Walker et al v. Life Insurance Company of the Southwest Settlement

This Lawsuit relates to illustrations used in the sale of life insurance policies issued by LICS, known as the SecurePlus Provider Policy and the SecurePlus Paragon Policy, which are indexed universal life insurance policies. In this Lawsuit, Plaintiffs alleged on behalf of the Class that illustrations issued by LICS at or before the time of policy application do not comply with the California Insurance Code and that they meet other requirements for relief under California’s Unfair Competition Law. Specifically, Plaintiffs assert that Provider and Paragon illustrations violated section 10509.956(b)(4) of the California Insurance Code because the terms “Guaranteed Values at 2.00%” and “Guaranteed Values at 2.50%” were not defined. Plaintiffs assert that this violation was important to policyholders because Plaintiffs allege that the illustrations do not disclose that the guaranteed interest rates are not paid each year but are instead retrospectively calculated average rates. Plaintiffs also assert that Paragon illustrations violated section 10509.956(e)(3) of the California Insurance Code because they reflected the elimination of a Monthly Percent of Accumulated Value Charge after ten policy years without that planned elimination being described in the life insurance Policies. Plaintiffs assert that this violation is important because Plaintiffs allege that it increases the Policy values that LICS showed in its Paragon illustrations without a corresponding guarantee that the planned elimination would in fact occur. Plaintiffs claim that these violations entitle the Class to relief.

LICS disputes all of these claims and denies that it did anything wrong. LICS contends that it has not violated the Unfair Competition Law, that its pre-application illustrations comply with the law, and that no policyholders were harmed by any asserted violations. LICS believes that the terms and features of its Policies are fully disclosed and set forth in a variety of materials and settings, including in conversations between policyholders and their agents or brokers and in written materials (including the Policies themselves, marketing materials, buyers’ guides, and illustrations).

In a class action lawsuit, one or more persons, called Class Representatives (in this case Joyce Walker, Kim Bruce Howlett, Muriel Spooner, Taline Bedelian, and Oscar Guevara), sue on behalf of people (called “Class Members”) who have similar claims. The Class Representatives who sued—and all of the Class Members like them—are called Plaintiffs. The company they sued (in this case LICS) is called a Defendant. One court resolves the issues for all Class Members, except for those members who ask to be excluded from the Class.

United States District Judge James V. Selna of the United States District Court for the Central District of California (“Judge Selna” or “the Court”) is in charge of this case, and he has certified a class action. The Court decided that this Lawsuit can be a class action because it meets the requirements of Federal Rule of Civil Procedure 23, which governs class actions in federal courts. Specifically, the Court found that:

• LICS issued SecurePlus Paragon or SecurePlus Provider Policies to individuals in California between September 24, 2006, and April 27, 2014;
• There are legal questions and facts that are common to each of these individuals;
• The claims of the Class Representatives are typical of the claims of the rest of the Class;
• The Class Representatives and the lawyers representing the Class will fairly and adequately represent the Class’ interests;
• The common legal questions and facts predominate over any questions that affect only individuals; and
• This class action will be more efficient than having many individual lawsuits.

The Court did not decide in favor of Plaintiffs or Defendant. Instead, both sides agreed to a settlement before the case proceeded to a trial. The Class Representatives and their attorneys think the Settlement is best for all members of the Class.

The Class consists of all persons who purchased a SecurePlus Provider Policy or SecurePlus Paragon Policy from Life Insurance Company of the Southwest that was issued between September 24, 2006, and April 27, 2014, who resided in California at the time the Policy was issued, and who received an illustration on or before the date of policy application.

The Paragon or Provider Policy purchased by a Class Member that causes such Class Member to fall within the Class is referred to in the Notice as the “Underlying Life Insurance Policy.” In the event a Class Member owns multiple Underlying Life Insurance Policies, the terms of the Settlement will apply to each such Underlying Life Insurance Policy.

The Class includes only policyholders who received an illustration on or before the date of policy application. Policyholders who only received an illustration after the date of policy application are not in the Class.

