INN: PennMutual lawsuit article

[DHK]

Why is it that the headlines have almost NOTHING to do with the actual FACTS?

You have to read further in this article to get the real facts:

Plaintiffs accuse Penn Mutual of ignoring its own underwriting guidelines "by repeatedly accepting insurance applications for plaintiffs that … falsely inflated the net worth of plaintiffs." The policies equated to big profits for the insurer because all of plaintiffs' policies "were designed to (and in fact did) terminate long before the insureds' life expectancies," the lawsuit states.

Improper reporting of net worth to the insurance company AND improper policy design is the real issue here, not the stated headline.

[EXTERNAL LINK] - Group of 29 plaintiffs sue Penn Mutual over whole life tax-avoidance 'sham'

 

[scagnt83]

Why is it that the headlines have almost NOTHING to do with the actual FACTS?

You have to read further in this article to get the real facts:

Plaintiffs accuse Penn Mutual of ignoring its own underwriting guidelines "by repeatedly accepting insurance applications for plaintiffs that … falsely inflated the net worth of plaintiffs." The policies equated to big profits for the insurer because all of plaintiffs' policies "were designed to (and in fact did) terminate long before the insureds' life expectancies," the lawsuit states.

Improper reporting of net worth to the insurance company AND improper policy design is the real issue here, not the stated headline.

[EXTERNAL LINK] - Group of 29 plaintiffs sue Penn Mutual over whole life tax-avoidance 'sham'

Also improper premium financing.

But the whole UW issue is a lot deeper than one might think. And could open up a huge can of worms for them.

I just recently ran into a client with a very large Penn term policy. Based on his income, he did not meet the UW for that policy... and did not have considerable assets to speak of. How that policy got issued, is beyond me. The "plan" was to convert this term to IUL when he got a raise in 12 months. Why that large of a DB would be needed for a high CV policy... is beyond me as well.

So many different layers to unwind there in the greater scheme of things.

 

[DHK]

The "plan" was to convert this term to IUL when he got a raise in 12 months. Why that large of a DB would be needed for a high CV policy... is beyond me as well.

While I can see having a large term policy and perhaps converting portions of it over time, this seems to be common with far less ethical agent sales practices.

Most of us can read between the lines on the many different layers going on there.

Yes, most of us can.

It's our far-less-informed agents that take headlines like these and run with them.



I blocked that guy a while ago on TikTok, but he just sees a headline bashing the product and he runs with it.

 

[DHK]

PennMutual sent this out regarding Premium Financing (rather timely):

True or false – premium financing edition | Gateway | Penn Mutual

gateway.pennmutual.com

 

[Tahoe Ray]

I do think some carriers play a little loose with this stuff.

I just personally wrote a large term policy on a client and both carriers that we applied him with wanted to see financials.

Now I certainly don't want to have to do that for small faces (I deal with that enough on the disability insurance side) but there should be some level of scrutiny at the carrier level.

 

[scagnt83]

Its f*cking RICO charges. To even have those charges approved by a judge, means they have cleared a very high bar.

 

[scagnt83]

Here is a free link to the actual court filing. PDFs of the advisors client presentations are at the end (as evidence).

https://storage.courtlistener.com/recap/gov.uscourts.cacd.951923/gov.uscourts.cacd.951923.1.0.pdf