A class action lawsuit was filed last week in the Eastern District of Pennsylvania against Lincoln National Life Insurance Company on behalf of the owners of Jefferson Pilot-issued, JP Legend 100, 200, 300 and 400 series life insurance policies. Lincoln National purchased Jefferson Pilot in March of 2006.
We wrote about this COI increase in August of 2016. The announcement from the carrier at that time noted COI changes, stating that while most of the changes were increases, there were some decreases, “reflecting Lincoln’s commitment to acting fairly and responsibly.”
The class action lawsuit alleges the COI increase breached the contracts underlying the policies in several ways. First, the “increases were based on non-enumerated factors” since “the 3 factors that Lincoln relies upon to justify the increase could not possibly justify an increase of the size” of the policies in question. Those three factors included “its estimates for future cost factors of investment returns, mortality assumptions, and reinsurance costs.” According to the suit, the carrier’s “expectations of future investment returns could not reasonably be materially lower than what Lincoln originally expected—and certainly not nearly so much lower as would be need to justify” the stated increases of “50-90%,” which are in line with the ITM TwentyFirst analysis of these policies in portfolios we manage. The suit points out that, in filings from 2010 to 2014, Lincoln stated, “It expects mortality experience to improve.” The lawsuit also notes that “Mortality (normally the most important element in COI charge rates) has continuously improved nationwide since the policies were issued.” Reinsurance costs “cannot provide material support for the increase, and reinsurance costs are not an enumerated factor for an increase,” according to the filing.
Second, the suit alleges that cost increases were not designed to respond to expectations but to recoup losses. The policy contract states, “[R]ates will be based on our expectation of future monthly interest, expenses, and lapses,” which “forbids COI increases that are based on a carrier’s desire to increase profits or to make up for past losses,” according to the lawsuit. The lawsuit also indicates that Lincoln admitted they were focused on the past, not the future, since they pointed to a “decade of persistently low interest rates” and the “recent historic lows” to provide a rationale for an increase when the costs were announced.
In addition, the suit points out that the cost increases were not uniform “across insureds of the same rating class” and notes “COI rates being higher when the insured is 98 years old than when she is 99.” According to the suit, the “strange and illogic shape” of the cost increase “could not possibly have been replicated for every one of the same rating class,” which violates the contract provision. This provision states, “any change in the monthly cost of insurance rates used will be on a uniform basis for Insureds of the same rate class.”
The lawsuit also points out that, by refusing to provide an illustration while the policy was in the grace period, Lincoln breached the contract. During the grace period, the policy is still considered to be in force, and the contract language states that the carrier would, if asked, “provide, without charge, an illustration showing projected policy values based on guaranteed as well as current mortality and interest factors.”
The suit seeks damages and court costs, along with reasonable and necessary attorneys’ fees, an injunction against the increase, treble damages, and “such other relief as this Court may deem just and proper under the circumstances.”
For a copy of the lawsuit, contact email@example.com.
I was so shocked by the increases; and the loss of all my total cash value in 4-yrs. that I cashed in my policy. Do I have any recourse since I have done that ? I live in Matthews, North Carolina
John: Sorry as I did not see this until tonight. Yes, you do have recourse. If you email me at firstname.lastname@example.org I can provide information. THANKS
John: There are lawsuits out there. If you email me at email@example.com I can provide you with contact information.
They incease my life insurance premium from 3400.00 a year to 18.000.00 a year starting 01/01/2017 if you can help me have someone to contact me it will expire next month I cannot pay 18.000.00 a year please help if you can I am 78 years old I have had this for 14 years. Benny owen paoli in 47454 . P h 812 723 4723. Cell 812 521 4213 1116 n gospel st paoli in—pro box 183 paoli in 47454 thank you
My husband’s premium has increased from 7,200.00 a year to over $20,000. We are considering some reduction of face amount but the MEC regulations keep us from reducing to an affordable amount.
Will be be damaged in the event of a positive legal outcome if we reduce the benefit? How do we stay informed of the progress and is there any estimation of timing?
Thank you. Harriet Bynum. firstname.lastname@example.org
I cannot speak to any outcome of the litigation or what it would mean should you reduce the benefit, but if you want to email me I can give you contact information on the lawsuit. My email is email@example.com.
I also have a Universal Life Insurance Policy with what is called Lincoln Financial Group previously called Lincoln National Investment.IManagement Co.
I have a $50,000.00 policy that I have been paying on for approximately 30 years. I also found out that my policy is worthless. Is it to late to get any compensation? I never knew about the other lawsuits.
Susan: I also received your email and hope you got my response with the information about the lawsuit. THANKS
I would like to have more info. regarding the law suit. My premiums have increased by about 200 % per month. I will have to cash out . The length of insurance went down fro age 80 to 75, and if I don’t cash out the surrender value ,I will loose it. Clearly a ploy to get rid of older people,have them cash out at 10% of death pay out,enroll younger people at higher cost. What a ploy and breach of contract,expectations and confidence. any one who buys insurance now can have all changed, I wonder,whats their CEOs salary?
If anyone wants info on the lawsuit, email me directly at firstname.lastname@example.org. THANKS
Received yearly statement from these morons for a policy I’ve had since 2003. I am now going in the hole monthly to have this policy. How can a company rip consumers off like this without being prosecuted?