Insurer’s Drastic Cost Increase May Constitute Bad FaithPosted April 25, 2016
Recently, a consumer watchdog group filed suit against Transamerica Life Insurance Corporation, alleging breach of contract and bad faith. In the complaint, which followed on the heels of the company’s decision to drastically increase monthly premium payments, policyholders requested a reversal of the cost increases, compensatory and punitive damages, and the reinstatement of any policies that were cancelled or surrendered as a result of the premium increase.
Universal Life Insurance
In the 1980s, Transamerica began offering and sold a large number of universal life insurance packages to policyholders. In exchange for policyholders’ agreeing to pay monthly premiums, Transamerica promised to pay a guaranteed monthly interest of no less than 5.5% a year, which would automatically be deposited into a policy savings account.
Recently, Transamerica shocked policyholders nationwide when it announced that it would be increasing premium payments by as much as 38 percent. In response to the public outcry that followed the announcement, the company justified the dramatic increases by stating that the higher premiums were necessary to cover the future costs of providing coverage to existing accounts.
However, as a result of the company’s decision, thousands of policyholders who have diligently paid their premiums for over twenty years, and are now living on fixed incomes, may not be able to keep up with the payments. This, in turn, could cause their policies to lapse, meaning the loss of decades worth of savings.
Responding to public concern, a consumer watchdog group filed suit against the insurer, arguing that by drastically increasing its fees, Transamerica had breached its contracts with policyholders. Furthermore, the group also alleged that the company practiced bad faith insurance practices, as revealed by Transamerica’s decision to require increased payments from existing clients, which was driven primarily by a desire to subsidize the cost of meeting interest guarantees, to make up for any losses, and to induce policyholders to terminate their contracts.
Contact an Experienced Bad Faith Insurance Attorney Today
An insurance company’s failure to deal honestly with policyholders is unfair, unlawful, and potentially devastating to a family’s finances. If you or a loved one have been the victim of your insurer’s bad faith, it is necessary to seek the advice of an experienced bad faith insurance attorney who may be able to help you obtain the compensation you deserve. Please contact a member of our legal team at the Bennett Law Firm at 405-272-0303 for a free consultation.