A lawsuit against Pacific Life by a Washington couple dissatisfied with a PDX indexed universal life policy is back on track after a round of refilings.
Simona G. Marie and Thomas Lewis, from Richland, Wash., initially filed a lawsuit June 27 against PacLife, Harding Financial Partners and Andrew Brown, the producer who sold them a PacLife PDX life insurance policy.
After PacLife made a motion to dismiss for failure to state a claim, Judge Stanley A. Bastian gave the plaintiffs an opportunity to file an amended complaint. They did so on Sept. 18. PacLife filed a second motion to dismiss this week.
“Plaintiffs attempt to plead around the fact that Pacific Life did no more than issue a Policy and Illustration by attacking the form of the Policy itself, making the conclusory allegation that the illustrations and the inner working of the type of policy are misleading and deceptive, warranting both compensatory and punitive damages,” PacLife attorneys wrote.
Illustrations used to sell FIA and indexed universal life insurance have been subjected to several lawsuits, with mixed results. Industry analysts and many regulators agree that illustrations are problematic and unrealistic.
A similar lawsuit over illustrations and returns in Texas took a different route recently. In that case, Lincoln Financial opted for settlement talks with nine plaintiffs – including an ex-Lincoln agent – who allege that the insurer misrepresented the potential returns with its OptiBlend fixed indexed annuity.
Starting December 2017, plaintiffs made five premium payments to PacLife totaling $505,000, the lawsuit states. Their investment gain added $248,650. The couple surrendered the policy in April 2022 and received a $202,655 check from PacLife. They claim the insurer made nearly $551,000 from the IUL contract.
Plaintiffs allege negligent misrepresentation, breach of fiduciary duty, professional negligence, breach of contract and violation of the Washington Consumer Protection Act.
Marie and Lewis were successful married business owners in 2017 when they bought a PDX policy with a “Performance Factor,” paid with annual $200,000 premiums for five years, the lawsuit said.
“Simona Marie and Tom Lewis purchased the policy with the intent to provide them with income in retirement,” the lawsuit said.
After making $200,000 premium payments in 2017 and 2018, Marie and Lewis decided to reduce their final three premium payments to $35,000. Brown indicated that the couple could reduce their premium in exchange for reduced financial benefits, including reduced annual income to $ 117,000 per year from ages 65 to 100, the lawsuit claims.
On Nov. 14, 2021, the couple made the final $35,000 premium payment. A month later, they joined Brown on a Zoom call to discuss their investment, the lawsuit said. Instead, Brown informed Marie and Lewis they would need to pay further premiums to maintain their contract.
Pacific Life: no wrongdoing shown
The couple say they were never told that the reduced premium payments could endanger their policy, or prompt additional premium payments. Marie and Lewis surrendered the policy in April 2022, paying PacLife a $45,000 surrender charge.
In a competitive IUL sales world with constantly changing regulations, the plaintiffs sought to paint the PacLife PDX as an especially egregious product.
“No IUL product in the industry contemporaneous with the PDX policy was riskier than the PDX policy,” the lawsuit reads.
But PacLife said their policy performed within the parameters outlined in the policy the plaintiffs signed.
“When Marie grew unhappy with the consequences of her own financial decisions, Plaintiffs brought the present suit in an attempt to place blame on anyone else,” the PacLife response reads. “The Amended Complaint demonstrates that any alleged harm Plaintiffs claim to have suffered was a result of Marie’s decision to purchase the Policy and pay a $1,000,000 premium over five years.
“Marie later decided to pay only half of the total premiums, and nevertheless expected the Policy to perform precisely as originally illustrated.”
InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at email@example.com. Follow him on Twitter @INNJohnH.
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