If you purchased an Indexed Universal Life (IUL) insurance policy through Five Rings Financial and experienced significant losses or discovered the policy does not perform as promised, you may have grounds for legal action. At RP Legal LLC, our investment fraud attorneys have recovered over $100 million for clients harmed by deceptive IUL sales practices. Additionally, we handle cases involving commission-based insurance companies and their carrier partners.
Five Rings Financial operates as a 100% commission-based insurance sales organization that partners with National Life Group to sell IUL policies. While the company maintains legitimate business credentials and proper licensing, their aggressive sales tactics and high-commission structure have raised concerns among consumers and industry observers. Our experienced legal team has experience handling IUL fraud cases against similar companies and their insurance carrier partners.
Understanding Five Rings Financial IUL Fraud
What is Five Rings Financial?
Five Rings Financial was founded in 2004 by Mike Wilk and operates from Littleton, Colorado. The company functions as a traditional insurance marketing organization that recruits agents to sell life insurance products, primarily Indexed Universal Life policies, through a 100% commission-based structure. Agents earn commissions from their sales and may receive additional compensation for training and mentoring new agents within the organization.
The company maintains an A+ rating with the Better Business Bureau and presents itself as a legitimate financial services organization. However, their high-commission business model and aggressive sales culture have raised concerns among consumers and industry observers. Five Rings Financial agents typically target middle-class families and individuals seeking retirement planning solutions. Furthermore, they often promote IUL policies as superior alternatives to traditional retirement accounts.
How Five Rings Financial IUL Policies Work
Five Rings Financial primarily sells IUL policies underwritten by National Life Group, a Vermont-based insurance company that serves as a major partner for commission-based insurance organizations. These policies combine life insurance coverage with an investment component tied to stock market indices like the S&P 500.
The policies promise policyholders the ability to earn market-linked returns while protecting against market losses through a “floor” guarantee, typically set at 0%. However, the policies include numerous fees and charges that can significantly reduce or eliminate potential gains according to NAIC regulations:
- Cost of Insurance Charges: Monthly fees that increase with age and can consume policy value
- Administrative Fees: Annual charges for policy maintenance and management (typically $5-10/month plus percentages)
- Cap Rates: Maximum returns allowed, often limiting gains to 10-12% even when indices perform better
- Participation Rates: Percentage of index gains actually credited to the policy (standard is 100%, though some strategies may vary)
- Spread Fees: Additional charges deducted from credited returns (ranging from 0-9%+ depending on strategy)
Common Deceptive Practices in Five Rings IUL Sales
Based on our experience with similar commission-based insurance companies and documented industry practices, Five Rings Financial agents may engage in several problematic sales tactics that constitute broker misconduct:
Overstated Return Projections: Agents often show policy illustrations using unrealistic return assumptions, such as consistent 8-10% annual gains, without adequately explaining how fees and charges reduce actual performance. These practices violate FINRA rules regarding fair dealing with customers.
Misrepresenting Tax Benefits: Policies are frequently marketed as “tax-free retirement income” without explaining the complex loan structures required and the risks of policy collapse if loans exceed policy value.
Downplaying Risks: Agents may minimize or fail to disclose the significant risks associated with policy loans, increasing insurance costs, and the potential for policies to lapse without adequate funding.
Unsuitable Recommendations: The high-commission structure incentivizes agents to sell expensive IUL policies even when simpler, less expensive alternatives would better serve the client’s needs, constituting unsuitable investment recommendations.
Red Flags of Five Rings Financial IUL Fraud
“Tax-Free Retirement Income” Promises
One of the most common deceptive practices in IUL sales involves marketing these policies as sources of “tax-free retirement income.” Five Rings Financial agents may present IUL policies as superior alternatives to 401(k) plans or IRAs. Additionally, they claim these policies offer unlimited contributions and tax-free withdrawals.
This marketing approach is misleading because:
- Policy loans are not truly “tax-free” – they reduce the death benefit and create interest charges
- If policy loans exceed the policy’s cash value, the entire loan amount becomes taxable income
- Unlike qualified retirement plans, IUL policies offer no employer matching contributions
- The complex fee structure often results in lower net returns than traditional retirement accounts
Misleading Policy Illustrations
IUL policy illustrations are sophisticated marketing tools that can easily mislead consumers. Five Rings Financial agents may use illustrations that violate state insurance regulations:
- Assume consistent high returns that rarely occur in practice
- Minimize the visual impact of fees and charges
- Show projected values decades into the future without adequate risk disclosures
- Compare IUL performance to conservative investments rather than appropriate alternatives
Our indexed universal life fraud lawyers have seen numerous cases where actual policy performance falls far short of illustrated projections. As a result, policyholders are left with inadequate coverage and depleted cash values.
