Pacific Life Sold Complex IUL Policy as Retirement Strategy: Lawsuit

"This case is not about market performance, hindsight, or a misunderstanding of policy fine print," the suit maintains. "It is about a deliberate, multi-step sales campaign that targeted retirees, cultivated trust through seminars, media appearances, and repeated solicitations, and then leveraged that trust to persuade Plaintiffs to entirely liquidate the retirement savings they had accumulated over a lifetime of work and redeploy those assets into a single, commission-driven insurance structure that was structurally incapable of performing as represented."

Neither Christopher Dixon nor Samuel Dixon informed the plaintiffs that Pacific Life "had investigated their conduct in connection with the marketing and sale of Indexed Universal Life policies in South Carolina and had terminated their appointments as Pacific Life producers in or around early 2019," the suit states.

To the contrary, the Dixons "continued to hold themselves out as trusted advisors, allowed Plaintiffs to rely on prior representations regarding the RANT strategy and the policy's performance and permitted Plaintiffs to continue paying substantial premiums and incurring tax consequences without disclosure of the investigation or termination," the suit contends.

Not Sold as Insurance

The product "was not sold as insurance," the suit states.

"It was sold as a replacement retirement plan, marketed as tax-free, low-risk, and self-funding after a limited number of years," the suit continues. "In reality, it was a highly complex, non-guaranteed insurance contract whose performance depended on insurer-controlled variables, aggressive assumptions, and compensation-driven design choices that transferred long-term risk to Plaintiffs while generating immediate commissions."

The plaintiffs state that they were "induced to dismantle their retirement portfolio, incur substantial and unavoidable tax consequences, suffer reductions in Social Security income, experience increased Medicare costs, and lose the financial security they had spent decades building."

As the laswuit explains, "an indexed universal life insurance policy, commonly referred to as an IUL, is a type of permanent life insurance contract that combines a death benefit with a cash value component whose credited growth is tied to the performance of one or more external financial indices, subject to caps, participation rates, multipliers, fees, cost-of insurance charges, loan mechanics, and other non-guaranteed policy elements controlled by the insurer."

In early 2018, the plaintiffs became aware of Christopher Dixon and his affiliated firms through "retirement-focused seminars, local advertising and media appearances in which Dixon and his associates presented themselves as experts in tax planning, retirement income planning, estate preservation and financial planning for retirees," the lawsuit states.

The plaintiffs, in their 60s, did not seek out an indexed universal life policy, an insurance-based strategy, or any form of leveraged or alternative retirement product.

"They were seeking safe, conservative guidance to protect those assets from market risk, taxes, and erosion, not to replace their retirement plan with a new financial product," the lawsuit continues, and "expressed no need for life insurance coverage to protect against a specific loss."

Dixon "expressly advised Plaintiffs that the substantial tax liabilities created by liquidating their qualified retirement accounts would be paid through policy loans taken from the IUL itself, and that this structure would result in no out-of-pocket tax payments, no losses, and no financial disruption to Plaintiffs," according to the suit.

The plaintiffs "were told that the policy would effectively pay its own taxes and that any amounts owed to the IRS could be satisfied by requesting checks from Pacific Life," the lawsuit states.

Pacific Life didn't respond to a request for comment.