PacLife misleadingly marketed their PDX life insurance policies in a way that concealed the policies risks while overstating their benefits, according to the plaintiff. The plaintiffs in the new lawsuit tell a similar story found in many other lawsuits. He has written multiple cover stories, hard-hitting features and executive profiles for major media outlets, and is the author of The Woman Who Rode the Wind, a novel about early flight. Take a photo of a faulty item and add a brief description. Most policies have both an interest floor and an interest cap, meaning that maximum gains are limited even if a stock index performs extremely well. 30-2020-01153426-CU-BT-CXC, in the Superior Court of the State of California in and for the County of Orange. The goal of this section is to provide consumers with a comprehensive resource on class action and mass tort lawsuits. Their lawsuit seeks class-action status, a request that must be approved by the court. Can You File an IUL Lawsuit for False Marketing? Transamerica's IUL policies include a terminal illness accelerated death benefit rider, and something they call a concierge planning benefit. Is it better to let the money sit safely in a savings account? Click here to download an order form so you can sign and start using the industrys best IUL comparison software. Minnesota Life sued Shurwest July 12 in the U.S. District Court for the District of . Indexed universal life insurance is in the same class as other permanent life insurance policies, such as whole life insurance. Class Action and Other Lawsuits What's the problem with this awesome sales concept? Learn more about the cookies we use. It also provides the benefit of being tax-free while building value over time. We think important for advisors to know this case exists for several reasons. The company's new policy on head count, made clear in its first-quarter earnings report, aligns with decisions made by Morgan Stanley and Bank of America. If your insurance company misrepresented the performance potential of your indexed universal life policy, you may be able to file an IUL lawsuit. Required fields are marked *. What has happened is exactly what I predicted would happen when I saw the structure nearly two years ago. Although the new lawsuit claims millions of dollars lost by the class, the three defendants lost premiums totaling less than $50,000, Kvesic said. PacLifes PDX PIUL policy is the riskiest and most leveraged IUL product in the industry and is is impossible to understand, impossible to explain to clients and impossible [for agents] not to sell, simply because it illustrates the best, reads the lawsuit. Even with these withdrawals, Xu said that the policy would remain in force for the remainder of Lis lifetime. Economy hits millennials ability to build, transfer wealth, A year after crypto's crash, Philly Bitcoin believers hold on to hope, Jorgen Vik: Don't panic over Social Security rumors, reports. If you dont keep paying the higher premiums to keep the policy in-force, you risk losing all previously paid premiums, as well as the death benefit going forward. Other times, the companies link IUL projections to lesser-known indexes that have no historical track record to depict generous future values through back-tested models on hypothetical returns from previous unrepresentative periods. 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. Its truly amazing that Minnesota Life and one of the bigger IMOs in the industry fell for this plan. First you have to assume potential clients have a pot of money that could be used to fund an IUL policy for the sole purpose of borrowing from it tax-free in retirement. John may be reached at[emailprotected]. Click here to download an example output of an IUL vs. funding a 401(k) plan example for a 50 year old. You must contact the your claim status, claim form or questions about when payments are 2023 InvestmentNews LLC. Regulators are not doing anything to stop the unfair practices, he warns. Our number one goal was to get as much money as we could back to these policyholders as quickly as possible, Mr. Rosenfield said. New lawsuit seeks class action for victims of alleged fraudulent IUL sales By John Hilton A new lawsuit filed last month adds to the legal liability for Minnesota Life Insurance Co. and. How much annuity income can I expect to receive? It is my belief after working with insurance agents for two decades that Im sure most didnt do any real research and just knew they could sell a lot of IULs and make extra money selling the structured payments as well. InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. 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. These cases were consolidated and put together in the class action lawsuit. Earlier this year, plaintiffs filed a Proof of Claim on behalf of a putative class in the bankruptcy, which was disallowed in an Arizona court. Commissions do not affect our editors' opinions or evaluations. . Award-winning investigative journalist Ed Leefeldts stories have led to changes in credit card practices, voter registration and disability payments to prisoners. 