On November 8th, a United States District Court judge in California’s Central District ruled that a consolidated class-action lawsuit against Transamerica could move forward. The lawsuit’s main allegation concerned Transamerica’s “breach of faith” for the cost of insurance (COI) increase in their Universal Life policies.
In the complaint filed, the plaintiffs argued that Transamerica was not allowed to set monthly deductions (which included the COI) “in whatever amount or by whatever method it determines.” The plaintiffs also argued that the standardized policy language requires that Transamerica can only change deductions based on underlying mortality rates and that Transamerica was not allowed to “set or increase [monthly deduction rates] to recoup past losses” because of low interest rates or other factors. They further argued that the deduction increase of “as much as 100%” caused “an astronomical increase in the premiums necessary to maintain coverage under the policies” which was designed to induce “shock lapses.”
On October 31, 2016, the court heard oral arguments. On November 8th, the Honorable Cristina A. Snyder ruled against Transamerica; their motion to dismiss the plaintiffs’ claims was denied.
For a copy of the Civil Minutes in the case, please email firstname.lastname@example.org.
Michael, what about the other carriers doing the same COI increases? Give me your best estimate of where this will end. All the best my friend.
Hi Glen: I really do not know where this will lead. I have heard at least one more lawsuit might be coming and I believe for this Transamerica case they will be working for an injunction against the COI increase, as we talked about in a prior blog. But I have not heard anything else on lawsuits against other carriers. Do take care.
Is there any group of Transamerica policy owners discussing how they are dealing with renewal premium invoices? My clients face a 600% increase in February, 2017. They would like to know what others in their position are doing.
Our policy face amount is $275,000. Premium paid for 17 years to date $170,000. Projected premiums for 5 more years is $150,000. So let’s see, pay $320,000 in premiums for a $275,000 death benefit. If this isn’t the most shameful example of “bait and switch”. You pay premiums for 17 years and when almost at the goal line they move the goal post.
Hi Scott Gardiner. I have a client with a similar situation. She is a 84 year old widow with a $25k policy. She has paid $29k and is about lose her policy because she can no longer afford it. The COI in 2009 for the policy was, $620.65. The COI in 2016, $1,631.61, a more than 260% increase. The client has paid into the policy since 1986 and was never late with a payment. Today, February 21, 2017, the cash value of the policy is, $261. Imagine, an 84 year old widow being taken advantage of in this way. Scott, if you are able to find an amiable resolution, please post here. Thank you.
To both Scott and Regina: If you would like further information on joining a class action lawsuit, you can email me at email@example.com. THANKS
I have tried to contact you via your email firstname.lastname@example.org and it say invalid email address.
My apologies. It was not entered properly.
Transamerica have cheated me,I have paid on this policy since 1987,theuy are crooks,I want every cent I paid with interest.
Hello we live in SC our Transamerica policy is located in Florida according to the local agency. After speaking to him this morning I realize we too are victims how would we go about joining this lawsuit?
Sincerely Elizabeth and Morris Connell