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Court Approves $28 Million Settlement for US Financial Life Insurance Policyholders

Ohio federal District Judge Matthew W. McFarland gave final approval to a $28 million settlement agreement between US Financial Life Insurance Company and a class of policyholders. The class alleged the insurer improperly increased the cost of insurance (COI) charges on certain universal life products beginning in 2015.

“We are pleased that Judge McFarland approved the settlement agreement with very good relief and benefits to class policyholders,” said  W. Daniel “Dee” Miles, III, head of the Beasley Allen’s Consumer Fraud Section. He served as lead class counsel along with Beasley Allen’s  Rachel Minder and Paul Evans.

Plaintiff Vivian Farris, trustee for Wirt Adams Yerger, Jr. Legacy Trust, filed the class-action lawsuit in the U.S. District Court for the Southern District of Ohio in June 2017, on behalf of nearly 12,000 universal life insurance policyholders. The lawsuit alleged USFL unjustifiably increased the cost of insurance rates on Nova and Supernova universal life products beginning on or after August 31, 2015, which impacted approximately 11,891 Nova and Supernova policies.

US Financial Life argued that the increases were due to poor mortality experience and therefore permitted  under the policies. Plaintiffs alleged there was no such increase in mortality rates, rendering the COI rate increases unjustified. After four years of litigation and nine months of negotiation between the two parties, US Financial Life agreed to settle with class members.

Under the terms of the settlement agreement, USFL will pay $11.5 million to create a Common Settlement Fund. The fund will be distributed by checks to class members pro-rata, based on the proportion of COI charged to each class policy after the 2015 rate increases went into effect. No class member will receive less than $100 under the settlement.

Additionally, USFL agreed to other relief valued at approximately $17 million, including an agreement by USFL not to increase COI rates on class members’ policies for five years. Nor will it seek to void or otherwise deny coverage or death claims submitted by settlement class members based on any alleged lack of insurable interest or misrepresentations made in connection with the initial application process.

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