High-Commission Sales Culture
Five Rings Financial’s commission-based structure creates potential conflicts of interest that can harm consumers and may constitute breach of fiduciary duty:
- Agents are incentivized to sell high-commission products regardless of suitability
- Sales quotas and performance pressure may lead to aggressive tactics
- New agents may lack adequate training and experience to properly advise clients
- The focus on commissions can override suitability responsibilities to clients
Targeting Unsuitable Customers
Commission-based insurance companies often target demographics that may be particularly vulnerable to deceptive sales practices, including financial elder abuse:
- Middle-class families seeking retirement security
- Individuals with limited investment experience
- People attracted to promises of “guaranteed” returns
- Customers who may not fully understand complex insurance products
Legal Claims Against Five Rings Financial
Breach of Fiduciary Duty
Insurance agents and financial advisors have a legal obligation to act in their clients’ interests. When Five Rings Financial agents recommend IUL policies that are unsuitable for a client’s financial situation or fail to adequately disclose risks and alternatives, they may breach their fiduciary duty.
Our investment fraud attorneys have successfully pursued breach of fiduciary duty claims against insurance agents and companies who:
- Recommended high-commission products when simpler alternatives were more appropriate
- Failed to conduct adequate suitability analysis
- Prioritized their own compensation over client needs
- Misrepresented the nature and risks of IUL policies
Misrepresentation and Fraud
Fraudulent misrepresentation occurs when agents make false statements about material facts regarding IUL policies. Common misrepresentations in Five Rings Financial cases may include investment fraud tactics such as:
- False claims about guaranteed returns or “no downside risk”
- Misrepresenting IUL policies as investments rather than insurance products
- Overstating tax benefits or understating tax risks
- Making unrealistic projections about policy performance
Unsuitable Investment Recommendations
Financial professionals must work to confirm that recommended products are suitable for each client’s financial situation, risk tolerance, and investment objectives. IUL policies may be unsuitable for clients who:
- Need simple term life insurance rather than complex permanent coverage
- Cannot afford the high premiums required to maintain policy performance
- Have limited investment experience or risk tolerance
- Would benefit more from maximizing contributions to employer-sponsored retirement plans
Failure to Disclose Risks and Fees
Insurance agents must provide clear, comprehensive disclosure of all material risks and fees associated with IUL policies under federal banking regulations. Failure to adequately explain the following may constitute grounds for legal action:
- The impact of increasing cost of insurance charges over time
- How cap rates and participation rates limit potential returns
- The risks associated with policy loans and potential tax consequences
- Alternative products that might better meet the client’s needs
How RP Legal LLC Can Help
Our Experience with IUL Fraud Cases
RP Legal LLC has established itself as a recognized authority in IUL litigation nationwide. Our founding partner, Robert G. Rikard, has litigated hundreds of IUL cases across the country and recovered over $100 million for clients harmed by deceptive insurance practices.
Our recent victory against Pacific Life Insurance Company resulted in a $1,526,156.54 jury verdict for a client who was sold an unsuitable IUL policy. This case, decided on May 13, 2024, demonstrates our ability to hold major insurance companies accountable for their agents’ misconduct and recover significant damages for our clients. Note: This case is currently under appeal at the Idaho Supreme Court (Docket No. 52014).
We understand the complex legal and technical issues involved in IUL fraud cases, including:
- Insurance law and regulatory requirements
- Securities regulations that may apply to IUL sales
- Fiduciary duty standards for insurance agents
- Damages calculation for policy losses and opportunity costs
Proven Track Record Against Insurance Companies
Our firm has successfully represented clients in cases against major insurance companies, including National Life Group, which underwrites Five Rings Financial’s IUL policies. We have experience with:
- Individual lawsuits against insurance companies and agents
- Class action litigation involving systematic misconduct
- FINRA arbitration proceedings (when contractually required, though not universally mandated)
- Regulatory complaints and investigation.
Our attorneys have served on multidistrict litigation (MDL) steering committees. Additionally, professional organizations like Super Lawyers have recognized us as top-rated securities litigation attorneys.
