National Western Life pays $17 million to end class-action suit

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A national life insurer paid more than $17 million to 3,274 senior citizens who purchased annuities to settle a class-action lawsuit against it for targeting senior citizens.

The case, Clark v. National Western Life Insurance Co., alleged that former life insurance agent Ezra Chapman sold a National Western contract to a widow, 83, under the pretense that she would never lose money, according to the California Department of Insurance (CDI).

Chapman allegedly failed to disclose to the woman that National Western would apply surrender penalties if she withdrew money or if she died during the 15-year surrender penalty period, the CDI reported.

She died during that time, and National Western deducted 25% as a penalty, denying her beneficiary the entire amount of the annuity, the department reported.

The CDI said it intervened in the case in 2005.

National Western’s business plan targeted selling annuities to seniors, the CDI said. The suit alleged the company set up an unlawful group annuity policy that was issued through an out-of-state group created by National Western, and that the company sold the annuity to individual senior citizens, rather than to members of any groups.

“The company created the plan to avoid California consumer protection statutes and other state laws that protect, not only the elderly, but all citizens against inappropriate annuity products and sales practices,” Insurance Commissioner Dave Jones said in a statement.

Ezra Chapman’s insurance agent license was revoked and he faces an injunction which would prohibit him from getting it back.

National Western, as part of the settlement, also is subject to an injunction and agreed to change its business practices, officials said.

 

6 Responses

  1. John smith Says:

    Agents representing this product still do not disclose surrender penalties until after you are locked into the contract

  2. Lolita Says:

    One other important aspect is that if you are a senior citizen, travel insurance with regard to pensioners
    is something you ought to really take into account. The mature you are, greater at risk you’re for allowing something negative happen to you while abroad. If you are certainly not covered by many comprehensive insurance plan, you could have many serious difficulties. Thanks for giving your suggestions on this website.

  3. Richard Duffner Says:

    My father who is in a Veterans Nursing Home has a National Western Annunity, I did notice the high and long surrender cost because he purchased it when he was 75.
    Does the class action lawsuit cover this policy. Rich Duffner POA

  4. james e jones Says:

    national western agents sold my elderly parents(now deceast)inapropriate annuitys they had no idea that the payouts were longer than they could possibly live they also solld them alliance life they repeated the free witdrawl money to generate commissions they ended up with like 20 contracts weve ead exposas online they used every trick in the book wed like to know how to join any class actions jim jones 1107 clkde amarillo tex 79106 806 681 9953

  5. Gerald W Neff Says:

    I to was not informed of the penalty of removing our money from our accounts is it too late to be included Thank you Jerry Neff

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