John Hancock Settles Life Insurance Class Action for $91M

John Hancock Life Insurance Co. has agreed to pay $91.25 million to settle a class action lawsuit accusing the company of using improper mortality rate calculations that caused consumers to pay inflated rates.

On Friday, plaintiff 37 Besen Parkway LLC filed a memorandum supporting its motion for preliminary approval of the John Hancock class action settlement.

“The $91.25 million settlement fund will be used to compensate tens of thousands of elderly insureds, and is a remarkable result for an alleged breach of a contractual promise that this Court had preliminary concerns about being ‘awfully vague’ and ‘almost sounds illusory,’” the plaintiff says in the memorandum.

The plaintiff reportedly owns a Universal Life Estate Protection policy issued by John Hancock that contains the contractual promise: “The Applied Monthly Rates will be based on our expectations of future mortality experience.”

37 Besen Parkway originally filed the John Hancock class action lawsuit in December 2015, claiming John Hancock should have lowered its cost of insurance rate to account for improved mortality, that John Hancock incorporated improper factors into its cost of insurance rates, and that the life insurance company charged improper Age 100 Rider charges.

The John Hancock class action lawsuit asserts that the company failed to lower the cost of insurance charges even though mortality rates improved across the United States. The plaintiff argues that the rates should have decreased, but John Hancock failed to lower them.

The plaintiff claims that the Age 100 Rider allowed John Hancock to charge policyholders more before they turn 32 and less once they turned 100.

However, the John Hancock class action lawsuit claims that the life insurance company continued charging the higher premiums even after the policyholder turned 33.

According to the John Hancock class action settlement documents, Class Members will automatically receive funds and will not need to file a Claim Form. No unclaimed settlement funds will revert to John Hancock, the plaintiff’s memorandum states.

Class Members of the John Hancock settlement include all owners of all universal and variable universal life insurance policies issued by John Hancock or its predecessors that state: “The Applied Monthly Rates will be based on our expectations of future mortality experience.”

Under the terms of the proposed John Hancock class action settlement, each Class Member will be entitled to a pro rata share based on the Class Member’s share of the total damages.

Top Class Actions will post updates to this class action settlement as they become available. For the latest updates, keep checking TopClassActions.com or sign up for our free newsletter. You can also receive notifications when this article is updated by using your free Top Class Actions account and clicking the “Follow Article” button at the top of the post.

The plaintiffs are represented by Glenn C. Bridgman, Steven G. Sklaver, Seth Ard and Rohit Nath of Susman Godfrey LLP.

The John Hancock Life Insurance Class Action Lawsuit is 37 Besen Parkway LLC v. John Hancock Life Insurance Co., Case No. 1:15-cv-09924, in the U.S. District Court for the Southern District of New York.