Complaints arise from elaborate, tax-motivated (but failed) plans involving life insurance, or from a fundamental misunderstanding about the “promises” difference between a policy illustration and the policy itself. In recent years, these two issues have given rise to a great number of lawsuits initiated by policy owners against insurance companies and their agents or promoters.
So-called Sec. 419(A)(f)(6) “Welfare Benefit Plan” and Sec. 412(i) “Insured Pension” schemes were very popular from 1984 through 2003, but IRS scrutiny on abusive cases resulted in numerous tax audits, and tax judgments (taxes, interest, penalties and “listed transaction” fines often doubled or tripled the cost of the failed plan). Often, the only recourse against abusive promoters was to initiate a lawsuit.
But lawsuits are costly – and take an enormous toll in time and emotion. Our first strategy is to mediate an equitable resolution, and we’ve enjoyed the opportunity to work with some of the best legal talent to produce the most favorable result for the client. Two of our best relationships are described in the people section of this site.
The Ethical Edge has consulted on more than 50 complaints (2/3 representing plaintiffs and 1/3 representing carriers and/or agents) and less than 20% of those complaints went the distance to a trial and jury. All but one of our cases were settled or found in favor of our clients.
For more information or to arrange a no-obligation phone consultation, email us at Dick@InsuranceFiduciary.com