ITM TwentyFirst Alert: Lawsuit Filed Against John Hancock for COI Increase

In February of 2017 we reported John Hancock had placed restrictions on certain inforce illustrations. At that time, we mentioned this was a possible precursor to a cost of insurance increase.  A year later the carrier notified the New York Department of Financial Services that it would be raising the cost of insurance (COI) on some Performance UL policies. Last month we reported the first customer announcements for the increase arrived at our NYC office.  Just as COI increases seem to follow inforce illustration limitations, class action lawsuits seem to follow COI increases.

Last week (June 5th), a lawsuit was filed in the Southern District of New York against John Hancock for “an unlawful and excessive cost of insurance (“COI”) increase” on “approximately 1,500” Performance UL policies.

The lawsuit details policy COI increases of 17%-71%, in line our with analysts’ findings.  The lawsuit alleges that increases up to 71% are “far beyond what the enumerated factors in the policy could justify.”

Letters announcing the increase blamed it on “expectations of future mortality and lapse experience,” but according to the suit “mortality expectations have continued to improve” and lapse experience, though “deteriorating…cannot justify any increase, much less one of this size.”  In addition, the recent tax cuts, “should have led to lower COI rates” since John Hancock recently announced, “the U.S. tax cuts will save it $240 million per year going forward.”

According to the filing, the carrier “told regulators as recently as February 2016 that its expectations did not warrant any change in projected COI rates,” and the lawsuit alleges John Hancock “admits” the increase was “driven” by the carriers’ goal to raise or meet its “profit objectives,” which is “not one of the enumerated factors a COI rate increase can be based on.”

The suit asserts the increase is “discriminatory and non-uniform” and “there does not appear to be any actuarial justification for the differences in the amount of the COI increase between policyholders.” For example, “the increase was applied to a standard male insured with issue age 73, but not to a standard male insured with issue age 65, and there is no actuarial reason to treat those two policies in such wildly disparate manners.”

The lawsuit calls for, among other things; compensatory damages and restitution and the “reinstatement of any policy that was surrendered or terminated following Defendants’ breach and unlawful conduct.”  The filing also calls for the court to prohibit John Hancock from collecting “the unlawfully and unfairly increased COI amounts.”

We have been analyzing the nature and amount of the COI increase and will be reporting back shortly on our findings.

A copy of the lawsuit can be obtained by emailing


  1. Chris Acker, CLU, ChFC June 13, 2018 at 11:43 am - Reply

    Excellent post. I assume that these COI increases are only affecting non-guaranteed UL policies and not the no-lapse flavor? Seems like all of these competitive carriers are doing the same thing, so they obviously think they have a legal right to raise COI’s..

  2. Gail Glasser July 12, 2018 at 7:54 am - Reply

    They want to get into wealth management but forget about life insurance. Isn’t the bases for wealth planning? My past experience is that they couldn’t identify fraud when it smacked it in the face. This destroyed a senior couple wealth, the very essence of what they claim they can do best. Would you trust them, I wouldn’t as I saw the negligence that they executed.

  3. Fred Spagat July 13, 2018 at 7:15 pm - Reply

    Upping the COI is just another effect of leaving the mutual world. There is much to be said in regards to mutuality and the products offered in the Mutual Insurance company world. Look who dominates the top of Comdex ratings and where the policy holder benefits as opposed to stock holders who benefit with demanded stock performance

  4. Richard Norizsan July 14, 2018 at 6:09 am - Reply

    How can JH increase coi when a
    Ul increases cash value with the rise of interest rates,? Are they just trying get more money from the increased cash value, all these costs are calculated in original illustration.

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