IUL Lawsuits in Columbia
Have you invested in an indexed universal life insurance policy based on the recommendation or sales pitch of your financial advisor or an insurance firm? Although an advisor or firm may have promised numerous advantages of buying and paying premiums to an IUL, you may have discovered that an IUL comes with limitations and risks that an advisor or seller failed to disclose, causing you to lose money or investment opportunities. As a result, you may deserve to seek compensation and accountability from a financial advisor or firm that negligently recommended or willfully misled you to purchase an IUL in Columbia, SC.
Contact the Columbia IUL lawsuit attorneys of RP Legal LLC today for an initial case evaluation with an experienced attorney to discuss your options for pursuing financial recovery through a legal claim or IUL class action and learn how our firm will fight to protect your rights and interests. We have over a century of combined legal experience and a 97 percent success rate over hundreds of cases, having recovered millions of dollars for clients through settlements and verdicts. Our firm has more experience than any other in the U.S. in litigating IUL cases.
What Are IULs?
IULs, or indexed universal life insurance policies, are a type of universal life insurance that includes two components: a cash value component and a death benefit. Money in a policyholder’s cash value account can earn interest based on the performance of one or more stock market indexes selected by the insurer.
When a policyholder pays their premium, a portion of the premium pays the cost of the life insurance (the death benefit) based on the insured’s life, a portion goes to fees and expenses charged on the policy, and the rest goes to the policyholder’s cash value account. The account receives interest based on increases in the tracked equity index fund. Many IULs offer interest rate guarantees, which can limit a policyholder’s downside. However, these guarantees also come with caps on interest earned, which also limit a policyholder’s upside, leading to lower gains than one could earn through traditional investments.
IULs may allow policyholders to reduce or skip premium payments once the policy has reached a specific value based on the interest earned. However, policyholders may have to resume premium payments if the interest fails to cover those payments. Policyholders may also have the right to borrow against their cash value account; however, any borrowed money not repaid to the policy gets taken out of the death benefit.
Common Areas of Misconduct
Investment brokers and financial advisors may improperly recommend IULs to clients whose financial goals or needs do not mesh with the benefits, disadvantages, and risks of these products. Examples of misconduct that may lead to unsuitable recommendations of IULs include:
- Breaches of fiduciary duties, such as conflicts of interest or self-dealing (e.g., having compensation based on sales or receiving kickbacks for referrals)
- Broker negligence in assessing a client’s investment goals and financial needs and determining the suitability of an IUL for the client’s objectives or risk tolerance
- Investment or financial advisory firms’ failure to supervise representatives
- Misrepresentations regarding the potential performance, costs, and risks of IULs
Common ways that firms or advisors can mislead clients into unsuitable IUL products include:
- Recommending IULs for Older Customers – Sellers may tout IULs as a means of receiving retirement income. However, withdrawing money that includes investment returns before an IUL policy matures can trigger unexpected income taxes.
- Deceptive Marketing Practices and Excessive Fees – Firms frequently sell IULs as a type of investment tool without disclosing how fees and expenses charged to a policy can significantly reduce or eliminate interest gains.
- Misleading Illustrations That Overestimate Returns – Advisors who push IULs may use overly optimistic projections of returns that fail to account for interest rate caps or administrative expenses.
- Fraudulent Sales Practices/Pyramid Schemes – Some firms may sell IULs through fraudulent pyramid schemes that focus on making money for the firm through recruiting more clients to recruit from their networks, rather than through the management of legitimate financial products.
- Multi-Level Marketing IUL Sales and Recruitment – Firms may use MLM sales tactics that seek to encourage clients to recommend IULs to people in their networks.
Financial advisory firms and insurance companies may use misleading marketing phrases to make IULs seem better than other investment tools or to conceal the downsides and risks of IULs. Common selling points used by IUL sellers include:
- “Tax-Free Retirement Income” – This marketing slogan tries to equate IULs with traditional retirement investment programs that provide tax-free post-retirement income, like Roth IRAs and pensions. However, sellers who pitch IULs as an alternative to conventional retirement products may overlook the risks of IULs, such as policyholders defaulting on loans and letting their policies lapse, risks of financial difficulties for the insurance company, and rising costs of insurance may require unexpected future contributions.
