$1.45 Million Settlement – Life Insurance Fraud
We represented several hardworking low- to middle-income families who had purchased whole life insurance policies from Metropolitan Life Insurance and expected that as long as they paid the fixed unchanging premium, the insurance would be available for their heirs when they died. A Met Life insurance agent, working out of Modesto and Merced, California, engaged in an activity termed “churning” or “piggybacking” where the value in an older existing life insurance policy was taken to fund the purchase of a new Met Life policy. The sales agent convinced the policyholders to roll the cash value built up in their policies to purchase new, more costly and less advantageous universal life policies. The devastating result for each policyholder was the end of their insurance or a policy that required higher premiums to keep it in force. The sales agent also falsely checked one of the boxes on the insured’s application, denying the existing policy was being used to fund the new policy and promised a higher interest rate than the actual rate. Met Life attempted to avoid responsibility by claiming the insureds had the opportunity to read the policy and should not have relied on the salesman’s promises. The case settled at mediation before trial and the policyholders were compensated for their losses.