Jackson National Life Insurance Co. Facing Proposed Class Action

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Texas policyholders have filed a class action against Jackson National Life Insurance Company claiming the group breached its contracts with variable annuity holders by improperly calculating and then charging them “surrender charges” while misrepresenting the nature of these fees.

A variable annuity plan pays retirees a level of income that coincides with the performance of investments they’ve chosen, as opposed to a fixed annuity plan that provides individuals with a guaranteed payout in retirement. The complaint claims that even though the defendant designs and markets its variable annuity products and options as a safe source of income in retirement, Jackson National “omits and fails to disclose that certain of its product features automatically result in adverse impacts to contact values unless holder action is taken.” Even worse, Jackson National allegedly does not disclose that its corporate management penalizes its agents from “engaging in activities” that would cause contract holders to utilize their benefits or from influencing contract holders in any way that may not be profitable to the defendant.

Surrender charges are fees life insurance and retirement policyholders pay upon canceling their policies. The lawsuit says surrender chargers, as well as various other fees, are an important revenue source for companies like Jackson National. In 2013, the defendant stopped publicly reporting the specific amount of revenue it made from surrender charges given the steady upward trend of the figures. According to the lawsuit, Jackson National engaged in “assessing excess charges as a matter of uniform application of its methodology,” thereby breaching its contracts with policyholders. Essentially, Jackson National allegedly charged surrender charges on top of surrender charges.