Can You File an IUL Lawsuit for False Marketing?

Consumers may be able to file an IUL lawsuit if their insurance provider misrepresented the policy’s performance with false marketing promises.

What Is an IUL Policy?

An indexed life insurance policy is like other life insurance policies in that it will provide a death benefit to a beneficiary in exchange for premiums paid every month. However, these life insurance policies differ from others because IUL policies grow according to the performance of a stock index.

For an IUL policy, the interest rate on the policy’s cash value is tied to a stock market index such as the S&P 500 or Nasdaq 100. Depending on the policy’s terms, and pros and cons, a policyholder can tie up to 100% of their policy’s value to the stock index. When the stock index performs well over the course of a year, the gains are credited to the policy based on a percentage rate – but the policy’s interest rate may be much higher than those seen with normal life insurance policies.

Although IUL policies have the potential for high rates of growth, the policies also have the risk of no growth if a stock market index performs fully. Most IUL policies have a crediting “floor” of 0% to 1% which ensures that, even if a market consistently performs fully, the policy will grow by at least 0.5% or whichever floor is determined by the policy’s floor.

Even if a market index performs extremely well, not all of these gains will be translated into a policy’s interest rate. Most policies have both an interest floor and an interest cap, meaning that maximum gains are limited even if a stock index performs extremely well.

Do Insurance Brokers Use False Marketing To Advertise IUL Policies?

Although IUL policies can be a good idea for some people, it is important that insured individuals are properly informed of the risks surrounding the policies. If an insurance company uses false marketing to overstate the benefits of IUL policies, consumers could make serious financial decisions without knowing the true risks of these policies.

Has an IUL Lawsuit Been Filed?

After being misled by some companies about the performance of IUL policies, some consumers have filed IUL lawsuits for false marketing.

In August, a California woman Hong Li filed a class action lawsuit against Pacific Life Insurance and Sky Vision Insurance Agency for allegedly deceiving her and other consumers about the performance of their IUL policies.

“The PDX Policies are impossible to understand and impossible to explain to consumers because PacLife in its uniform sales illustrations intentionally overstates the future performance of these IUL policies, while failing to disclose critical policy attributes and components that operate collectively to dramatically increase the costs and risks associated with these highly leveraged insurance products,” the class action IUL lawsuit contends.

Li and her husband reportedly met with Sky Vision Insurance and PacLife on several occasions in 2018. During this meeting, their agent Tiffany Xu reportedly encouraged them to take out an Indexed Universal Life policy based on “false and misleading” representations of the policy’s performance.

For example, during one meeting, Xu reportedly told the Li’s that the policy’s value could support yearly withdrawals of $175,000 after paying five years of annual premiums at $500,000. Even with these withdrawals, Xu said that the policy would remain in force for the remainder of Li’s lifetime. On another instance, Xu reportedly represented that the policy would provide an initial death benefit of over $12 million which would grow to over $18 million by the time Li turned 80.

After these representations, Li reportedly opted into a IUL policy through PacLife. However, after two years of paying $500,000 annual premiums, Li reportedly started to notice significant losses. On her February 2020 quarterly statement, Li reportedly found that her policy sustained over $54,000 in losses between Oct. 26, 2019 and Jan. 25, 2020. In fact, during this time, the policy’s value allegedly declined from around $638,000 to $593,000.

According to the IUL class action lawsuit, Li would not have taken out an insurance policy if she knew that Xu used false and misleading illustrations about policy performance to induce her into purchasing the policy.

Can I File A IUL Lawsuit?

If your insurance company misrepresented the performance potential of your indexed universal life policy, you may be able to file an IUL lawsuit. Companies that use false marketing could be in violation of state or federal law, entitling consumers to damages and other relief. A qualified IUL attorney can determine your eligibility for legal action.

The IUL Class Action Lawsuit is Hong Li v. Pacific Life Insurance Company, et al., Case No. 30-2020-01153426-CU-BT-CXC, in the Superior Court of the State of California in and for the County of Orange.

Free Indexed Universal Life Policy Deceptive Marketing Class Action Lawsuit Evaluation

If you have purchased an IUL policy, you may be entitled to compensation by joining this Indexed Universal Life Insurance False Marketing lawsuit investigation.

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This article is not legal advice. It is presented
for informational purposes only.