Litigation on COI rate increases by companies - TransAmerica

[MoRunner]

The industry seems to have no shortage of litigation on COI increases. One particular case is the
Gordon Feller, et al v. Transamerica life effecting about 70,000 policies. It is a CA class action suit that claims that TA is in violation of many things including elder abuse with their egregious MDR increases up to 100% forcing policies to be surrendered or lapse. http://www.consumerwatchdog.org/sit...aint_in_feller_et_al_v._transamerica_life.pdf

Joseph M. Belth has written on this case and others just like it.

Cases like this always are against the Company and not the Broker (thankfully)

But it seems like over the last 20 years when ultimately resolved they are resolved in favor of the plaintiff and the insurance company either settles or loses. Any thoughts on how to consul customers with policy issues based on COI changes.
seems that eventually they get resolved.

 

[AboutThatLife]

What is the basis for these cases? That the company has no basis for increasing the COI rates of the policies? I'm confused because I thought most of the increases were only affecting underfunded policies that were projected to have 10-11% interest rates.

 

[MoRunner]

I believe the Transamerica has sent some of our clients letters with increases between 39 and 100%
Those increases also for each of the next three years.

Evidently just filed today what is a settlement on the above mentioned class action. But from my limited knowledge many of the new MDR increases were not covered by the settlement of the but from my limited knowledge many of the new MDR increases we’re not covered by the settlement of the Feller case.

 

[Allen Trent]

What is the basis for these cases? That the company has no basis for increasing the COI rates of the policies? I'm confused because I thought most of the increases were only affecting underfunded policies that were projected to have 10-11% interest rates.

The basis for the lawsuit is that the carriers have not had worse mortality experience than originally estimated, they have actually had better than priced mortality. So, to raise the COI tables on clients merely because they are making less returns than planned on their investment is not a reason to be permitted to raise the COI tables.

It affects all their policies, not just the underfunded ones. Higher COI per 1,000 net amount at risk impacts every policyholder & the performance of the policy due to increased costs

 

[Robert Barney]

Never buy "trust me" life insurance policies. If the company can raise the premiums, it's not "if" but "when". Nobody had to apologize for selling a fully guaranteed product.

 

[DHK]

The UL policies sold in the 80's or so... were sold on the notion of "whole life for half price" or "double the coverage at no additional cost".

They didn't learn from Guy Baker. Either you fund the box, or you pay the (increasing) curve. The product itself doesn't matter. All that matters is how well you "fund the box".

 

[achilles213]

Transamerica, Geneworth, AIG all carriers of the past. Dying, bailed out beasts. AIG Is owned 80% by the goverment after that near trillion dollar bail out.

LTC DEAD

 

[Allen Trent]

AIG Is owned 80% by the goverment after th

While I am not a fan of AIG or the bailout, I believe the govt is 0% owner of AIG & no longer owed any money. Kind of remember that was finalized a few yrs back

 

[achilles213]

While I am not a fan of AIG or the bailout, I believe the govt is 0% owner of AIG & no longer owed any money. Kind of remember that was finalized a few yrs back

Your right then

However it still remains part of the federal reserve syndicate. Where the commercial banks, and giants insurance companies are arms of of the same beast.

Bank issues you mortgage, then makes you pay insurance to cover their risk...etc.

It's why these things were bailed out and not the population

 

[scagnt83]

The government is no longer in owner in AIG or any other insurance company or any other bank for that matter. TARP was paid back (with interest) to the US Treasury.

Many insurers were forced to take the money despite not wanting it or having an immediate need for it.

AG Life is not a member of the Federal Reserve. Perhaps AIG has a banking arm that is a member... but that is a separate entity from the Life Insurance Company.

Banks often require life insurance on loans because you owe them the money regardless. it was money you did not have to begin with. If you have a problem with guaranteeing it will be paid back if you are dead, then you should stick to using your own money.

Our banking system is not perfect by any means. There are pros and cons to a Fiat monetary system. But there are pros and cons to the gold standard as well.

However, none of this directly has anything to do with life insurance. To equate the two in that fashion is just misguided.