If you purchased a Mutual of Omaha indexed universal life (IUL) insurance policy and discovered it was not performing as promised, you may be entitled to compensation. At RP Legal LLC, our experienced indexed universal life insurance lawyers have extensive experience representing clients harmed by deceptive IUL sales practices, including a recent $1.5 million verdict against Pacific Life Insurance Company.
Mutual of Omaha, one of the nation’s major insurance companies, has faced scrutiny for various business practices, including a $6.7 million ERISA lawsuit settlement in 2020. When insurance agents misrepresent IUL policies as guaranteed retirement investments or fail to disclose significant risks, policyholders suffer substantial financial losses.
Our legal team understands the complex nature of IUL fraud cases and provides nationwide representation to help victims recover their losses. We work on a contingency fee basis, meaning you pay no attorney fees unless we secure compensation for your case.
Understanding Mutual of Omaha IUL Fraud Lawsuit Claims
What Makes an IUL Sale Fraudulent
Indexed universal life insurance fraud occurs when agents or insurance companies engage in deceptive practices during the sale or administration of policies. In Mutual of Omaha IUL fraud cases, several factors typically constitute fraudulent behavior:
Misrepresentation of Policy Performance and Returns: Agents may present historical market data or hypothetical illustrations that suggest guaranteed returns when IUL policies actually provide no such guarantees. These misleading presentations often show consistent positive returns without adequately explaining how market downturns, fees, and caps can significantly impact policy performance.
Failure to Disclose Risks and Limitations: IUL policies contain numerous risks that agents must explain to potential buyers according to FINRA regulations. These include the possibility of policy lapse, increasing cost of insurance charges, and the impact of loan interest on policy values. When agents fail to provide adequate disclosure of these risks, it constitutes investment fraud.
Unsuitable Recommendations Based on Client Profile: Insurance agents have a fiduciary duty to recommend products suitable for their clients’ financial situations, age, and investment objectives. Selling IUL policies to elderly clients who need immediate income or to individuals who cannot afford the premium payments required to maintain the policy represents unsuitable sales practices that may constitute financial elder abuse.
Deceptive Marketing Materials and Illustrations: Mutual of Omaha agents may use marketing materials that emphasize potential benefits while minimizing or hiding significant risks. Policy illustrations that show unrealistic performance scenarios or fail to adequately explain how various factors affect policy values can constitute deceptive practices under state insurance regulations.
Common Deceptive Practices by Mutual of Omaha Agents
Insurance agents selling Mutual of Omaha IUL policies often employ specific deceptive tactics that have become common across the industry:
“Tax-Free Retirement Income” Misleading Claims: Agents frequently market IUL policies as sources of “tax-free retirement income,” comparing them to Roth IRAs or other retirement benefits. While policy loans may be tax-free under certain circumstances, this marketing ignores the risks of policy collapse, loan default, and the impact of loan interest on death benefits.
“Be Your Own Bank” Promotional Schemes: This popular sales pitch suggests that policyholders can borrow against their IUL policies and repay themselves, creating a personal banking system. However, agents often fail to explain that policy loans reduce death benefits and can cause policy collapse if not managed properly.
Overstated Historical Performance Projections: Agents may show backtested performance data or cherry-picked historical periods to suggest that IUL policies will generate substantial returns. These presentations often fail to account for IUL fees, caps, and participation rates that significantly reduce actual policy performance.
Downplaying Policy Fees and Charges: IUL policies contain numerous fees and charges that can substantially impact policy performance. Agents may minimize these costs or fail to explain how they compound over time, leading to unrealistic expectations about policy growth.
How Mutual of Omaha IUL Policies Fail Policyholders
Unrealistic Return Projections and Illustrations
One of the primary ways Mutual of Omaha IUL policies fail policyholders involves the use of unrealistic return projections in policy illustrations. These illustrations, while required by law, often create false expectations about policy performance.
