A class action lawsuit filed in the United States District Court in New York, alleges that John Hancock Life Insurance Company (U.S.A.) has forced policyholders to pay “unlawful and excessive cost of insurance (“COI”) charges,” as well as “unlawful and excessive premiums.”

According to the filing, policy provisions in the John Hancock policies referenced “specify that monthly cost of insurance (“COI”) rates “will be based on ”expectations of future mortality experience – and nothing else.”  In addition, the filing notes that the carrier “contractually promised to review those mortality-only based COI rates at least once every 5 policy years.”  Based on those policy provisions, the suit further alleges, John Hancock agreed to “decrease COI rates on its customers when there is an improvement in mortality.”

Noting that “nationwide mortality rates have declined significantly over the past several decades,” and that the carrier itself stated “in regulatory filings over the past 15 years that mortality experiences were substantially better than it expected,” the lawsuit is asking for “monetary relief for the COI overcharges that John Hancock has wrongly imposed on its customers.”

The suit also charges that the carrier collected “unauthorized additional premiums under an Age 100 Waiver of Charges Rider (“Age 100 Rider”) included in certain John Hancock life insurance policies.”  The Age 100 Waiver of Charges Rider states that after the insured reaches age 100 no additional premium will be collected on the policy.  According to the suit, there is an additional charge for this rider and the policy “sets the additional premiums that John Hancock could charge and the period of time in which these additional premiums would need to be paid under the Age 100 Rider.”  Those additional premiums could only be charged, according to the filing “during the years in which the underlying insureds were 32 years old or younger.  The policy did not provide for or permit John Hancock to charge any additional premium for the Age 100 Rider for insureds that were 33 years old and older.”  However, the suit alleges that “John Hancock charged plaintiff additional premiums for the Age 100 Rider even though the insureds were older than 32 years old.”  Those filing the suit seek “monetary relief for these impermissible additional premiums charged by John Hancock and paid by plaintiff and other similarly situated policyholders.”

The lawsuit, filed on December 21st is an interesting way to end 2015, a year in which a number of carriers raised COI rates on its policies.  ITM TwentyFirst will be following this case closely and reporting back as the case progresses.