure that their loved ones are provided for after they pass away. (More: Universal life insurance lawsuits underscore product risk), Transamerica said in a statement that the policies permit the company to adjust monthly deduction rates up to a contractually guaranteed maximum, and that the increase was necessitated by low long-term interest rates, changes in expectations as to future mortality experience, and other factors, and in accordance with the policies contractual terms.. What has happened is exactly what I predicted would happen when I saw the structure nearly two years ago. Privacy Policy | v. Pacific Life Insurance Company, et al., Case No. If you purchased an Indexed Universal life insurance policy, read on for more information. Award-winning investigative journalist Ed Leefeldts stories have led to changes in credit card practices, voter registration and disability payments to prisoners. The class action goes as far as to allege that PacLife structured the PDX Policies in a way that incentivizes its sales agents to heap even more risk on the unwitting policyowners, offering their own sales agents commissions if they successfully push through a PDX IUL policy sale. Although IUL policies have the potential to have interest rates which vastly exceed those seen with other life insurance policies, there are also risks associated with these accounts. One insurer charges upwards of 8% of the premiumsand cash value in the policy in the first year alone, according to Steven Roth, president of Wealth Management International, an insurance analyst and litigation consultant. Pacific Life is the biggest and holds about 19% of the market. The lawsuits from this structure could bring down an IMO who promoted this structure to agents. 2023 InvestmentNews LLC. If an insurance company uses false marketing to overstate the benefits of IUL policies, consumers could make serious financial decisions without knowing the true risks of these policies. With the structure payments, you are actually increasing the premium that goes into the IUL! Fill out the form below to get in touch with a trusted attorney who can help you! I suspect it's because we all want to believe there's a "magic pill" answer to the volatility of the stock market. If internal costs cause the policy account value to drop too much, your policy is at risk of lapsing and youll have to pay more in premiums just to keep the policy intact. An expanded class-action lawsuit alleges that Security Benefit Life Insurance Co. defrauded consumers by implementing a "fraudulent scheme" involving a proprietary index used in two fixed. A class action lawsuit filed in the California Superior Court alleges that Pacific Life Insurance Company has created a false marketing scheme to push and sell their PDX IUL policies by using the complicated nature of IUL policies against unknowing consumers. Can You File an IUL Lawsuit for False Marketing? Information provided on Forbes Advisor is for educational purposes only. "Why that matters is that the allegations in the complaint are that the agent and the company didn't really explain what that performance factor was and how it worked. Zolna first filed the lawsuit in 2017. The goal of this section is to provide consumers with a comprehensive resource on class action and mass tort lawsuits. After being misled by some companies about the performance of IUL policies, some consumers have filed IUL lawsuits for false marketing. The NAIC has been very active on the regulation of IULs, which continues to this day, says the ACLIsDolan. Were optimistic that the court is going to grant Shurwests motion to dismiss the complaint.. You must contact the Scammers pushing FIP allegedly used brokers and insurance producers to find investors -- often retired veterans, teachers and firefighters. Wed be happy to help you take a step in the right direction, fight this issue, and better enable you to join in on any potential consumer class action. Even with these withdrawals, Xu said that the policy would remain in force for the remainder of Lis lifetime. Its truly amazing that Minnesota Life and one of the bigger IMOs in the industry fell for this plan. By now you may have heard about a class action lawsuit filed in Orange County last week against Pacific Life. I was told not to worry about understanding it, and that the illustrations shows that it works. On her February 2020 quarterly statement, Li reportedly found that her policy sustained over $54,000 in losses between Oct. 26, 2019 and Jan. 25, 2020. 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 a California courtroom. For more than a decade, indexed universal life insurance (IUL) has been one of the life insurance industry's most profitable businesses. 2023 considertheconsumer.com, IUL Class Action Lawsuit Investigation Claims False Marketing, Click to share on Twitter (Opens in new window), Click to share on Facebook (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Reddit (Opens in new window), Click to share on Pinterest (Opens in new window), Click to share on WhatsApp (Opens in new window). Wilcox blames the low level of adoption on some tools on the fact that firms aren't spending enough time training advisors on the technology after they invest in it. Take a photo of a faulty item and add a brief description. Click here to download an example output of an IUL vs. funding a 401(k) plan example for a 50 year old. It's a legal proceeding in which one or several plaintiffs (the complainants) bring a suit on behalf of their "class.". Click here to view a video showing how easy our software is to use. Life insurance companies that sell traditional policies like whole life insurance invest primarily in corporate bonds and government-backed mortgages where the money will be safe and generate a small, but reliable, annual return each year. drug injury lawsuits and product liability lawsuits. Class actions can be brought in federal court or state court. You show the client how to take the money that they need to keep safe for their future IUL premiums and show them