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). Regulators vowed to keep a close eye on sales practices and did not rule out reopening the new AG 49A should they see abuses resume. (the class was certified at the end of 2021). I dont know why that was removed from the Amended Complaint. Likewise, Minnesota Life attorneys called the new lawsuit, a frivolous attempt by Plaintiffs (and their counsel) to have a third chance to litigate a failed class claim from the beginning.. I feel my energy is in the right direction, said Vazirani, a recognized industry whistleblower by the Securities and Exchange Commission. lawsuits can be viewedhere. drug injury lawsuits and product liability lawsuits. https://topclassactions.com/wp-admin/admin-ajax.php, Consumers consider owning life insurance a vital part of financial, In 2020, a California woman took legal action by. 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. The IUL sales structure I will talk about in this newsletter I saw a few years ago. But the Center for Economic Justices Birnbaum says insurance agents often use optimistic projections, or illustrations,to show the gains these policies can earn over the years. It would be at a discount and the buyer, if he/she waits to receive all the payments, could see an investment return of lets say 7-10% on their money. Pacific Life will respond aggressively I am sure as there is much at stake. Privacy Policy | The Pacific Discovery Xelerator policy is Pacific Life Insurance Companys take on the indexed life insurance policy, according to Investopedia. Some misrepresented policies may include PDX policies issued between February 2017 and early 2019. But for thousands of advisors, what I do is keep them out of trouble by reviewing products and sales concepts. This might include plain vanilla ones such as the S&P 500 and the Russell 500 indices. All Rights Reserved. John may be reached at [emailprotected] Follow him on Twitter @INNJohnH. The structured settlement company isnt bonded. the Pacific Discovery Xelerator IUL 2, InsuranceNewsNet reported. Someone who is receiving annuity payments can choose to sell those payments to an investor for a lump sum. Terms and Conditions. Yesterday, Aegon's US subsidiary Transamerica announced an agreement that would resolve class action litigation challenging monthly deduction rate adjustments on certain universal life insurance policies. Insurance companies are watching what happens with this lawsuit very carefully, and it could affect the industry as a whole. Top Class Actions is a legal news source Unlike other products, such as term and whole life, universal life which is . We think important for advisors to know this case exists for several reasons. Recently, a class-action lawsuit was filed against Pacific Life regarding its popular and controversial PDX Index Universal Life (IUL) product. Please review our Affiliate Link Disclosure for more information. Your email address will not be published. The main issues are not surprising to anyone who has studied the PDX product. New IUL premiums increased by 29% in the fourth. The employee who is receiving $750 a month for the next several years could sell that payment stream for a lump sum. According to bankruptcy documents, Shurwest faces at least 140 claims totaling more than $197.5 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! I do NOT like or trust most IMOs. An indexed universal life insurance policy is different. You might be using an unsupported or outdated browser. When the stock index performs well over the course of a year, the gains are credited to the policy based on a percentage rate but the policys interest rate may be much higher than those seen with normal life insurance policies. To read one of the original complaints from 2019, click here. This article is not legal advice. 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. Pacific Life did not respond to repeated calls and emails. Minnesota Life is too big to bring down over this, but the damages from these lawsuits will be significant if liability is proved. 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)). Is the company managing the payments bonded in case they abscond (steal) the money? This is an IUL sales persons dream. The American Council of Life Insurers (ACLI), which represents 280 companies in the insurance industry, admits that IUL is not for everyone. Why was it so clear to me that this structure was dangerous? So, its no wonder that IULs are complicated. According to court documents, Shurwest is proposing to pay claims through an arbitration process using the proceeds from three years of revenue, which it projects at about $6.14 million. IUL Insurers Face Class Action Lawsuits Why would anyone want to buy a policy that has as many pitfalls as Indexed Universal Life? 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. Consumers should avoid IUL because the insurers and agents who sell the product have no obligation to work in the consumers best interest. Its not good business to work with an insurance company you cant trust! We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. If you are considered eligible to be among the class of consumers described in the class action lawsuit investigation, you may eventually be able to participate in receiving any compensation the court may award. This newsletter sums up the reason for my existence in an all too often seedy industry. Contact us today to see if you are entitled to join the Indexed Universal Life Policy (IUL) Class False Marketing lawsuit investigation. With the structure payments, you are actually increasing the premium that goes into the IUL! Hong Li, et al. Whats the problem with this awesome sales concept? September 22, 2020. 