Attorneys with Susman Godfrey have filed two federal lawsuits that could affect what happens to life insurance policy cost-of-insurance charges when tax rules change.
In the suits, filed on behalf of policy owners against John Hancock and Talcott Re, the plaintiffs contend that insurers should have used the Tax Cuts and Jobs Act of 2017 to reduce the policy cost-of-insurance charges. The act lowered the corporate income tax rate to 21% from 35%.
The plaintiffs are seeking class-action status for both suits.
Representatives for John Hancock said the company does not comment on pending litigation. Representatives for Talcott Re were not immediately available for comment.
Universal Life Litigation History
A universal life insurance policy is a cash-value policy that separates charges for the cost of insurance and other items from the performance of the assets supporting the death benefit.
The owner may be able to pay the premiums on an adjustable schedule.
Asset growth might depend on returns on the insurer's own assets; returns on variable funds that resemble mutual funds; or changes in a stock index or other investment index.
In the past, owners of universal life, variable universal life and indexed universal life policies have filed waves of suits accusing insurers of imposing unreasonable COI charge increases.
Insurers responded by adding VUL and IUL policy provisions listing tax increases as one reason that COI charges might rise.
