Insurance Sales Practices and Settlement Agreement Affecting Marines and Family Members
This MARADMIN informs Marines and commanders about a settlement agreement with American-Amicable Life Insurance Company and its affiliates concerning misleading business practices in selling life insurance products to servicemembers. Approximately 57,000 servicemembers and their families who purchased "Horizon Life" or "Wealth Builder" policies between January 1, 2000 and July 28, 2006 are eligible for $10 million in cash refunds and increased policy benefits, and the companies are banned from military installations for five years.
Issued: October 26, 2006
1. PURPOSE. THIS MSG INFORMS COMMANDERS AND MARINES OF A SETTLEMENT AGREEMENT, REF (A), CONCERNING ALLEGATIONS OF MISLEADING BUSINESS PRACTICES IN AMERICAN-AMICABLE COMPANIES' MARKETING AND SALE OF LIFE INSURANCE TO SERVICEMEMBERS AND THEIR FAMILY MEMBERS. 2. BACKGROUND. IN JUNE 2006, STATE REGULATORS AND FEDERAL AGENCIES SETTLED LEGAL CLAIMS BROUGHT AGAINST AMERICAN-AMICABLE LIFE INSURANCE COMPANY OF TEXAS AND ITS AFFILIATES PIONEER AMERICAN INSURANCE COMPANY AND PIONEER SECURITY LIFE INSURANCE COMPANY (AMERICAN-AMICABLE COMPANIES) FOR ALLEGED VIOLATIONS OF INSURANCE OR CONSUMER PROTECTION LAWS IN THE COURSE OF THEIR MARKETING AND SELLING A LIFE INSURANCE POLICY, COMMONLY CALLED "HORIZON LIFE" OR "WEALTH BUILDER," WHICH WAS A TERM LIFE CONTRACT WITH AN ANNUITY ACCUMULTAION FUND RIDER. CONSUMERS WHO PURCHASED SUCH POLICY, INCLUDING APPROXIMATELY 70,000 SERVICEMEMBERS, ARE ELIGIBLE TO RECEIVE CASH REFUNDS AND INCREASED POLICY BENEFITS TOTALING $70 MILLION. UNDER THE AGREEMENT, THE COMPANIES WILL PAY $10 MILLION TO APPROXIMATELY 57,000 SERVICEMEMBERS AND THEIR SPOUSES AND DEPENDENTS WHO PURCHASED A HORIZON LIFE OR WEALTH BUILDER POLICY FROM 1 JANUARY 2000 THROUGH 28 JULY 2006, WHETHER OR NOT THEY ARE CURRENT POLICYHOLDERS. THE COMPANIES ALSO WILL INCREASE THE CASH SURRENDER VALUE OF ALL IN FORCE POLICIES WHICH INCLUDE A 20TH-YEAR ACCUMULATION VALUE ADDITIONS ENDORSEMENT, AND WILL CANCEL THE AUTOMATIC PREMIUM PAYMENTS PROVISION OF SUCH POLICIES. IN ADDITION, THE AGREEMENT FORBIDS THE COMPANIES AND THEIR AGENTS FROM SOLICITING OR SELLING ANY PRODUCT ON ANY MILITARY INSTALLATION FOR FIVE YEARS, OR PARTICIPATING IN OR ASSISTING WITH ANY PERSONAL FINANCE CLASS FOR SERVICEMEMBERS ON A MILITARY INSTALLATION. MORE INFORMATION ON THE SETTLEMENT IS AT HTTP:/WWW.USDOJ.GOV/USAO/PAE/NEWS/PR/2006/AUG/AMERICANAMICABLEPRESS.P DF. 3. ACTION. MARINES AND THEIR DEPENDENTS WHO PURCHASED A LIFE INSURANCE PRODUCT FROM AN AMERICAN-AMICABLE COMPANY SHOULD CALL THE COMPANIES' CONSUMER SERVICE CENTER AT 1-800-736-7311, AND GIVE THEIR CURRENT MAILING ADDRESS. THE COMPANY WILL CONTACT EACH POLICYHOLDERS BY MAIL INFORMING THEM OF THEIR POLICY'S INCREASED CASH SURRENDER VALUE AND DELIVER A CHECK PAYABLE TO CERTAIN CURRENT AND FORMER HORIZON LIFE OR WEALTH BUILDER POLICYHOLDERS. COMMANDERS ENSURE THAT AMEIRICAN-AMICABLE COMPANIES AND THEIR AGENTS STOP SOLICITING OR SELLING ANY COMPANY PRODUCT ON THEIR MILITARY INSTALATION FOR FIVE YEARS. IN ADDITION, COMMANDERS ENSURE ALL INSURANCE COMPANIES AND THEIR AGENTS COMPLY WITH REF (B) BEFORE CERTIFYING ANY MILITARY PAY ALLOTMENT. 4. YOUR LOCAL MARINE CORPS LEGAL ASSISTANCE OFFICE HAS MORE INFORMATION REGARDING THE TERMS OF THE SETTLEMENT AGREEMENT.