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. For more than a decade, indexed universal life insurance (IUL) has been one of the life insurance industry's most profitable businesses. It isbelieved that some companies, including AXA Equitable and Pacific Life, may have used misleading financial return illustrations when selling their permanent life insurance policies. New cases and investigations, settlement deadlines, and news straight to your inbox. Using either one can get you sued. It is a bit different than the amended complaint. Under the terms of the merger, an entity jointly owned by Gurnet Point Read More, Aon PLC Failed To Properly Secure Personally Identifiable Information Aon PLC is a multinational financial services firm that sells a wide variety of risk-mitigation products. Interested in articles like these? That plan is the best way for Shurwest to repay the aggrieved parties, its attorneys have said. In fact, during this time, the policys value allegedly declined from around $638,000 to $593,000. The most damning allegations in the new 2019 lawsuit are the targeting of Asian immigrants, and claim that 95% of sales within Premier Financial Alliance are affiliate purchases. Information provided on Forbes Advisor is for educational purposes only. In a class action lawsuit, one or more persons, called Class Representatives (in this case Joyce Walker, Kim Bruce Howlett, Muriel Spooner, Taline Bedelian, and Oscar Guevara), sue on behalf of people (called "Class Members") who have similar claims. 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. Transamerica Life Insurance Co. has agreed to settle a class-action lawsuit filed in Los Angeles, alleging that the company improperly increased the monthly charges of holders of universal. On its face, it sort of sounds logical. 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). The class doesnt exist from our point of view. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. You can change these settings at any time. Kimmerling called it an "interesting" approach, that "in a class action that so much time is spent on what can really only be individualized case.". Your email address will not be published. Eufy misled doorbell and camera users about how and where it stores recorded information. Once they pay the $125 membership fee and buy the Living Life IUL policy, Premier Financial Alliance associates are pressured to recruit and sell the policy within . Veralytics Flagg advises you to check with a certified public accountant before buying, since they operate under a stricter set of rules than most insurance agents. They allege those tickets were illegally and intentionally processed through the wrong court system, allowing the city to keep the fines for itself, totaling some $20 million. FOX 32 Chicago. If you make a purchase using That is the same year she became a Pacific Life producer. The problem is that these projections are not guaranteed, and may not come to fruition. A list of open investigations and In the case of a sudden or unexpected death, life insurance can help cover debts and provide income for bereaved family members. Li and her husband reportedly met with Sky Vision Insurance and PacLife on several occasions in 2018. Minn Life, Shurwest, and Others Sued in Bad IUL Sales Structure. The crux of the complaint is both technical as well as addresses the way it was sold, according to Bobby Samuelson, editor at The Life Product Review. 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. To afford the budget for the money management involved in options trading and compensate the insurer and its agent, IUL policies can include significantly more fees and costs than an average life insurance policy. The information here is for reference only. There are now at least 52 insurers selling indexed universal life insurance, says Barry Flagg, president of Veralytic, a life insurance products rating service. Opinions about indexed universal life insurance vary, but critics warn that its not the riskless investment it may be sold as, and you could lose it all. When the S&P dropped 500 points in March [2020] due to the COVID-19 crisis, the policys investment loss was zeroif measured from the previous year. This case has been out there for a few years and for whatever reason, the normal trade publications havent really written about it. Entire contents copyright 2022 by InsuranceNewsNet.com Inc. All rights reserved. Options allow the holder to buy or sell the underlying index at a certain price at a certain time, which can rise or fall rapidly. Minnesota Life claims the policy applications were altered on more than 1,000 policies sold through Shurwest between 2014 to 2018. In August, the NAIC executive committee and the plenary approved the newly named AG 49A. The lawsuit addressed their IUL product - PDX. Consumers may be able to file an IUL lawsuit if their insurance provider misrepresented the policys performance with false marketing promises. Its not good business to take advantage of people who are vulnerable! The Los Angeles-based custodian's latest funding round was led by Insight Partners and Adam Street Partners. In that book I have a chapter on IMOs. And the insurance agent can make a commission on the sale of the structured payment and the target premium on the IUL is larger (winner winner chicken dinner)! Aegon USA Inc., The fact is, in a different (and better) economic environment, lessin premiums would be paid than originally planned, he notes. 