Jackson National Life Insurance Increases in COI Class Action

The complaint for this class action brings suit against the Jackson National Life Insurance Company, alleging that it has breached the terms of its agreements with customers. The complaint claims that the company made customers pay “inflated monthly charges for cost of insurance (‘COI’) that are not allowed by the plain language of their insurance contracts.”

Plaintiff Suneel Rajpal has a universal life insurance policy with Jackson. According to the complaint, this is how it works: Each month, Rajpal pays the premium. That money goes into an Accumulation Value that earns interest and is held in trust by Jackson for Rajpal. Each month as well, Jackson deducts certain amounts from the Accumulation Value to pay for the policy.

The main item deducted from the Accumulation Value is the Cost of Insurance (COI). The complaint says, “The COI charge represents Jackson National’s risk—the chance that Jackson National will have to pay the death benefit … when the insured dies.”

Specifically, the complaint quotes the policies as saying, “The monthly cost of Insurance Rate is based on the sex, attained age, and rating class of the person insured. Monthly Cost of Insurance Rates will be determined by the Company from time to time based on its expectations as to future mortality experience.” Mortality expectations, the complaint alleges, are the only basis on which Jackson can change its COI rates.

The complaint points out, “Nationwide mortality rates have declined significantly over the past several decades. … As a result, insureds are living longer than Jackson National originally anticipated when the policies at issue were first priced.”

If customers’ likely lifespans have increased, the complaint alleges, then the COI rates should decrease. Otherwise, the complaint claims, Jackson is playing a “heads I win, tails you lose” game in which it gets to increase rates based on mortality figures, but is never required to decrease them on the same basis.

When an insurance company can keep increasing rates on insurance policies but never needs to decrease them, it gets two benefits. First, it gets to collect higher payments from insureds. Second, if the costs become too high for the insureds because of the ever-higher trends, policyholders may be forced to forfeit their policies, letting Jackson escape from the obligation ever to provide the death benefit.

Two subclasses have been defined for this class action.

  • The National Subclass is all persons who own or owned a universal life insurance policy issued or administered by Jackson National, where the terms provide for (1) an insurance or COI charge or deduction calculated using a rate based on expectations of future mortality experience, and (2) additional but separate policy charges, deductions, or expenses.
  • The California Subclass is the same, except that instead of “all persons” it has “all California residents.”
Article Type: Lawsuit
Topic: Insurance

Most Recent Case Event

Jackson National Life Insurance Increases in COI Complaint

March 11, 2020

The complaint for this class action brings suit against the Jackson National Life Insurance Company, alleging that it has breached the terms of its agreements with customers. The complaint claims that the company made customers pay “inflated monthly charges for cost of insurance (‘COI’) that are not allowed by the plain language of their insurance contracts.”

Jackson National Life Insurance Increases in COI Complaint

Case Event History

Jackson National Life Insurance Increases in COI Complaint

March 11, 2020

The complaint for this class action brings suit against the Jackson National Life Insurance Company, alleging that it has breached the terms of its agreements with customers. The complaint claims that the company made customers pay “inflated monthly charges for cost of insurance (‘COI’) that are not allowed by the plain language of their insurance contracts.”

Jackson National Life Insurance Increases in COI Complaint
Tags: Cost of Insurance, Increase in Monthly Deduction Rate or Similar, Insurance, Life Insurance