Backtested Performance Data Limitations: Policy illustrations may use historical market data to project future performance, but this approach has significant limitations according to SEC guidance. Past market performance does not guarantee future results, and the specific indexing strategies used in IUL policies may not capture the full market returns shown in historical data.
Cap Rates and Participation Rates Impact: IUL policies typically limit upside potential through cap rates (maximum annual returns) and participation rates (percentage of index gains credited to the policy). These limitations mean that even in strong market years, policy growth may be significantly less than actual index performance.
Market Volatility Effects on Policy Value: While IUL policies often advertise downside protection through floor rates, market volatility can still negatively impact policy performance. Years of zero returns due to market downturns, combined with ongoing policy charges, can cause significant policy value erosion.
Illustration vs. Actual Performance Gaps: The gap between illustrated and actual policy performance often becomes apparent within the first few years of policy ownership. When actual performance falls short of illustrations, policyholders may need to pay higher premiums or face policy collapse.
Hidden Fees That Erode Policy Value
Mutual of Omaha IUL policies contain numerous fees and charges that can substantially erode policy value over time:
Cost of Insurance Charges: These charges increase with age and can become prohibitively expensive in later years. Many policyholders do not receive adequate information about how these charges will impact their policies over time.
Administrative and Management Fees: Monthly administrative fees, asset management charges, and other policy expenses can significantly reduce the amount available for cash value growth. Our broker negligence attorneys frequently see cases where these fees were not properly disclosed.
Surrender Charges and Penalties: Early surrender charges can trap policyholders in underperforming policies, making it expensive to exit the policy even when it clearly does not meet expectations.
Policy Loan Interest Rates: While agents may market policy loans as “borrowing from yourself,” they typically carry interest rates that can compound and eventually cause policy collapse if not properly managed.
Policy Lapse Risk and Premium Increases
Many Mutual of Omaha IUL policyholders face unexpected premium increases or policy collapse due to factors not adequately disclosed at the time of sale:
Rising Cost of Insurance Over Time: As policyholders age, the cost of insurance charges increase exponentially. These increases can quickly outpace policy growth, requiring additional premium payments to keep the policy in force.
Premium Payment Requirements: When policy performance falls short of illustrations, policyholders may need to pay significantly higher premiums than originally projected to maintain coverage. This is particularly problematic for premium financed IUL policies.
Policy Collapse Scenarios: If policy values become insufficient to cover monthly charges, the policy will lapse, leaving policyholders without coverage and potentially facing tax consequences on outstanding loans.
Loss of Death Benefit Protection: Policy collapse not only eliminates the death benefit but may also result in taxable income if the policy had outstanding loans at the time of lapse.
Legal Grounds for Mutual of Omaha IUL Lawsuits
Breach of Fiduciary Duty Claims
Insurance agents and companies owe fiduciary duties to their clients, and violations of these duties form the basis for many IUL fraud lawsuits:
Agent’s Obligation to Act in Client’s Interest: Insurance agents must prioritize their clients’ interests over their own financial gain. When agents recommend unsuitable IUL policies to earn higher commissions, they breach their fiduciary duty.
Failure to Conduct Proper Suitability Analysis: Agents must thoroughly analyze a client’s financial situation, investment objectives, and risk tolerance before recommending an IUL policy. Inadequate suitability analysis can form the basis for legal claims.
Inadequate Disclosure of Conflicts of Interest: Agents must disclose compensation arrangements and potential conflicts of interest that might influence their recommendations according to FINRA Rule 2111.
Negligent Supervision by Mutual of Omaha: Insurance companies have a duty to properly supervise their agents and work to maintain compliance with sales practices regulations. Failure to supervise can result in corporate liability.
Misrepresentation and Fraud Allegations
Fraudulent sales practices provide strong grounds for legal action against Mutual of Omaha and its agents:
Material Misstatements About Policy Features: When agents make false statements about policy guarantees, performance potential, or features, these misrepresentations can form the basis for fraud claims.
Omission of Critical Risk Factors: Failing to disclose material risks associated with IUL policies, such as the possibility of policy collapse or the impact of market volatility, constitutes fraudulent omission.