Additionally, the following persons are not included in the Class: past or present officers, directors, agents, brokers, or employees of LICS, or its parent or subsidiary corporations; any agents, brokers, or others who sold the SecurePlus Provider or SecurePlus Paragon policies for LICS, or for its parent or subsidiary corporations; any entity in which LICS has a controlling interest; the affiliates, legal representatives, attorneys, or assigns of LICS or its parent or subsidiary corporations; any judge, justice, or judicial officer presiding over this matter and the staff and immediate family of any such judge, justice, or judicial officer; persons who previously had settled disputes with LICS with respect to their SecurePlus Provider or SecurePlus Paragon Policies and signed releases; and any person who submits a valid request to be excluded from the Class.

The estates or heirs of deceased policyholders may have the same rights as the deceased policyholder would have if still living, including the right to share in the Settlement benefits obtained on behalf of the Class.

If you are still not sure whether you are included in the Settlement, you can ask for free help. You can call the Claims Administrator, Epiq Class Action & Claims Solutions, Inc., toll-free at 1-877-432-3865, send an email to info@LSWclassaction.com, or write to Walker v. LICS Class Action, c/o Epiq Class Action & Claims Solutions, Inc., P.O. Box 5053, Portland, OR 97208-5053.

LICS has agreed as part of the Settlement to guarantee that it will eliminate the Monthly Percent of Accumulated Value Charge on Class Members’ in-force Paragon Policies after each Policy has been in force for ten policy years. LICS has also already made certain changes to the contents of pre-application illustrations in order to address Plaintiffs’ claims.

Additionally, LICS has agreed to make available three additional benefits: (1) a Cash Relief Option; (2) a Surrender Charge Credit; and (3) Term Insurance Relief. Details about each benefit are below. Please note that a Class Member may not receive all three benefits. Instead, each benefit has particular eligibility criteria that a Class Member must meet, and no Class Member may receive both the Cash Relief Option and Term Insurance Relief. Whether a Class Member is eligible to receive a particular settlement benefit may depend on the status of the Class Member’s Underlying Life Insurance Policy, as explained below.

None of these benefits will be available to any Class Member who excludes himself or herself from the Settlement.

The amount that is left in the Settlement Fund after the payment of Surrender Charge Credits, Administrative Costs, and Taxes (the “Residual”), as described in the Stipulation of Settlement, will be made available to Class Members as a Cash Relief Option. If a Class Member elects to receive Term Insurance Relief and the insured on the Class Member’s Underlying Life Insurance Policy dies prior to issuance of the Term Insurance Relief, then the Class Member shall receive the Cash Relief Option.

The amount of Cash Relief available to each eligible Class Member will be the lesser of: (1) the total premiums paid on the Underlying Life Insurance Policy owned by the electing Class Member; or (2) a pro rata share (by total premium paid on each Underlying Life Insurance Policy electing to receive the Cash Relief Option) of the Residual.

The Claims Administrator disseminated to all Class Members (except those individuals who excluded themselves from the Class, as described below) a Proof of Claim Form. In order to receive the Cash Relief Option, a Class Member must have submitted to the Claims Administrator, by October 29, 2021, a completed Proof of Claim Form electing the Cash Relief Option. The Claims Administrator will calculate the amount of Cash Relief due to each eligible and electing Class Member after calculating the Residual (i.e., following the payment of Surrender Charge Credits, Administrative Costs, and Taxes). The Claims Administrator will then distribute a check to each electing Class Member in the amount of the Cash Relief.

LICS will make available to the Class a one-time opportunity to fully surrender an in-force Underlying Life Insurance Policy and obtain a refund of some or all of the surrender charge incurred on the full surrender of the policy. LICS will make available to the Class up to $1,000,000 in aggregate Surrender Charge Credit from a Settlement Fund.

The amount of Surrender Charge Credit available to each eligible Class Member will be the lesser of: (1) the amount of surrender charge actually incurred on full surrender of the Class Member’s Underlying Life Insurance Policy in accordance with the Stipulation of Settlement; or (2) an amount determined by the following formula: (a) first, calculate a percentage (which will be the same for all eligible Class Members) equal to one million dollars ($1,000,000) divided by the aggregate premium paid on all SecurePlus Paragon and SecurePlus Provider Policies issued to individuals in California during the Class Period, and then (b) multiply that percentage times the total premiums paid on the eligible Class Member’s Underlying Life Insurance Policy that is being surrendered. The percentage is currently estimated to be 0.256%, and will be finalized as part of the Settlement administration process. To illustrate the foregoing calculation on a purely hypothetical basis, suppose a Class Member has paid total premiums of $20,000 on an Underlying Life Insurance Policy, fully surrenders it in accordance with the Stipulation of Settlement, and incurs a surrender charge of $200. In this instance, if the percentage is 0.256%, then the Surrender Charge Credit is $51.20 (i.e., 0.256% of $20,000).

