Lawsuit: Sentry Life Insurance Makes Improper Deductions from Insureds’ ‘Cash Value’ Accounts

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Sentry Life Insurance Company is facing a proposed class action lawsuit that claims the defendant makes unlawful deductions from the “cash value” accounts set up under consumers’ life insurance policies. The complaint explains that the defendants’ policies allow insureds to maintain an interest-bearing account containing their own funds from which the defendant deducts monthly fees for the “cost of insurance.” These deductions, according to the lawsuit, are determined, in part, by “mortality rates” based on the insured’s age, sex, mortality class, and the defendant’s “expectations as to future mortality experience.” The case argues that the defendant improperly bases its mortality rates on various other factors not permitted under the policies that cause the rate to be inflated and the cost of insurance to rise. From the complaint:

“Although the [insurance policies] authorize Defendant to use only certain, specified factors in determining monthly Mortality Rates, Defendant uses other factors, not authorized by [the policies], when determining those rates, including, without limitation: expense experience, persistency, taxes, profit assumptions, investment earnings, capital and reserve requirements, and other unspecified factors.”

As a result, the suit attests, the defendant “impermissibly inflates” the cost of insurance it deducts from policyholders’ accounts in violation of its own policies’ terms, thereby “improperly draining monies” consumers have accumulated “after having paid significant premiums for decades.”

The case, originally filed in Florida in August 2017, has recently been removed to Wisconsin federal court. The original complaint can be read below.