Two Arizona senior citizens filed a proposed class-action lawsuit against EquitTrust Life Insurance Company, claiming the Iowa-based financial company duped consumers into purchasing financial products through deceptive sales practices, among other charges.
According to the lawsuit, EquiTrust designed a scheme that defrauds policyholders, especially the elderly -- a group in need of retirement saving and spending vehicles without onerous surrender charges and lengthy maturation periods -- to create large product spreads in order to pay its agents oversized commissions, to lure prospects with illusory bonuses, and to earn a large profit margin.
To help protect this group, 47 states have adopted a consumer protection statute -- the Standard Nonforfeiture Law for Individual Deferred Annuities (SNFLIDA) -- that limits surrender penalties through a prospective test. This test generally protects those over the age of 60 from individual deferred annuity products that have optional maturity dates and surrender charges that exceed 10 percent of the policyholder's premium.
The suit claims EquiTrust's surrender charges are often 20 percent, twice the permitted amount. The SNFLIDA test also prohibits issuing such annuities to the elderly that have surrender penalty periods in excess of 10 years. EquiTrust's annuities often have surrender penalty periods of up to 14 years.
The lawsuit claims EquiTrust builds into its annuities package a maturity that occurs after the policyholders' 105th birthday. As the fine print is built into plaintiff's contracts with EquiTrust, these dates cannot be changed. This conniving tactic protects the insurance company from risk while significantly damaging the financial security of the policyholder, the suit claims.
Annuities receive a beneficial tax treatment under U.S. Tax Code in that the growth on principal within the annuity accumulates on a tax-deferred basis until the funds are withdrawn. This is a big incentive for prospective purchasers and one EquiTrust offsets by its product spread in its indexed annuities, plaintiffs claim.
The lawsuit claims the "scheme was devised and intentionally crafted to ensure that plaintiffs and class members would purchase indexed annuities and not receive full benefits from the annuities or be subject to exorbitant surrender charges."
Plaintiffs claim the class has been forced to pay hundreds of millions of dollars in premiums and surrender charges for annuity products that, by design, could not perform as advertised.
The lawsuit names several counts against EquiTrust including violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), unjust enrichment and common law civil conspiracy.
The suit seeks to represent anyone who purchased an indexed annuity product from EquiTrust from 2004 until present.
EquiTrust Life Insurance Company Class Action Legal Help
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Since signing our Fixed Annuity Contract in 2016, have not been able to get in touch with our agent. And Corporate will not give us any help. Very discouraging, as we have been hit with the Big C.
Posted by Karen Robar
I was sold an Equitrust investment a couple of months after my Husband passed. I purchased the investment from a semi retired employee of a well known company. He told me he had sold investments and his age and experience made me trust him. I found out later there were complaints against the company and it was not the great investment I thought it would be. I also purchased one other investment from the bank my Husband worked at that was not terrible but far short of what I should have done. My advise is to check and re check what you are investing in. Death makes you desperate and they know it. Take more time.
Posted by Fritz Vold
Our conventional IRA money was rolled over into this annuity in 2006 for a 10% up front bonus. Allianz was offering the same product for only a 6% bonus so we went with Equitrust. Our agent put us into the 2-year S+P 500 index option. This money could be rolled over into a 12 month fixed interest rate at renewal. There were no fixed fees. The company makes profit from the actual point to point gain minus the cap which is the month to month average gain, which of course has a floor of zero if the market goes down over the term. there were no fixed fees subtracted from the accumulated value as calculated per the plan. Also, the conventional IRA laws required us to be paid a monthly RMD at no penalty. So if those other elderly folks put their CONVENTIONAL IRA money in, NOT ROTH IRA money in, they didn't have to wait 14 years to start receiving monthly or annual annuity payments per IRA tax rules. These situational factors FAVOR myself and other elderly pensioners who have both types of IRA money to invest, or at least conventional IRA money to squirrel away to augment their other pensions? Conclusion: for me and mine, what's not to love?
Posted by Wayne Latham
Signed up for a fixed annuity. Guarantee 6.5%. Have not gotten this return and it doesn't look like I got the 3 years of 2% either. was told at my last meeting I would not receive it either. only receiving around 2% after fees. Need to know why. Only switched before to get the guarranty. help
Posted by Todd Pisarek
total misled, have had $ in for 5years and with penalties worth less than initaial investment, do not use this company.
Posted by Leonard Watkins
My mother purchased an annuity before she passed in 2016. Because her death was within the 2 year period he are pulling every medical record and hospital visit known to man. She passed on September 14 2016, and as of today February I, 2017 they are still reviewing her case. They have had all of her medical records since October of last year, except one, which I had to help them find in January of this year. It seems to me as though they set all of her records aside until they got the last record instead of reviewing the records that the had at the time. I call often to check up on the progress of the case only to speak to an Phone answering person, never to anyone at the insurance company who knows what's going on. This process has been so aggravating and stressful that I declined when asked to open my own trust with the Same trust company that wrote up my mother's trust. Still waiting. Leonard
Posted by D Capp
They are still at it as of today. Jan. 2017. My parents were offered a "guaranteed" 6.0% return for 10 years on a fixed deferred annuity. Did not give them anything but a one page projection of what they would have in ten years without taking into consideration the annual fee, Required Minimum Distribution since it is an IRA, and no mention of surrender charges in this projection. Told them to hold off signing anything until we did some research and came across this article. Needless to say they did not go forward with it after seeing this. I will be filing a complaint with the PA Attorney General asap.
Posted by Marvallene Lapp
June 1,2016 will be the third year that I placed my IRA into EquiTrust hands! I have regrets about this move as The agent talked me into signing the contract before reading anything! He assured me it was great! My husband had died 7 mts. Prior and I wasn't in a good state of mind! When I finally received the full contract I tried to understand it! It took me more than a year to grasp what I had signed! They had me wrapped up into a 15 year waiting period before I would be able to get all the money out penalty free. I thought they were only taking .005% from the earnings but it is charged on the entire account each anniversary! That is a lot! The only positive to the account is that they gave me 6%. To start with and the next 3 years I would receive 2%. It has an "Income for Life" feature that accumulates for 9 years. I am 66 now and if I start taking money I will lose the "Income for Life" increases each year as I have only been in this since 2013. I wish I had never done this!
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