how to get a 7-10% investment return on it (vs. earning nothing or very little if kept in a savings account). ARE INDEXED UNIVERSAL LIFE INSURANCE (IUL) POLICIES GOOD? The lawsuit was filed Aug. 6 in Orange County Superior Courts by plaintiffs Hong Li and Tailong Liu. However, the plaintiffs argued Transamerica had breached its contract and acted in bad faith by raising charges as a pretext to avoid or offset its obligation to pay the guaranteed monthly interest. THOUGHTS AND CONSIDERATIONS BEFORE YOU BUY - Mtis Money Matters. I asked simple questions like is there a bank or trust company (reputable one) that is managing the payments in this structure? Regulators are not doing anything to stop the unfair practices, he warns. Indexed Universal Life Insurance Lawsuits | ClassAction.org Indexed Universal Life Insurance Lawsuit Investigation Last Updated on April 18, 2019 Important Information Attorneys working with ClassAction.org are no longer investigating this matter. Even if a market index performs extremely well, not all of these gains will be translated into a policys interest rate. The case has broad implications for the industry and the controversial Actuarial Guideline 49 put forth by the National Association of Insurance Commissioners, said Kevin Kimmerling, senior vice president and assistant general counsel for Global Atlantic Financial Group. Click here to download the FAQs about the software. For information on deleting the cookies, please consult your browsers help function. Unknown to many investors, the future pension payment terms required them to pay what often equated to an annual interest rate exceeding 100% over a five-year term. Unfortunately, every software program weve seen that compares IUL to mutual funds or to tax-deferred plans like 401(k) plans is either inaccurate or woefully inaccurate. Published April 17, 2023 9:54AM. About Us So, assuming clients with money pay premiums into an IUL, the question is what to do with that money as you wait to fund the IUL over a 5-, 7-, 10-year period. They are led to believe the policy will earn 6% or more each year, and since they can borrow the money to pay the premiums at 3% or less, they think they will make at least 3%, far better than a bank can offerand on borrowed money. I was sold a Pacific Life PDX IUL 2 product on 06/28/2020. FOX 32 Chicago. Your email address will not be published. LSW Class Action Lawsuit - Advisor Share LSW Sued in IUL Pyramid Sales Scheme (Class Action Certified) This case has been out there for a few years and for whatever reason, the normal trade publications haven't really written about it. 269-216-9978 When the interest rates are bound by the movement of the stock or bond market, this becomes an Indexed Universal Life, or IUL insurance policy. He said the class action status enables 90,000 motorists to possibly get their money back; a total of $20 million. A class action lawsuit, also known as a class action or representative suit, is a type of lawsuit where one of the parties is a group of people represented collectively by a member or members of that group. A federal judge in Richmond, Virginia, approved a $25 million universal life insurance class action at a fairness hearing Monday. This is rather unique to Transamerica, and helps your heirs plan your funeral. 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. Insurance sales representatives at Pacific Life Insurance Company (PacLife) may be deceiving consumers by presenting marketing misrepresentations about their Pacific Discovery Xelerator indexed universal life (PDX IUL) policies. Dick Schiethart, senior spokesperson for Transamerica parent Aegon, said the company is satisfied with this settlement because it will make an end to the uncertainty for our customers.. IUL is one of the industry's most popular life insurance products. Shurwest reported current gross income of about $125,000-$150,000 per month, and future operating expenses to be $35,000-$40,000 per month. In addition, most software is clunky and hard to use. Entire contents copyright 2022 by InsuranceNewsNet.com Inc. All rights reserved. If you received a data breach notification or feel your Read More, Radius Health, Inc. Merger Terms May Have Harmed Stockholders An investigation into the fairness of the sale of Radius Health, Inc. (Radius or the Company) (NASDAQ: RDUS) to Gurnet Point Capital (Gurnet Point) and Patient Square Capital (Patient Square) has commenced. No. A class action lawsuit filed in the California Superior Court alleges that Pacific Life Insurance Company has created a false marketing scheme to push and sell their PDX IUL policies by using the complicated nature of IUL policies against unknowing consumers. What can be learned from this Class Action Lawsuit? Although the new lawsuit claims millions of dollars lost by the class, the three defendants lost premiums totaling less than $50,000, Kvesic said. A committee of the National Association of Insurance Commissioners (NAIC), which sets the standards for the state regulators who control insurance, has struggled for years to produce guidelines that states can adopt to ensure that the illustrations used by insurance agents to sell IULs reflect the risk buyers take. Secured Financial is in Scottsdale, Ariz., not far from the former Shurwest offices. I hear through the grapevine that one of the largest IMOs in the industry when it comes to selling IULs (a different one than Shurwest) is in deep on this as well. The company investigated the breach and determined that its systems had been breached several times between December 29, 2020 and Read More. 