No Upfront Fees – Contingency Basis
We understand that clients who have been harmed by IUL fraud may be facing financial difficulties. That’s why we handle IUL fraud cases on a contingency fee basis, meaning you pay no attorney fees unless we recover money for you.
Our contingency fee arrangement provides the following benefits:
- You can pursue your case without upfront legal costs
- We are motivated to achieve the maximum recovery possible
- You have access to experienced legal representation regardless of your financial situation
Steps to Take If You’re a Victim
Gathering Your Policy Documents
If you believe you were sold a fraudulent Five Rings Financial IUL policy, the first step is to gather all relevant documentation. Our investment fraud attorneys recommend collecting:
- Your original policy application and any amendments
- Policy illustrations shown during the sales process
- Annual statements and performance reports
- Correspondence with your agent or the insurance company
- Records of premium payments and any policy loans
- Marketing materials or presentations used during the sale
Calculating Your Losses
Determining your damages in an IUL fraud case requires careful analysis of:
- Premium payments made versus current policy value
- Opportunity costs of alternative investments
- Lost insurance coverage or inadequate death benefits
- Tax consequences of policy loans or surrenders
Out-of-pocket costs for replacement coverage
Our legal team works with financial professionals to accurately calculate the full extent of your losses. Furthermore, we work to confirm you receive appropriate compensation through securities litigation.
Filing Your Claim
IUL fraud claims may be pursued through various legal channels:
- Direct lawsuits against the insurance company and agents
- FINRA arbitration proceedings (if contractually required)
- Regulatory complaints with state insurance departments
Class action litigation for systematic misconduct
We will evaluate your case and recommend the most effective legal strategy based on the specific facts and circumstances of your situation.
Frequently Asked Questions
Is Five Rings Financial a legitimate company or a scam?
Five Rings Financial is a legitimate insurance marketing organization with proper licensing and an A+ BBB rating. However, their high-commission business model and aggressive sales tactics have raised concerns among consumers and industry observers. The key issue is not whether the company is legitimate, but whether their agents engage in deceptive practices when selling IUL policies.
What makes an IUL policy fraudulent?
An IUL policy becomes fraudulent when it is sold through misrepresentation, unsuitable recommendations, or failure to disclose material risks. Common fraudulent practices include overstating potential returns, misrepresenting tax benefits, failing to explain fees and charges, or recommending policies that don’t meet the client’s actual needs.
How do I know if I was sold a fraudulent Five Rings Financial IUL?
Warning signs of investment fraud include: promises of “guaranteed” returns or “no downside risk,” marketing the policy as a retirement investment rather than insurance, failure to explain fees and charges, pressure to purchase without adequate time for review, or recommendations that seem unsuitable for your financial situation.
What damages can I recover in a Five Rings Financial IUL lawsuit?
Potential damages may include: recovery of premium payments, compensation for lost investment opportunities, reimbursement for replacement insurance costs, interest and penalties, and in some cases punitive damages. The specific damages depend on your individual circumstances and losses.
How long do I have to file a lawsuit against Five Rings Financial?
Statutes of limitations vary by state and type of claim, typically ranging from 2-6 years from when you discovered or should have discovered the fraud. It’s important to consult with an investment fraud attorney promptly to protect your rights.
Do I need to pay attorney fees upfront for an IUL fraud case?
No. RP Legal LLC handles IUL fraud cases on a contingency fee basis, meaning you pay no attorney fees unless we recover money for you. We advance all case costs and expenses, so you can pursue your claim without any upfront financial burden.
What evidence do I need for a Five Rings Financial IUL fraud claim?
Important evidence includes your policy documents, sales illustrations, marketing materials, correspondence with agents, premium payment records, and any documentation of the sales process. Our legal team will help you gather and organize the necessary evidence to support your claim.
Can I join a class action lawsuit against Five Rings Financial?
Class action opportunities depend on whether there are sufficient numbers of similarly situated victims and common legal issues. We monitor potential class action developments and will advise you if such opportunities arise. Individual lawsuits may also be appropriate depending on your specific circumstances.
Contact RP Legal LLC Today
If you believe you were sold a fraudulent IUL policy by Five Rings Financial, contact our experienced investment fraud attorneys for a free consultation. Call (803) 805-7546 or complete our contact form to discuss your case with an attorney who understands IUL fraud litigation.
Our case results demonstrate our commitment to recovering maximum compensation for IUL fraud victims. Don’t wait – contact us online or give us a call: (803) 805-7546 to protect your rights and explore your legal options.