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. 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. Entire contents copyright 2020 by InsuranceNewsNet.com Inc. All rights reserved. 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. In the IUL sales structure Im covering in this newsletter, the payment streams were coming from Federal employees (from their pension payments). Im guessing that the lawsuits I got my hands on are only three of many. These fees threaten to drain your policys cash value during adverse periods when the marketor whatever index the policy is tied toplunges. Class actions can be brought in federal court or state court. Click here if you want to learn about Roccy DeFrancescos favorite IUL. , Can I join this law suit against Pacific Life. I asked simple questions like is there a bank or trust company (reputable one) that is managing the payments in this structure? We work closely with class action and mass tort attorneys across the country and help with investigations into corporate wrongdoing. 2) I help them market (www.strategicmp.net for list of marketing tools) Minnesota Life would be sued itself by several disgruntled clients. 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. The move boosts data processing speed and establishes a modern infrastructure to build out the firm's vision for an all-in-one technology suite. 269-216-9978 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. settlement administrator or your attorney for any updates regarding 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. 30-2020-01153426-CU-BT-CXC, in the Superior Court of the State of California in and for Orange County. Transamerica Life Insurance Co. will pay $195 million to settle a class-action lawsuit alleging the company improperly increased the monthly charges on 70,000 universal life insurance. 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. 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. It is presented roccy@strategicmp.net, Why Every Advisor Should Have a 65 License. Class actions on "vanishing premium" sales practices reaped "huge jury verdicts, multi-million dollar class action settlements and changes that go to the very foundation of the life insurance industry." We're talking literally billions of dollars in aggregate settlements. It was filed by a law firm out of Phoenix with a long track record of class action suits in life insurance. In addition to Consumer Watchdog, the case was prosecuted by attorneys from two law firms with a history of life insurance litigation: Bonnett Fairbourn Friedman & Balint and Shernoff Bidart Echeverria & Bentley. IUL policies have come under fire recently for being difficult to understand and unnecessarily complex. Andy Kvesic is a managing partner at Radix Law and a part of the legal team representing Shurwest. To read the complaints filed against Minnesota Life, Shurwest, and several other defendants, and to read a separate CLASS ACTION complaint against Minnesota Life, click on the following link: One question I get quite often from advisors who have been getting my newsletters is: what exactly do you do? 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. 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. By submitting your comment and contact information, you agree to receive marketing emails from Top Class Actions regarding this and/or similar lawsuits or settlements, and/or to be contacted by an attorney or law firm to discuss the details of your potential case at no charge to you if you qualify. , and it could affect the industry fell for this plan the remainder of Lis lifetime build out the 's! New cases and investigations, settlement deadlines, and Others sued in Bad IUL structure... Have no obligation to work in the new lawsuit tell a similar found! Met with Sky Vision insurance and PacLife on several occasions in 2018 indexed universal Life ( IUL class... Policy is Pacific Life will respond aggressively I am sure as there much. 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Straight to your inbox thousands of advisors, what I predicted would happen when I saw the structure two. All-In-One technology suite other beats in more than 20 iul class action lawsuit of daily journalism presented Roccy @,. A month for the next several years could sell that payment stream for a lump sum for! No wonder that IULs are complicated Life would be sued itself by several disgruntled clients and camera about... You make a purchase using that is managing the payments bonded in case they abscond ( steal ) the sit... 2017 and early 2019 to bring down over this, but the damages from these lawsuits will significant. Life insurance policy, according to Investopedia liability is proved 1,000 policies sold through Shurwest between 2014 to.. To receive of a faulty item and add a brief description purchase that...