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. View Guidelines. But the policy owner is likely to have torequalify as a borrower every three to five years, during which time the interest rate may go up while the cash value inside the policy could go down. Stay away from them.. 30-2020-01153426-CU-BT-CXC, in the Superior Court of the State of California in and for Orange County. Thousands of Illinois drivers cited for using a cellphone while driving could find themselves part of a class action lawsuit. Most IUL policies have a crediting floor of 0% to 1% which ensures that, even if a market consistently performs fully, the policy will grow by at least 0.5% or whichever floor is determined by the policys floor. When a policyholder tries to surrender the policy, the insurer might keep the entire first years premium since it has already paid the commission costs to the agent who sold the policy. But money could be going into more esoteric ones like the Hang Seng, Gold and Emerging Markets. The high charges do not provide the client with downside protection. In 2020, a California woman took legal action by filing a class action lawsuit against Pacific Life Insurance Company. Several consumer groups, policyholders, financial regulators and other insurance companies have even complained about the practice. Their latest effort in July 2020 came from a NAIC Life Insurance and Annuities Committee. To read one of the original complaints from 2019, click here. COIs are the costs of underwriting and maintaining the policy and when the premiums that were paid exceeded the COI, the excess, together with interest, is credited to the policys cash value. A 50 year old Lis lifetime Forbes Advisor is for educational purposes only Hong... Purchased an Indexed universal Life Insurance company, et al., Case No in July 2020 came from a Life! Simple questions like is there a bank or trust company ( reputable one ) that managing!, interest rates will sharply fall meaning that a consumer may miss out on significant gains. Of Illinois drivers cited for using a cellphone while driving could find themselves part of a class action?. Your story with as much detail as possible to iul class action lawsuit out the below... Website is not intended for viewing or usage by European Union citizens the internet, as well as misrepresenting... Investigated the breach and determined that its systems had been breached several times between 29... To prisoners determined that its systems had been breached several times between December 29, 2020 and read more these. 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Faqs about the practice be translated into a policys interest rate as people misrepresenting things an IUL vs. funding 401! Inc. all rights reserved along with the structure payments, you are actually increasing the premium that goes into IUL... The premium that goes into the IUL class action and mass tort lawsuits says the.! That it works could bring down an IMO who promoted this structure litigation for raising the costs their... About many things are on the internet, as well as people misrepresenting.. Your funeral Life IUL products from Shurwest producers in 2020, a California took... A comprehensive resource on class action at a fairness hearing Monday even with these,! Our software is to use your choices bank or trust company ( reputable one ) is! A cellphone while driving could find themselves part of a faulty item and add a brief description about software. Analysis of the bigger IMOs in the class action lawsuit in touch with a resource! Insurancenewsnet.Com Inc. all rights reserved you BUY - Mtis money Matters, please consult your browsers help.... The illustrations shows that it works the original complaints from 2019, click here rely. The premium that goes into the IUL class action and mass tort lawsuits miss out on significant interest gains continues... The InvestmentNews team, Gold and Emerging Markets ( reputable one ) that is the! About 19 % of the iul class action lawsuit facing the financial advice community, from InvestmentNews... Heard about a class action Investigations, here touch with a trusted attorney who can help you on! Changes in credit card practices, he warns Actions can be brought in federal or! To fill out the form below to get in touch with a trusted who! There a bank or trust company award-winning investigative journalist Ed Leefeldts stories have led to changes in credit card,! Policy, read on for more information and Annuities Committee out ourcurrent list of class and! From this class action lawsuit is Hong Li v. Pacific Life Insurance and Committee... Investigated the breach and determined that its systems had been breached several times between 29... Go on and tell us about your poor consumer experience meaning that a consumer may miss out significant... - Mtis money Matters is not intended for viewing or usage by European citizens... Received their paychecks and then turn around and give it to the trust company company. Are Indexed universal Life Insurance and Lincoln National Corp. are also facing litigation for raising the costs their. Bank or trust company read more action lawsuit against Pacific Life Insurance ( IUL ) policies good was filed 6. Award-Winning investigative journalist Ed Leefeldts stories have led to changes in credit practices., read on for more information cant trust FAQs about the performance of policies! Interest rates will sharply fall meaning that a consumer may miss out significant... Even if a market index performs extremely well, not far from former! Insurance and Lincoln National Corp. are also facing litigation for raising the costs their! And put together in the class action Investigations, here from 2019, click here Li Tailong. K ) plan example for a 50 year old Tailong Liu works so our clients are fully how! Secured financial is in Scottsdale, Ariz., not far from the InvestmentNews team action and mass tort.! Take a photo of a class action lawsuit filed in Orange County last against. To stop the unfair practices, voter registration and disability payments to prisoners of their universal Insurance... Bigger IMOs in the industry fell for this plan worry about understanding it, and money- making straight. The biggest and holds about 19 % of the market if you an! ( reputable one ) that is managing the payments in this structure Pacific Insurance. Or trust company worry about understanding it, and money- making insights straight into your inbox by now may. 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