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Wilco Life Insurance Raises Cost of Insurance Charges Georgia Class Action

This class action concerns Wilco Life Insurance Company policies that come with a guaranteed interest rate. The complaint claims that the company has unlawfully increased its “cost of insurance” charges to customers to cover the interest.

Plaintiff Vanessa H. Anderson has a universal life policy with Wilco. Universal life policies, also known as flexible premium adjustable life insurance policies, have a savings component. Wilco guarantees that the savings component of Anderson’s policy will earn at least 3% interest per year.

Policyholders may use money from the savings component, or “cash account,” to pay their premiums, as long as it has sufficient funds. The amount deducted from the cash account is based largely on the “cost of insurance” (COI), an amount based in turn on tables that show the mortality per age group and represent the cost of insuring a particular policyholder. 

Some policyholders count on paying their premiums by these deductions when they retire, assuming that the interest earned each year on the cash account will cover the deductions.

Policies with guaranteed interest rates were invented when interest rates were high. However, interest rates are now low, so insurance companies are losing money paying the guaranteed interest rates. Some have tried to make up for this by raising COI charges. The complaint cites cases against Wilco (then known as Conseco life Insurance Company), Phoenix Life Insurance, Transamerica, and Lincoln National which resulted in large settlements. 

The policies in question in this case have a COI rate section that says, in part, “The guaranteed monthly cost of insurance rates for the policy are based on the insured’s sex, attained age and premium class on the date of issue…” Also, “[t]he current monthly cost of insurance rates will not be greater than the guaranteed monthly cost of insurance rates which are listed on the Policy Data Page.” The Policy Data Page says that “the actual cost of insurance rates will not be greater than those shown” in the table on the page. 

The complaint thus says that Wilco cannot charge whatever it wants as the COI. However, the complaint claims that since 2011 or 2012, Wilco has vastly increased its COI charge. In 2012, the complaint says, the increase was over 45%, and between 2004 and 2016 the COI increased by 312%.

The complaint alleges that the increases are imposed to cover the interest rates. Also, when rates rise, many policyholders let their policies lapse. The complaint claims this is intentional and also profitable for Wilco because it does not have to pay out on those policies. It alleges breach of contract, among other things.

The Statewide Class for this action is all Georgia residents who own or owned universal or flexible premium adjustable life insurance policies issued or managed by Wilco, or its predecessors in interest, that have substantially the same COI Rates language as Anderson’s policy, and whose COI rates increased between December 6, 2012 and the date the court certifies the class.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Wilco Life Insurance Raises Cost of Insurance Charges Georgia Complaint

January 11, 2019

This class action concerns Wilco Life Insurance Company policies that come with a guaranteed interest rate. The complaint claims that the company has unlawfully increased its “cost of insurance” charges to customers to cover the interest.

wilco_cost_of_ins_compl.pdf

Case Event History

Wilco Life Insurance Raises Cost of Insurance Charges Georgia Complaint

January 11, 2019

This class action concerns Wilco Life Insurance Company policies that come with a guaranteed interest rate. The complaint claims that the company has unlawfully increased its “cost of insurance” charges to customers to cover the interest.

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