Class Action Lawsuit Filed Against American General Life & Accident Insurance Company by James, Hoyer, Newcomer, P.A. Alleging Unconscionable Insurance Practices in the Sale of Burial Life Insurance Policies.
The lawsuit was filed in Gainesville, Florida, on October 27, 1999. The complaint alleges that for many decades American General Life & Accident Insurance Company has engaged in a nationwide scheme which takes advantage of the poor and minorities in the sale of burial life insurance. Burial life insurance policies, also commonly known as industrial life insurance policies, are life insurance policies with death benefits typically of $1,000 or less and weekly premium payments often less than one dollar. American General Life & Accident Insurance Company itself, through life insurance companies it has acquired, such as Independent Life and Accident Insurance, targeted the poor and minorities for the sale of burial life insurance. Burial policies do not build value and often build little or no cash surrender value. The suit alleges that even though the premium payments on burial policies appear small, millions of poor and minority policyholders have paid substantially more in premiums than the death benefits provided by the policies. Because the policies contain little or no cash surrender value, policyholders stand to lose everything paid into the policies if they discontinue paying premiums even though they have already substantially overpaid for the policies.
Burial policies have been widely sold to the economically disadvantaged by agents of the life insurance company who would routinely make personal visits to their policyholders to collect premium payments and convince policyholders to purchase additional insurance products. The suit alleges that in some instances policyholders were sold as many as twenty burial policies even where it was not in the policyholder's best interest to purchase additional burial insurance. The suit also alleges that even though other types of life insurance were available which were better and less expensive for the policyholders, American General Life & Accident Insurance Company agents sold the burial policies solely to increase their own commissions and the company profits.
The class action plaintiffs in the Florida lawsuit are Queen Crawford, Bessie Jones and John A. And Earther Strong.
Christa L. Collins, an attorney with the Tampa law firm of James, Hoyer, Newcomer, Forizs & Smiljanich, P.A., stated: "American General Life & Accident Insurance Company has taken financial advantage of those who can least afford it." State of Florida Insurance Commissioner, Bill Nelson conducted hearings in the Spring of 1999 on burial life insurance and supported legislation which would have required burial insurance companies to inform their policyholders of the total amount they have paid in premiums for burial life policies. This legislation was vigorously opposed by the insurance industry and was defeated in the Florida legislature. On Monday, October 25, 1999, Commissioner Nelson launched an extensive investigation into five burial life insurance companies, including American General Life & Accident Company. He also announced that he will again propose legislation to include barring new sales of burial policies.
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|Date:||Oct 28, 1999|
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