- “Be Your Own Bank” – Sellers sometimes promote the feature of IULs that allows policyholders to borrow against their cash value, suggesting that they can use the money for other investment purposes. However, sellers may fail to mention the fact that borrowing against the policy can reduce the death benefit or risk causing the policy to lapse without repayment or continued premium contributions. Sellers may also improperly simplify the concept of infinite banking by ignoring the costs attendant to IULs or borrowing against their cash value.
- “No Downside Market Risk” – Marketers may emphasize an IUL’s interest rate guarantee without discussing the corresponding rate cap or how the policy’s fees and expenses can mitigate or negate returns for policyholders.
- “Indexed Growth with No Loss” – Sellers’ explanation of an IUL’s mechanisms may confuse customers into believing that the product will allow them to participate in the market, where the interest on an IUL’s cash value only corresponds to the performance of selected index funds without actually investing in those funds.
- “Outperform Your 401(k)” – Some sellers may tout IULs as a superior alternative to traditional retirement accounts, without discussing the comparative advantages of other retirement products, such as employer matching and historical performance of the stock market.
- “Tax Shelter for High-Income Earners” – Some firms may improperly characterize or imply that an IUL can provide a loophole to avoid income, capital gains, or other taxes, ignoring the fact that state and federal taxing authorities frequently scrutinize financial products that enable individuals to avoid taxes unless specifically authorized by state or federal law.
- “Life Insurance with Living Benefits” – Sellers frequently advertise IULs as a dual-purpose financial product that provides life insurance with an investment component. However, they may fail to disclose that many of the lifetime benefits of IUL depend on strict underwriting requirements or expensive riders.
Financial Firms & Life Insurance Companies Engaged in IULs
Various insurance companies have made selling IULs a significant part of their business. Examples of insurance companies that participate heavily in the IUL product space include:
- Pacific Life
- Allianz
- National Life Group
- Minnesota Life
- Fidelity and Guaranty
- Lincoln Financial
- Transamerica
- Mutual of Omaha
Examples of financial firms that have partnered with insurance companies to market IULs to clients aggressively include:
- World Financial Group
- PHP Agency
- Family First Life
- Symmetry Financial Group
- Integrity Marketing Group
- LifePro Financial Services
- Equis Financial
- Five Rings Financial
IULs in Columbia, SC
Various financial firms and insurance companies have targeted individuals and families in Columbia and throughout South Carolina with aggressive marketing tactics designed to sell unsuitable IUL products. People who have sustained financial losses or lost investment opportunities after getting misled into IULs may have legal claims against their financial advisors and the insurance companies that sold those products. Residents of Columbia, SC, may choose to pursue their claims in court, filing suit in South Carolina state court in the Richland County Courthouse, which serves the Fifth Judicial Circuit, or in U.S. District Court for the District of South Carolina in the Matthew J. Perry Jr. Courthouse.
How an IUL Lawsuit Lawyer Can Help
Holding a financial firm or insurance company accountable for negligently recommending or knowingly misleading you into purchasing an IUL can involve complex factual and legal issues. An IUL lawyer in South Carolina from RP Legal LLC can help you pursue an indexed universal life lawsuit by:
- Investigating your claims to recover evidence of negligent advisory services by your financial firm or misconduct in improperly recommending an unsuitable IUL product
- Calculating the financial losses you have incurred after an advisor or firm pressured you into buying an IUL that has cost you more money or provided less return than promised
- Identifying parties you might hold liable for your losses, such as individual advisors, the financial firms they work for, and insurance companies that sold you unsuitable IUL products
- Vigorously pursuing your legal claims, even when that means going to court to hold parties responsible for negligent advice or misconduct
Contact Our Firm Today to Discuss Your Legal Options
You deserve to pursue compensation and accountability if a financial advisor misled you into putting your money in an unsuitable IUL or failed to ensure that an IUL best served your economic objectives and needs. Call RP Legal LLC at (803) 805-7546 today for a confidential consultation with an IUL lawsuit attorney to learn whether you may have a claim against a financial advisor or insurance company for losing your hard-earned wealth in an IUL scam.