Symetra Deducted Unlawful Amounts from Life Insurance Policies’ Cash Values, Class Action Alleges [UPDATE]

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A proposed class action claims Symetra Life Insurance Company has made improper deductions from the cash values of consumers’ life insurance policies.

Per the 16-page case out of Washington, the defendant has harmed policyholders by deducting charges for consumers’ monthly cost of insurance in excess of the amounts specifically permitted by each policy.

“Every unauthorized dollar taken from policy owners is one less dollar that can be used to: invest through the policy; pay future premiums; increase the death benefit; use as collateral for policy loans; or withdraw as cash,” the complaint says. “Class members face a ‘lose-lose’ decision: continue to pay the overcharges to maintain their insurance or surrender the policy after having paid significant premiums for decades.”

According to the suit, proposed class members’ life insurance policies provide, in addition to a death benefit, an accumulating investment, savings, or interest-bearing component identified in the complaint as “Cash Value.” The case explains that consumers’ universal life insurance premiums, after a “Percentage of Premium Expense Charge” is deducted, are deposited into the cash value of their policies, from which the defendant deducts monthly charges as authorized by the policy.

Symetra’s insurance policies “expressly define[]” the charges that may be deducted from policyholders’ premium payments and the cash value of their policies, the complaint says. One such charge is the cost of insurance, the suit says, which is purportedly based on Symetra’s expectations as to future mortality experience and the insured’s age, sex, and rate class. According to the lawsuit, a policy will explicitly state that the defendant is authorized to use only those factors when determining the policy’s cost of insurance rates.

“Because the Policy specifically identifies age, sex, and rate class as the defining components of the Cost of Insurance Rates, and expressly states that current Cost of Insurance Rates are based on Defendant’s expectations as to future mortality experience, the parties agree that mortality expectations are what determine Cost of Insurance Rates under the Policy,” the complaint contests.

Symetra, however, has used other factors not authorized by the policy, including expense experience, to determine cost of insurance rates, according to the suit. By “loading Cost of Insurance Rates with unauthorized factors,” the defendant has “repeatedly and continuously” breached the terms of its life insurance policies by impermissibly inflating the amounts deducted from the policies’ cash values beyond the insurer’s “expectations as to future mortality experience,” the lawsuit alleges.

The case looks to cover the following class:

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