Does This Policy Contain Hidden Costs?
Last Updated on June 26, 2017
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At A Glance
- This Alert Affects
- Consumers who purchased the Hartford Stag Variable Life Last Survivor II policy.
- Damages
- It has been alleged that this policy contains certain hidden cost components.
- Company(ies)
- Hartford
- Additional Details
- In variable policies with a death benefit guarantee, the standard guarantee amount is equal to the full face value of the policy. In the Hartford Stag Variable Life Last Survivor II policy, it is said that the policyholder has the chance to set the guarantee amount to zero or any part of the face value ranging from 20% to 100%.
What Can I Do as a Hartford Policy Holder?
Consumers who purchased the Stag Variable Life Last Survivor II policy sold by Hartford may have legal recourse. It has been alleged that this policy, which includes a variable death benefit guarantee, contains certain cost components which have been hidden from the policyholder.
What Has Been Hidden from the Policy Holder?
It is believed that this policy was written in such a way that the consumer is facing significant costs associated with the variable death benefit. Allegedly, the amount of the death benefit guarantee sets the following:
- Mortality and expense charge in the policy
- Surrender charges in connection with the policy
- Insurance agent's commission
The link between these charges and the amount of death benefit guarantee are not explained in the policy, sales illustrations or prospectus, according to the allegations. Additionally, it has been alleged that there is no place on the application where the consumer can choose a death benefit guarantee amount.
Allegedly, the software which generates sales illustrations automatically uses the total first year premium to calculate the maximum amount of death benefit guarantee that premium will purchase, making the first year fully commissionable. If the policy holder could select a zero death benefit guarantee amount, the insurance agent would not receive any compensation. When a death benefit guarantee amount becomes part of the coverage, the policyholder will be responsible for high policy charges over the next 10 years.
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