NASCAR Champ Kyle Busch Sues Pacific Life Over $8.6M Losses Tied to IUL Policy

The defendants used misleading illustrations, undisclosed costs and false promises of guaranteed multipliers and controllable charges to induce the Busches to pay more than $10.4 million in premiums, resulting in net out-of-pocket losses exceeding $8.58 million, the firm said, citing the complaint.

"I never thought something like this could happen to us," Kyle Busch said. "These policies were sold to us as part of a retirement plan — something safe and secure that would grow tax-free and protect our family long after racing. We trusted the people who sold them, and the name Pacific Life. But the reality is far different. What was pitched as retirement income turned out to be a financial trap."

"I am learning how completely misrepresented these products can be when they're sold," said Samantha Busch. "It makes me worry about families, retirees and anyone trying to plan responsibly for their future who may be hearing those same promises. If this could happen to us, it could happen to anyone, and I want people to be aware and protect their financial future."

The Busches also posted a social media video to warn the public against what they called an insurance scam.

IUL is a type of permanent life insurance that offers a death benefit along with a cash value portion that can earn interest by tracking a stock index. While the policies have a guaranteed minimum interest rate that limits losses tied to the market, gains may also be capped.

Proponents of IUL argue that the policies are good products that are often misleadingly, and aggressively, marketed. Others say that clients who buy IUL and other complex products are not given appropriate disclosures on how the products could work over a long time period.

"This is not just an issue for celebrities or professional athletes. It is an issue for everyday Americans," RP Legal founding attorney Robert G. Rikard said.

"Across the country, teachers, small business owners and retirees are being sold complex life-insurance contracts as if they were simple, risk-free retirement plans. The danger lies not in the product itself, but in how it's marketed and presented as guaranteed paths to retirement security," he added.

Victims of IUL schemes often discover years later that the guarantees and illustrations they were shown were based on assumptions that could never be sustained, according to the firm. By then, escalating policy costs and vanishing cash values have erased years of savings, leaving families without the retirement security they were promised, the firm said.

Pacific Life told ThinkAdvisor via email Thursday, “To maintain the privacy and trust of our clients, Pacific Life does not comment on the specifics of individual matters. For nearly 160 years, we have committed ourselves to fairness, integrity and acting in the best interests of our clients — and we continue to take this responsibility very seriously.

"Pacific Life offers several different life insurance products, each with unique characteristics that are important to understand before making a decision. We encourage individuals to visit our website or contact their financial advisor to learn more about our products."

Credit: Matt Kelley/AP Images