The Claims Administrator has disseminated to all Class Members (except those individuals who excluded themselves from the Class, as described below) a Proof of Claim Form. In order to receive the Surrender Charge Credit, a Class Member must have submitted to the Claims Administrator, by October 29, 2021, a completed Proof of Claim Form electing the Surrender Charge Credit and an accompanying Surrender Form, and must maintain his or her Underlying Life Insurance Policy in force until the surrender has been processed in accordance with the Settlement. The Claims Administrator will provide to LICS all valid, timely, and complete Surrender Forms. LICS will, within a reasonable time thereafter, process the full surrenders and notify the Claims Administrator of the amount of surrender charge imposed on each eligible and electing Class Member, and electing Class Members will incur any applicable surrender charge before the Surrender Charge Credit is distributed. The Claims Administrator will then distribute a check to each electing Class Member in the amount of the Surrender Charge Credit. In the event a death benefit comes due on an Underlying Life Insurance Policy prior to the processing of a surrender in accordance with the Settlement, the Surrender Charge Credit will not be given and a death claim will be processed in accordance with the Policy terms. Please note that, separate and apart from the Surrender Charge Credit, Class Members retain all contractual rights to surrender their Policies at any time in accordance with policy terms.

Class Members will have the opportunity to receive from LICS at no cost a term life insurance policy. This is referred to in the Notice as “Term Insurance Relief.” Specifically, LICS will make available to the Class as a whole up to $35,000,000 in aggregate face value of term life insurance. Term Insurance Relief will be available to all Class Members unless the insured on a Class Member’s Underlying Life Insurance Policy has died prior to the actual issuance of Term Insurance Relief. The Term Policies will contain the following terms and limitations:

• There will be a three-year term with no ability to extend, convert or renew the Term Policy.
• The insured under a Term Policy shall be the insured on a Class Member’s Underlying Life Insurance Policy, with no ability to change the insured.
• The owner or owners shall be the same owner or owners as are, as of the time of issuance of the Term Policy, reflected on the Underlying Life Insurance Policy. In the case of a terminated Underlying Life Insurance Policy, the owner or owners of the Term Policy shall be the same as the owner or owners of the Underlying Life Insurance Policy as of the time of such termination.
• The beneficiary or beneficiaries shall be identified on a Term Insurance Application that each Class Member electing Term Insurance Relief must complete and submit to the Claims Administrator. Change of beneficiary shall be allowed in accordance with the terms of the Term Policies.
• The Term Policies shall not include any benefits other than a death benefit and (without limitation) shall not include accelerated death benefit riders, other riders, or any ability to take loans or cash withdrawals.
• LICS shall be entitled to conform or alter any provision of the Term Policies to obtain or ensure compliance with all laws, regulations, and requirements or requests imposed by any government regulatory agency.

The face value of each Term Policy will be a percentage of the face value of the Underlying Life Insurance Policy owned by the Class Member receiving the Term Policy. The percentage, which will be the same for all Term Policies, is equal to $35,000,000 divided by the product of: (i) the aggregate face value of all SecurePlus Paragon and SecurePlus Provider Policies issued to individuals in California during the Class Period (other than Policies that have paid a death claim prior to the date on which the Stipulation of Settlement was executed), multiplied by (ii) 0.75. The percentage is currently estimated to be 0.51%, and will be finalized as part of the Settlement administration process. To illustrate the calculation on a purely hypothetical basis, if a Class Member has an Underlying Life Insurance Policy with a face value of $500,000 and the percentage is 0.51%, if the Class Member elects to receive Term Insurance Relief, the face value of her Term Policy will be $2,561. In the event that the total aggregate face value of the Term Policies to be issued calculated using the formula outlined above exceeds $35,000,000, then the face value of each Term Policy shall instead be based on a pro rata share (by face value of each Underlying Life Insurance Policy electing to receive the Term Insurance Relief Option) of the $35,000,000, such that the total aggregate face value of Term Policies does not exceed $35,000,000.

