Editor’s note: This article was originally published by the Daily Business Review, a sister site of LifeHealthPro, and is reprinted here with their permission. Click here for the original post.

Universal life insurance policyholders behind a multimillion-dollar class action are asking a Miami federal judge to stop Transamerica Life Insurance Co. from drastically raising their monthly charges.

The lawsuit alleges Transamerica has increased cost-of-insurance charges to make up for low U.S. interest rates. Some customers’ premiums almost doubled, they claim.

The increases are “putting policyholders in the impossible position of having to immediately decide whether to pay the increased premiums, see the increased charges deducted from their policies’ accumulation value or surrender their policies altogether,” said a motion for preliminary injunction filed May 4.

The motion was filed for the plaintiffs by Kozyak Tropin Throckmorton in Coral Gables, Harke Clasby & Bushman in Miami Shores, Merlin Law Group in Tampa and Searcy Denney Scarola Barnhart & Shipley in West Palm Beach.

Many class members bought their policies in the 1980s and 1990s when interest rates were high. The policies include a savings element, allowing the owners to use accumulated interest from savings toward premiums.

“High interest rates meant that policyholders did not expect to pay much to fund the policy in their more senior years because the interest would cover future expenses,” the March 25 breach-of-contract complaint states.

Cedar Rapids, Iowa-based Transamerica sent notices in 2015 and in January and February of this year letting customers know it would be increasing cost-of-insurance charges on certain universal life policies, according to the complaint.

“Now they’re being charged these exorbitant rates and being given no choice but to surrender their policies,” plaintiffs lawyer Adam Moskowitz of Kozyak Tropin said. “That’s why they need immediate relief.”

Transamerica spokesman Greg Tucker said the company is fully complying with its contracts and intends to vigorously contest the litigation.

Each policy specifies a maximum allowable monthly premium rate, he said. The company decides whether to charge less than the maximum based on interest, mortality, taxes and expenses associated with the policy.

“In 2015, based on its expectations about future performance of certain universal life policies, Transamerica prospectively increased monthly rates of these older policies,” Tucker said in an emailed statement. “No policy owner, including the plaintiffs in the recently filed litigation, is being charged a rate greater than the maximum allowable rate specified in his policy. It’s important to note that even after the increase goes into effect, the rates will still be at or below the maximum rates allowable under these policy contracts.”

The company has established a team to assist customers with any questions they have about the changes, he said.

Moskowitz disagreed with Transamerica’s position that it has done nothing wrong by staying within established maximum rates.

“That has always been the standard response by these insurance companies when they have been called out for their outrageous cost increases,” he said. “They are specifically prohibited from imposing these [cost-of-insurance] increases to simply recoup their past losses.”

The plaintiffs attorneys are coordinating with a similar nationwide class action filed in the Central District of California. Their claims will be resolved in either that court or before U.S. District Judge Kathleen Williams in Miami. A hearing on the preliminary injunction request has not yet been set.

Transamerica is not the first company to raise cost-of-insurance charges, but it’s a large company and the recent changes apply to thousands of policyholders, Moskowitz said.

“They’re being affected and damaged on a daily basis,” he said. “That’s why it’s important that the courts address this issue at this time, at least to preserve the status quo until the merits of the case can be decided.”

Transamerica, with $9.2 billion in assets, is represented by Markham Leventhal of Carlton Fields in Miami.