Q & A: Life Insurance Overcharges Force Consumers to Pay or Surrender Policies

            Through unauthorized expense charges and excessive rate hikes, permanent life insurance policy owners nationwide have been getting ripped-off for decades. 

            The types of permanent policies involved here are often referred to as “universal,” “variable universal,” “whole,” and “variable whole” life insurance policies.  Contrary to the plain language of these policies, insurers have been overcharging policy owners through policy cost of insurance charges and rate hikes.  These overcharges drain a policy’s cash value – in other words, money that should be going to the investment side of the policy is impermissibly diverted to the insurer’s coffers.  Over time, many of these policy owners are left with a “lose-lose” decision: continue to pay the overcharges to maintain their insurance, or surrender the policy after having paid significant premiums for decades.  Many who do surrender find themselves no longer insurable due to age or changed medical condition. 

Who is taking action on behalf of life insurance policy owners?

For almost a decade, Miller Schirger LLC and Stueve Siegel Hanson LLP, two law firms based in Kansas City, have been advancing and resolving claims on behalf of consumers who own “permanent life insurance,” sometimes known as universal, variable universal, whole life, variable whole life or flexible premium policies.

We have recovered more than $2 billion in cash and death benefits for policyholders.

Why should life insurance owners and the general public care?

Improper deductions and overcharges gut the cash value of permanent life insurance policies and force many policy owners to choose between continuing to pay premiums and subject themselves to further overcharges just to keep their insurance, or surrendering policies they’ve paid so much into, but can no longer afford. This is creating a widespread problem within the life insurance industry. Extensive investigations conducted by our law firms over many years have revealed that overcharges are not limited occurrences. We believe there are millions of policy owners who are currently being overcharged by many different insurers.

What types of life insurance policies may be subject to improper deductions and overcharges?

Permanent life insurance policies – sometimes known as universal, variable universal, whole life, variable whole life or flexible premium policies – contain a “cost of insurance” charge, or a monthly deduction of some sort, that is deducted from a policy’s cash value each month.

How are policy owners being overcharged on these policies?

Buried within a policy’s cost of insurance charge, and other similar charges, may be hidden expenses or “loads” that are not authorized by the terms of the policy. These hidden expense loads ultimately drain the policy’s cash value, forcing policy owners to forfeit policies they can no longer afford. And recently, life insurers also have resorted to instituting massive rate hikes (not authorized by the policy) that have caused an even greater and more rapid decline in policy cash values.

What is the harm to individual policy owners?

The amount of overcharges that result from this conduct is substantial. In many cases, most of the “cost of insurance” charge is comprised of amounts not permitted by policy terms. This adds up over time. Depending on the size of the policy, “cost of insurance” overcharges can reach amounts in the tens of thousands of dollars, or more. The negative impact of these overcharges increases as policy owners get older, ultimately forcing policy owners to forfeit their “permanent” insurance policies because they can no longer afford them.

Could there be more cases out there?

Yes. We are continuing our efforts on behalf of consumers who we believe are being overcharged by several life insurance companies. Although every case is different and should be evaluated on its own merits, we hope to secure relief for both current and former policy owners who have been subjected to improper deductions and overcharges.

What should I do if I think I’m being ripped off?

If you suspect there is a problem, contact us today – online or toll-free at 888.816.2108.

Stueve Siegel Hanson LLP is a Kansas City, Missouri based law firm representing business and individuals in high stakes litigation on a contingency fee model. The firm includes 40 lawyers in Kansas City, New York and San Diego and represents plaintiffs and defendants nationwide in complex business, class action, wage and hour, environmental, and product liability litigation and trials. www.stuevesiegel

Miller Schirger LLC is a Kansas City, Missouri, based law firm focused on resolving complex disputes on behalf of businesses and individuals nationwide.  Its attorneys represent plaintiffs and defendants in state and federal trial and appellate courts, before administrative and regulatory tribunals, and in arbitration and other alternative dispute resolution proceedings nationwide. www.millerschirger.com

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