San Francisco, CA: A national life insurer has agreed to pay more than $17 million to settle a class-action lawsuit it faced over allegations that it targeted senior citizens.
The suit alleged that former life insurance agent Ezra Chapman sold a National Western contract to an 83-year old widow, under the pretence that the elderly woman would never lose money. Chapman allegedly failed to disclose to the woman that National Western would apply surrender penalties if she withdrew money or if she died during the 15-year surrender penalty period, the California Department of Insurance (CDI) reported
The woman did die during the 15 year period, and National Western deducted 25% as a penalty, denying her beneficiary the entire amount of the annuity, the department reported. in 2005, the CDI said it intervened in the case.
The suit alleged that National Western set up an unlawful group annuity policy that was issued through an out-of-state group created by National Western, and that the company sold the annuity to individual senior citizens, rather than to members of any groups.
Some 3,274 senior citizens who purchased annuities in the case - Clark v. National Western Life Insurance Co - are eligible for a share of the settlement.
