In 2015 we reported on a Transamerica cost of insurance (COI) increase on a block of universal life policies and illustrated the 40% increase in COI on one policy affected raised the annual carrying costs to maturity for that policy from $36,400 to $81,595.  That cost increase led to three separate class action lawsuits that were consolidated into one claim in November of 2016.

Preliminary approval for the settlement of that consolidated case was filed in the United States District Court in California on October 4th.  Policyholders may opt out, but those who decide to participate will receive part of a $195 million fund set aside for owners of the 70,000 policies affected, including those who terminated their policies. The payout is considered a refund of past overcharges and provides cash credits to in-force policies to supplement cash values. Those with terminated policies will receive a cash payment.

The cost of insurance increase imposed by the carrier will not be reduced going forward, but Transamerica agreed it would not impose any additional increase(s) “on any Class Policy within five (5) years of the Execution Date.”

The carrier also agreed that any increase after the five year period would be “based only on the collective effect of the cost factors assumed when the Policies were originally priced and will not increase the expected future profitability of Policies within the same plan to a level higher than projected based on original policy pricing assumptions, which is intended to ensure that Transamerica does not recover past losses.”

The agreement also includes a clause assuring the carrier would not deny death benefits for policies “based on an alleged lack of insurable interest or misrepresentations made in connection with the original application process.”

Policyholders affected will receive correspondence and if they decide to participate in the settlement will be required to release all claims against the company relating to the rate increases.

The settlement covers only those policies affected by the COI increases that occurred in 2015 and 2016.  A separate case is in progress dealing with the 2017 increase we wrote about in July of that year.  We will provide updates on the additional litigation when further news is available.

By |2018-10-08T18:44:33+00:00October 8th, 2018|Categories: BLOG, Uncategorized|Tags: , , |0 Comments

About the Author:

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This Is A Custom Widget

This Sliding Bar can be switched on or off in theme options, and can take any widget you throw at it or even fill it with your custom HTML Code. Its perfect for grabbing the attention of your viewers. Choose between 1, 2, 3 or 4 columns, set the background color, widget divider color, activate transparency, a top border or fully disable it on desktop and mobile.

This Is A Custom Widget

This Sliding Bar can be switched on or off in theme options, and can take any widget you throw at it or even fill it with your custom HTML Code. Its perfect for grabbing the attention of your viewers. Choose between 1, 2, 3 or 4 columns, set the background color, widget divider color, activate transparency, a top border or fully disable it on desktop and mobile.
%d bloggers like this: