|FORT SAM HOUSTON, Texas – Life insurance companies are being held accountable for their improper sales practices to military members. |
Four companies in the past three months have agreed to a multi-state settlement agreement after Texas Department of Insurance investigators uncovered a pattern of deception to young troops.
Under the agreements, the companies will refund more than $70 million to more than 93,000 consumers, including about 71,000 servicemembers, according to Texas Department of Insurance news releases.
The first settlement, reached Aug. 3, came after a 20-month investigation by Texas and Georgia, together with the U.S. Department of Justice and the U.S. Securities and Exchange Commission, into the sales practices of three Waco, Texas-based companies: American-Amicable Life Insurance Company of Texas, Pioneer American Insurance Company and Pioneer Security Life Insurance Company.
State regulators and federal agencies claim that the life insurance companies “targeted young recruits and misled them into believing they were buying an investment product.” The servicemembers were actually purchasing an expensive term-life product that was coupled with a side fund and called the “Wealth Builder” or “Horizon Life,” according to the release.
The second settlement, reached Oct. 17, involves the Boston Mutual Life Insurance Company.
In 2004, TDI investigators learned that several Boston Mutual agents were soliciting and selling life insurance to low-ranking soldiers in the Fort Hood, Texas, area by misrepresenting the insurance as a savings or investment plan, said Jim Hurley, TDI spokesman. The activity led to the multi-state examination of the company’s sales to military personnel.
The company will refund a total of $427,529.57 to 1,784 military members who bought life insurance policies between Jan. 1, 2002, and April 30, 2005.
“Servicemembers need to be skeptical and shop around if interested in purchasing life insurance,” said Tim Haight, acting chief, Client Services Division, Fort Sam Houston Legal Assistance Office. “Educate yourself. The best place to start when considering investments or additional insurance is to get sound advice from a certified financial planner.”
The companies are notifying servicemembers with current or lapsed policies affected by the agreements, Hurley said. Consumers who feel they are affected but have not received notification can call the companies’ consumer service center at 800-736-7311.