Deceptive Sales Presentations: Sales presentations that emphasize benefits while minimizing or hiding risks can constitute deceptive practices under state insurance regulations.
False Advertising Claims: Marketing materials that make misleading claims about policy performance or benefits may violate state consumer protection laws.
Unsuitable Investment Recommendations
Suitability violations form a common basis for IUL fraud lawsuits:
Age-Inappropriate Product Sales: Selling IUL policies to elderly individuals who need immediate income rather than long-term wealth accumulation may constitute unsuitable sales practices.
Income and Net Worth Considerations: Recommending IUL policies to individuals who cannot afford the premium payments required to maintain the policy represents unsuitable advice.
Risk Tolerance Assessments: Agents must properly assess clients’ risk tolerance and investment experience before recommending complex products like IUL policies.
Alternative Investment Options: Agents should discuss alternative investment and insurance options that might better meet clients’ needs and objectives.
Your Legal Options Against Mutual of Omaha
Individual Lawsuit vs. Class Action Claims
Victims of Mutual of Omaha IUL fraud have several legal options available:
Benefits of Individual Representation: Individual lawsuits allow for personalized attention to your specific circumstances and potentially higher recovery amounts. Our attorneys can focus exclusively on your case and develop strategies tailored to your situation.
Class Action Eligibility Requirements: Class action lawsuits require common issues of law and fact among all class members. While class actions can be efficient for certain types of claims, they may not be appropriate for all IUL fraud cases.
Settlement vs. Trial Considerations: Many IUL fraud cases settle before trial, but having experienced trial attorneys helps ensure that insurance companies take your claims seriously and offer fair settlement amounts. Our case results demonstrate our ability to secure favorable outcomes.
Recovery Potential Comparison: Individual representation often provides better recovery potential, as settlements and verdicts can be tailored to your specific losses and circumstances.
Arbitration Requirements and Procedures
Many Mutual of Omaha IUL policies contain arbitration clauses that affect how disputes are resolved:
FINRA Arbitration Process: Securities-related claims may be subject to FINRA arbitration, which provides a forum for investment disputes.
Mandatory Arbitration Clauses: Some policy contracts require arbitration rather than court litigation. Our attorneys have experience with arbitration proceedings and can effectively represent your interests in this forum.
Discovery and Evidence Presentation: Arbitration procedures may limit discovery, making it important to have experienced attorneys who understand how to effectively present evidence in this setting.
Award Enforcement Procedures: Arbitration awards are generally final and binding, with limited appeal rights. Our attorneys work to help favorable awards get properly enforced.
Potential Damages and Recovery
Victims of Mutual of Omaha IUL fraud may be entitled to various types of damages:
Premium Payments and Policy Losses: Recovery may include all premium payments made, plus interest, as well as any policy surrender charges or other losses incurred.
Opportunity Cost Calculations: Damages may include the lost opportunity to invest premium payments in more suitable investments that would have generated better returns.
Punitive Damages Availability: In cases involving egregious misconduct, punitive damages may be available to punish wrongdoers and deter similar conduct.
Attorney Fees and Costs: Depending on the jurisdiction and specific claims, attorney fees and litigation costs may be recoverable.
Why Choose RP Legal LLC for Your Mutual of Omaha Case
Proven Track Record in IUL Litigation
RP Legal LLC has established itself as a recognized firm in IUL litigation:
Significant Client Recoveries: Our founding partner, Robert G. Rikard, has recovered substantial amounts for clients harmed by investment fraud and deceptive insurance practices through dedicated advocacy and litigation work.
Recent $1.5 Million Verdict Against Pacific Life: On May 13, 2024, we secured a $1,526,156.54 verdict in Karen Shelstad v. Ronald R. Hill and Pacific Life Insurance Company, demonstrating our ability to take cases to trial and win. This case involved similar Pacific Life IUL lawsuits issues.
IUL Case Experience: Our attorneys have handled numerous IUL fraud cases across the country, giving us experience with the complex issues involved in these cases.
