A life insurance company has reached an agreement with state and federal regulators in connection with allegations of improper sales of life insurance products on military base grounds.
American Amicable Life Insurance Company, Waco, Texas, has agreed to pay about $10 million in cash to 57,000 members of the armed services who bought the company’s Horizon Life product between 2000 and July 15, 2006, when the product was discontinued.
The company also has agreed to provide other compensation with an estimated value of about $60 million, by improving contract terms for current holders of the Horizon Life policies.
Service members who bought a Horizon Life policy in 2002 while assigned to a training unit at Fort Benning, Ga., are eligible to split $800,000 in refund funds remaining in an existing $1.4 million refund fund.
Regulators will be banning American Amicable and its affiliates from military bases for 5 years and impose other marketing restrictions, officials say.
The settlement includes state regulators, the U.S. Department of Justice and the U.S. Securities and Exchange Commission.
“This agreement shows that regulators, both national and state, are united in protecting our military personnel, many of whom are young and financially inexperienced, from deceptive or unfair sales practices,” says Georgia Insurance Commissioner John Oxendine.
American Amicable put out a statement emphasizing that it has taken major steps to improve its compliance programs.
“We are a strong company, and that is because of our employees, our agents and our products,” American Amicable President Lanny Peavy says in the statement. “This settlement is in the best interest of our customers, employees and agents, and will allow us to focus on moving forward as we continue to provide service to our policyholders.”
American Amicable supplied prospects with literature that described the Horizon Life policy accurately, but it trained agents to describe themselves as “financial advisors” and to convince soldiers that they would reap substantial gains from investing in the policies, SEC officials say.
In most cases, service members who bought the policies gained little or nothing from their investments, officials say.