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NU Online News Service, June 29, 10:15 a.m. – London Life Insurance Company, London, Ontario, says it has negotiated a settlement of a class-action suit involving complaints about participating variable-return life insurance policies sold to 500,000 customers in Canada between 1980 and 1995.
The settlement must be approved by the courts in British Columbia, Ontario and Quebec.
If approved, the settlement would provide about $180 million for purchasers of the variable-return policies.
London Life has already paid $60 million to customers through earlier initiatives, the company says.
The settlement resolves complaints about policies sold with features that were supposed to use policy dividends to offset the cost of the premiums.
When interest rates fell and returns on policy assets declined, many clients ended up paying higher premiums than they had originally expected.
London Life will award the settlement payments through a combination of payments for all affected customers and enhanced benefits for those who bought the policies mainly because of the premium offset features, London Life says.
Future London Life policyholder dividends will continue to reflect changes in such factors as interest rates, claims and expenses, but the company will not recover the cost of the settlement benefits and expenses through future dividend scale changes, the company says.
London Life is a subsidiary of The Great-West Life Assurance Company, Winnipeg, Manitoba.
“The settlement is not expected to have a material adverse effect on Great-West Life’s consolidated financial position,” Great-West says.
More information is available from the London Life Web site, at http://www.londonlife.com