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State Farm Life Insurance Excessive Insurance Charges Class Action

When a life insurance policy has adjustable rates, it’s important to know what can and cannot be considered in figuring charges. The complaint for this class action claims that State Farm Life Insurance Company has set forth specific and limited factors in its policies yet has considered other factors as well that have resulted in excessive charges.

The class for this action is all persons who own or owned a universal life insurance policy issued by State Farm on Form 94030 in the State of California.

Plaintiff Elizabeth A. Bally has had her flexible-premium, adjustable, universal life insurance policy since 1994. The policy includes an Account Value, or savings component, of money held for her by State Farm. Each month, she pays a premium, 95% of which goes into the Account Value; and the company deducts certain items from the Account Value.

Under the policy, each month State Farm is permitted to deduct (a) the cost of insurance, (b) the cost of any riders, and (c) the monthly expense charge. The policy states that the monthly expense charge is $5.00.  The primary issue in this case is the cost of insurance.

The policy sets forth the way the cost of insurance is calculated. It also sets forth factors that State Farm may use to determine Monthly Cost of Insurance Rates which are used to determine the specific cost of insurance charge that is deducted from the policy.

The complaint quotes the applicable part of the policy as saying that the Monthly Cost of Insurance Rates “for each policy year are based on the Insured’s age on the policy anniversary, sex, and applicable rate class. … Such rates can be adjusted for projected changes in mortality but cannot exceed the maximum monthly cost of insurance rates. Such adjustments cannot be made more than once a calendar year.”

Thus, the complaint says, Bally’s age, sex, applicable rate class, and projected changes in mortality are the only factors the company can use in determining rates.

However, the complaint claims that the company actually uses other factors as well, which it identifies as expense experience, persistency, taxes, profit, investment earnings, capital reserve requirements, and other unspecified factors. These considerations, the complaint says, raise the cost of insurance charges and allow the company to deduct too much from the Account Value.

The complaint claims that this amounts to breach of contract as well as conversion.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

State Farm Life Insurance Excessive Insurance Charges Complaint

August 15, 2018

The complaint for this class action claims that State Farm Life Insurance Company has improperly figured adjustable charges for customers. The complaint says it set forth specific and limited factors in its policies that it may use in figuring these charges, yet it has considered other factors as well that have resulted in excessive charges.

state_farm_life_insuance_complaint.pdf

Case Event History

State Farm Life Insurance Excessive Insurance Charges Complaint

August 15, 2018

The complaint for this class action claims that State Farm Life Insurance Company has improperly figured adjustable charges for customers. The complaint says it set forth specific and limited factors in its policies that it may use in figuring these charges, yet it has considered other factors as well that have resulted in excessive charges.

state_farm_life_insuance_complaint.pdf
Tags: Deceptive Insurance Practices, Overcharges to Insurance Companies/Insured People