Insurance agents and brokers might market indexed universal life insurance as the ultimate investment vehicle, but the truth is usually the opposite. Insurance companies often target individuals with complex insurance policies to take advantage of them. Indexed universal life insurance policies might make sense for a few. But for most, it is a risk that can jeopardize their financial security.
If you have purchased an indexed universal life insurance policy and have lost money, you might be able to file a lawsuit to recover your losses. Insurance companies that used manipulative or fraudulent sales tactics can be held accountable under the law. RP Legal LLC has decades of experience combating bad-faith insurance companies and can help you pursue the financial compensation you need for economic stability.
Contact our offices today to speak to a California IUL lawsuit attorney about your claim.
How Does Indexed Universal Life Insurance Work?
Indexed Universal Life Insurance (IUL) is a type of permanent life insurance product that contains two components:
- A death benefit that pays beneficiaries if you die
- A cash value component that accrues value over time
It is helpful to distinguish IUL policies from whole life insurance policies. IUL and whole life insurance are similar in that they both contain a death benefit and cash value components. The difference is that the growth of the cash value component of an IUL policy depends on a stock or bond index, rather than a guaranteed return like a whole life policy.
IULs are called “indexed” because they are tied to a specific index fund, typically the S&P 500. The insurance company takes your premiums and invests them in the market after taking out fees. If the stock market does well, the cash value component increases; if it does poorly, it decreases instead.
The variable rate of return of IULs means that they are a significantly riskier financial product than typical life insurance. To make matters worse, insurance brokers and agents often exaggerate the returns of IULs while underplaying the amount of fees policyholders pay. The result is that many people who buy IULs from brokers and agents end up losing money.
Reasons to File an IUL Lawsuit
Insurance brokers and financial organizations are incentivized to sell IUL products, even if they are not ideal for customers. Agents who sell IULs can get a handsome commission, and insurance companies can take exorbitant fees, including fees for:
- Agent commission
- Management fees
- Premium increases
- Life insurance costs
- Other expense charges
It is not entirely unheard of for policyholders to discover substantial amounts missing from the cash value component, and unclear records of where those fees went. If you have lost money after buying an IUL, you may be able to file a lawsuit against the insurance provider. Below are some common reasons that could justify an IUL lawsuit:
Firm Misconduct
Insurance brokers have a general fiduciary duty to their clients, meaning they must generally act in their best interests. Firms can violate this duty through various types of misconduct. For instance, brokers are required to train their agents and ensure they know how to sell insurance legally. If a firm hires unqualified brokers who make misrepresentations or false claims, the brokerage can be guilty of negligent hiring practices.
Recommending IULs for Older Customers
IULs boast high returns, but brokers and agents can be scant on definite timeline details. Insurance companies might sell IUL products to older customers who will not be alive long enough for them to reap the promised benefits.
Deceptive Marketing Practices
Insurance companies can use vague or misleading marketing language to present IULs favorably and downplay their negatives. For instance, brokers might refer to IULs as investment products when they are not. Marketing materials might also misrepresent or outright lie about fee structures.
Misleading Presentations
Insurance agents might use misleading figures and illustrations to exaggerate expected returns from an IUL policy. For instance, an agent might use only the top percentage of returns and portray those as average. They might downplay or completely omit cases where policyholders instead lost money. Brokers might also show inaccurate calculations or misrepresent how they calculate their estimated yields.
Fraudulent Practices
Insurance companies can also engage in various fraudulent practices. For example, companies might offer “structured settlements” that end up paying out less than the value of the insurance policy. Insurance agents get incentives to sell policies and recruit others, similar to pyramid and MLM schemes that rely on siphoning money from the bottom to the top.
Common Misleading Language Insurance Agents Use
Much of the fraudulent practices from IUL providers come down to marketing misrepresentations and outright falsehoods. Insurance companies and their agents can use misleading language to present their products as something they are not or leave out key information. Below are some common “red flag” words and phrases that may indicate fraudulent practices:
- “Tax-Free Retirement Income” – Withdrawals from the policy under the cost basis are tax-free, but withdrawals above that are taxed. Income from IULs is also not guaranteed and depends on market performance.
