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.”