Equitable Life Insurance “Twisting” Policy Sales Class Action

This class action brings suit against AXA Equitable Life Insurance Company for “twisting.” In this process, the complaint says, the company and its brokers “trick life insurance customers into replacing their existing whole life policies into more costly Equitable universal life insurance policies that [have] lower rates of return and higher risk.” According to the complaint, “twisting” is prohibited in all but two states.

The Nationwide Class for this action is all entities residing in the US who, between January 1, 2010 and October 9, 2020, bought an “Athena” universal life insurance policy that Equitable issued, either directly or by surrender or lapse or by borrowing against an permanent life insurance policy they already held.

Much of the assertions made in this complaint come from an investigation by the New York State Department of Finance (NYSDF).

The complaint says that NYSDF found that the company systematically did not follow New York law’s disclosure requirements. As part of a settlement with the department, the complaint says, “Equitable was forced to correct the materially misleading disclosures it provided to consumers with corrected disclosures that revealed [Equitable’s] fraud.”

Another problem the complaint claims NYSDF detected was Equitable’s changing of the terms of the contract, so that customers did not receive what they believed they were getting.

For example, in the case of the plaintiff in this class action, Joel J. Malik, the complaint alleges that the policy he bought had a maximum growth of 12% per year, but the company in fact stopped his interest growth at a much lower rate.

Another problematic area for NYSDF was the marketing materials’ incomplete disclosure of the company’s premium requirements, such as the fact that premiums for Equitable’s policies could change depending on market rates, administrative expenses, and other expenses and costs. In addition, the complaint alleges, Equitable “also did not disclose that, based on the guaranteed assumptions, only, those policies will terminate without value after a certain number of years.”

These are some of the other allegations this complaint makes based on the NYSDF findings:

• Customers had to pay a 6-10% “upfront premium charge” on cash values they transferred, “even though whole life policies did not have upfront premium charges.
• One document “falsely represented that premium payment would not be required after the initial lump sum payment.”
• “The inherent costs and source of funding for the replacements, which was not disclosed, was not warranted or advisable under the circumstances[.]”
• The replacement transaction “was not in the consumer’s best interests.”

Also, the complaint claims the NYSDF found that the Disclosure Statement did not provide information to permit side-by-side comparisons of policies; and that another part of the Disclosure Statement falsely claimed that the new policies would provide a “lower cost of insurance.” Other provisions of the new policies, the complaint alleges, were also unfavorable and not disclosed.

The counts include violations of insurance law, breach of contract, and breach of the covenant of good faith and fair dealing, among other things.

Article Type: Lawsuit
Topic: Insurance
Tags: Deceptive Insurance Practices, Insurance, Life Insurance