WHEN INSURANCE COMPANIES ACT IN BAD FAITH
April 20, 2016
Most every American purchases insurance for one purpose or another; car insurance, homeowner’s insurance, life insurance, etc. We purchase this “protection” because we want to make sure that, should something catastrophic happen, we will be covered by the insurance company that we’ve been paying into each month.
However, this doesn’t always work out as expected (or as it should). For example, in late March, several plaintiffs sued Transamerica Life Insurance Company for raising the cost of insurance on some universal life contracts, ultimately acting in bad faith and causing clients to suffer damages due to giving them no choice but to pay more money or lose all the money they’d already paid into their premiums.
This specific lawsuit against Transamerica alleges that, in the late 1980s and early 1990s, Transamerica sold universal life insurance policies, guaranteeing to policyholders that it would provide a rate of no less than 5.5 percent annually, promising to protect their families well into old age. Then suddenly, in August 2015, the company increased monthly deductions taken from clients’ accounts by 38 percent. At issue now is the claim that the reason for these premium increases was to subsidize the cost of meeting the company’s interest guarantee and make policies overall more profitable. In other words, the company created its own burden by providing low interest rates and then found it difficult to pay out claims that were based on policy contracts with more generous provisions in them. Now, not only is Transamerica now being sued for breach of contract, but also unfair competition and abuse of elders.
“A Betrayal of Baby Boomers”?
This isn’t the first lawsuit like it. Other companies have recently been increasing the costs of some universal life insurance policies, eliciting litigation from clients as well. Ultimately, the outcome of these cases will likely depend upon the specific language included in the policies and how the court applies the law.
Most clients challenging these premium hikes argue that the reality is simple: insurance companies are simply trying to make clients pay for a poor return on their investments. This leaves people who have been paying into these premiums with no alternative but to cancel the policies they’ve been paying on for years and years – and that’s arguably illegal. In other words, their only choice—after paying the company thousands of dollars since 1989—appears to be paying much higher premiums or losing the policy (and all the money that went into it) altogether. For these reasons, Consumer Watchdog is calling it “a betrayal of baby boomers.”
Clearwater Insurance Attorney
Have you been the victim of an insurance policy, whereby you were promised one thing, and then it was denied to you unless you paid the company more, many years later? If so, this company may be liable for any damages caused as a result. Contact Clearwater attorney Mike Walker online or call for a free initial consultation to discuss your case.