Complex Litigation Experience: Our attorneys have experience with complex litigation matters and class actions, providing us with the skills necessary to handle large-scale litigation.
Comprehensive Legal Experience
Our legal team brings experience to every Mutual of Omaha IUL fraud case:
IUL Experience: We have been representing IUL fraud victims, giving us substantial experience with these complex cases involving why IULs are a bad investment.
National Recognition: Our firm has become recognized for representing investors harmed by IUL policies and other investment fraud schemes.
Professional Recognition: Our founding partner holds an AV® Preeminent rating from Martindale-Hubbell, the highest level of professional excellence.
No Upfront Fees – Contingency Representation
We make legal representation accessible to all victims of IUL fraud:
Free Initial Consultation: We provide free consultations to evaluate your case and explain your legal options without any upfront cost.
No Attorney Fees Unless We Win: We work on a contingency fee basis, meaning you pay no attorney fees unless we recover compensation for your case.
Comprehensive Case Evaluation: Our attorneys will thoroughly review your policy documents, sales materials, and financial records to build the strongest possible case.
National Practice Availability: We represent clients nationwide and can handle cases in multiple jurisdictions.
Take Action Against Mutual of Omaha IUL Fraud
If you believe you were the victim of Mutual of Omaha IUL fraud, time may be limited to pursue your legal rights. Statutes of limitations vary by state and can range from two to six years from the discovery of fraud. The sooner you contact our attorneys, the better we can preserve evidence and build your case.
Our experienced legal team will review your policy documents, sales materials, and communications with your insurance agent to determine whether you have valid fraud claims. We understand the complex nature of IUL policies and can identify deceptive sales practices that may not be immediately apparent to policyholders.
Don’t let Mutual of Omaha and its agents profit from deceptive sales practices at your expense. Contact RP Legal LLC today for a free consultation to discuss your legal options and learn how we can help you recover your losses. Give us a call: (803) 805-7546 or contact us online.
Financial and Insurance Firms We Target
Several large insurance firms have been implicated in class action IUL lawsuits. Below is a list of some of the brokerages and firms we might investigate:
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
Frequently Asked Questions About Mutual of Omaha IUL Lawsuits
Can I sue Mutual of Omaha for IUL fraud?
Yes, if you can demonstrate fraudulent sales practices, misrepresentation, or breach of fiduciary duty. Our attorneys will evaluate your specific circumstances to determine whether you have valid legal claims against Mutual of Omaha and its agents.
What evidence do I need for a Mutual of Omaha IUL lawsuit?
Important evidence includes your policy documents, original sales materials and illustrations, correspondence with your agent, premium payment records, and any marketing materials you received. Our attorneys will help you gather and organize this evidence to build your case.
How long do I have to file a claim against Mutual of Omaha?
Statutes of limitations vary by state, typically ranging from 2-6 years from discovery of fraud. Some states may have longer limitation periods for certain types of claims. Contact an attorney as soon as possible to preserve your rights.
What damages can I recover in an IUL fraud case?
Potential recovery includes premium payments, policy losses, opportunity costs, and in some cases punitive damages. The specific damages available depend on your circumstances and the applicable law in your jurisdiction.
Do I need to pay attorney fees upfront?
No, we work on a contingency fee basis – you pay nothing unless we recover compensation for you. This helps all victims of IUL fraud access quality legal representation regardless of their financial situation.
How long does a Mutual of Omaha IUL lawsuit take?
Cases typically resolve within 12-24 months, depending on complexity and whether arbitration is required. Some cases may resolve more quickly through settlement negotiations, while others may require arbitration or trial.
Can I join a class action against Mutual of Omaha?
Class action eligibility depends on common issues and damages among affected policyholders. Our attorneys will evaluate whether individual representation or class action participation would be more beneficial for your specific situation.
What if my policy is still active?
You may still have valid fraud claims even with an active policy, depending on the circumstances of the sale and the policy’s performance compared to what was promised. Our attorneys can evaluate your case regardless of your policy’s current status.