Lawsuit: Sentry Life Insurance Unlawfully Raised Universal Life Insurance Premiums

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Sentry Life Insurance Company is facing a proposed class action lawsuit filed by a Wisconsin woman who claims the defendant unlawfully increased the monthly premiums it charges universal life insurance policyholders. The complaint explains that universal life insurance policies allow the insurance company to withdraw a monthly deduction from an account into which each policyholder deposits premium payments. The account accrues interest at a guaranteed rate – between four and 5.5 percent, per Sentry’s policies – and builds a cash value that allows policyholders to adjust their premium payments as long as they have enough money to cover the monthly deductions, the suit says.

The lawsuit alleges that Sentry, in an attempt to recoup past losses and make a profit on its policies, began in 2012 to increase monthly deductions by raising the “cost of insurance” (COI). Sentry purportedly bases the COI on its “expectations as to future mortality experience,” but the case argues that if this were true, the amount should be decreasing instead of increasing due to the increased life expectancy of the general population.

Instead, the case claims, Sentry has unlawfully raised the COI “unrelated to changes in future expectations regarding mortality,” allowing itself to continue making a profit on policyholders’ accounts and “wrongfully induce policy forfeiture.” When faced with the increased premiums, the lawsuit explains, many elderly policyholders are unable to afford the monthly contributions and are forced to allow their policies to lapse, forfeiting their past payments and the benefits under their policies. The plaintiff claims her monthly premiums increased from $374.15 to $1,075.00 in March 2018 – “after nearly 30 years” of payments.

The complaint claims the defendant’s allegedly unlawful actions leave proposed class members with “an impossible choice” – either continue to pay “exorbitant or improper increases that cannot be justified by the ultimate death benefits of the Policies and that violate the Policies” or “surrender the Policies and walk away from years of premium payments.”