- “Be Your Own Bank” – IULs allow you to take out loans against the cash value of your policy, but may neglect to mention that loans will reduce your death benefit and make policy returns unstable.
- “No Downside, No Market Risk” – IUL providers might have floor guarantees but misrepresent or lie about applicable fees and other costs that can reduce financial returns.
- “Indexed Growth with No Loss” – IUL policies might have continual growth, but materials can ignore the fees, charges, and expenses that can reduce or counteract growth.
- Outperform Your 401(k)” – IULs are not necessarily superior to more regulated financial products, and these claims might ignore contribution limits, employer matching, or historical performance.
- “Life Insurance with Living Benefits” – Life insurance may advertise itself as having living benefits, while neglecting to mention they require expensive riders.
Insurance Companies and Financial Firms that Have Been Sued for Selling Fraudulent IULs
Several large, nationwide insurance brokers and financial organizations sell IUL policies, and many have been subject to class action lawsuits for fraudulent insurance practices. Companies that emphasize IULs include:
Insurance Companies
- Allianz
- Columbus Life
- Family First Life
- Minnesota Life/Securian Financial
- National Life Group
- Pacific Life
- Protective
- Prudential
- Transamerica
Financial Firms
- Ameritas
- Equis Financial
- Equitable AXA
- Five Rings Financial
- Global Atlantic (Accordia)
- Integrity Marketing Group
- John Hancock
- LifePro Financial
- Mutual of Omaha
- North American
- Penn Mutual
- PHP Agency
- Symetra
- Symmetry Financial Group
- World Financial Group
If you have purchased an IUL policy from one of these organizations and they misrepresented the cost, fee structure, or financial returns, you can possibly file a lawsuit to recover the money you lost. RP Legal LLC has successfully helped over 1,000 clients recover compensation from fraudulent insurers and wants to assist you next.
IUL Lawsuits in California: Recent News
Several lawsuits have been filed against insurance companies for fraudulent IUL practices in California. A notable class action lawsuit filed in 2020 accused Pacific Life Insurance Company of fraudulent misrepresentations for its Pacific Discovery Xelerator IUL policy. The filers alleged that marketing materials for PDX policies exaggerate potential returns and contain several hidden fees that policyholders are unaware of. More generally, the lawsuit accuses Pacific Life of leveraging the unnecessary complexity of its PDX policies to take advantage of customers.
How Can an IUL Lawsuit Attorney from RP Legal LLC Help?
RP Legal LLC is one of the nation’s preeminent litigators for fraudulent IUL claims nationwide and has recovered hundreds of millions of dollars for our clients. We can investigate your policy details and determine whether the broker or agent violated insurance laws concerning false or misleading marketing or illegal funding mechanisms.
One of the most challenging parts of pursuing IUL fraud lawsuits is the inherent complexity of the financial arrangement. These terms and conditions are incredibly difficult to untangle without a trained professional. Our team can show you what kinds of behaviors are indicative of fraudulent practices, such as:
- Failing to disclose fees upfront
- Making false or misleading statements about IUL performance
- Not supervising sales representatives
- Insurance companies violating their own policies
- Promoting IULs to those who are not likely to benefit
Depending on your circumstances, one of our attorneys can pursue compensation for missing premiums, lost policy value, cost of fees, and other financial losses related to the company’s deceptive practices.
Contact a California IUL Lawsuit Attorney Today
If you believe you have been the victim of an IUL scam or fraudulent indexed life insurance practices, contact RP Legal LLC as quickly as possible. We can investigate your case and help you determine the best option for recovering your losses and holding insurers accountable for their wrongdoing. Our attorneys have decades of experience going toe-to-toe with some of the largest insurance companies in the nation and walking away victorious. We can provide the aggressive representation necessary to confront bad-faith insurers and balance the scales of justice on your behalf.
Contact our offices today, or call (803) 805-7546 for a free case consultation with a IUL lawsuit attorney in California. RP Legal LLC doesn’t take a fee unless we win your case, so you have nothing to lose by getting in touch. We look forward to discussing your situation and helping you explore your legal options.