The Claims Administrator disseminated to all Class Members (except those individuals who excluded themselves from the Class, as described below) a Proof of Claim Form. In order to receive the Term Insurance Relief, a Class Member must have submitted to the Claims Administrator, by October 29, 2021, a completed Proof of Claim Form electing the Term Insurance Relief and an accompanying Term Insurance Application. The Claims Administrator will provide to LICS all valid, timely, and complete Term Insurance Applications. LICS will, within a reasonable time thereafter, process the Term Insurance Applications and issue the Term Insurance Relief.

The Settlement requires LICS to guarantee that it will continue to eliminate the Monthly Percent of Accumulated Value Charge (“MPAVC”) on each Class Member’s Underlying Life Insurance Policy, if that Policy is a Paragon Policy, once the Policy has been in force for ten policy years. During the course of this Lawsuit, LICS also made certain updates to its pre-application life insurance illustrations, including but not limited to adding definitions of “Current Basis A” and “Current Basis B” and adding clarifying text pertaining to the illustration of the elimination of the MPAVC. LICS acknowledges that these changes were made as a result of this Lawsuit.

The Court held a Settlement Hearing on June 7, 2021, at 1:30 p.m. PST, at the United States District Court for the Central District of California, Southern Division, Ronald Reagan Federal Building and United States Courthouse, 411 West 4th Street, Courtroom 10C, Santa Ana, CA 92701-4516. The Court approved the Settlement, and the Claims Administrator disseminated to all Class Members (except those individuals who excluded themselves from the Class, as described in FAQ 17) a Proof of Claim Form. Class Members must have completed and submitted a Proof of Claim Form to the Claims Administrator by October 29, 2021 in order to receive the Cash Relief Option, Surrender Charge Credit, and/or Term Insurance Relief provided for in the approved Settlement. Class Members who elected to receive the Term Insurance Relief must also have submitted an accompanying Term Insurance Application with their Proof of Claim Form. Class Members who elected to receive the Surrender Charge Credit must also have submitted an accompanying Surrender Form with their Proof of Claim Form. LICS will issue Term Insurance Policies and process full surrenders, as applicable. The Claims Administrator will then distribute checks to Class Members who chose the Surrender Charge Credit or Cash Relief Option.

It takes a long time, often many months, for all Claims to be accurately reviewed and processed. Please be patient. Updates regarding the status of the Settlement will be posted periodically as events warrant on this website.

Unless you properly excluded yourself, you remain in the Class, and are bound by the release of Claims, as described in the Stipulation of Settlement. This means that you and each of your immediate family members, heirs, executors, trustees, administrators, successors, assigns, and present and former employees, officers, directors, attorneys, legal representatives, accountants, insurers, reinsurers, managers, and agents will release (agreeing never to sue, continue to sue, or be part of any other lawsuit), unless prohibited by law, any and all Claims and Unknown Claims (as defined in the Stipulation of Settlement) relating in any way, directly or indirectly, to any Paragon or Provider life insurance Policies issued in California between September 24, 2006, and April 27, 2014, that have been or could have been asserted by or on behalf of any of the Releasing Plaintiff Parties, in any capacity, which concern, arise out of, are based upon, or refer or relate in any way to the same events, transactions, circumstances, or factual predicate as the claims asserted in the Action, including without limitation any communications, disclosures, omissions, or nondisclosures related to the Policies, whether written or oral, including any Policy illustrations; the offering of advice in any manner related to the Policies; the design, marketing, solicitation, application, sale, appropriateness, or administration of the Policies; or the crediting of interest to Policy accounts. Releasing Parties, on behalf of themselves, their successors and assigns, and any other Person claiming (now or in the future) through or on behalf of them (regardless of whether any such Releasing Party ever seeks or obtains by any means, including without limitation by submitting a Proof of Claim, any Term Insurance Relief or any disbursement from the Settlement Fund), shall be deemed to have, and by operation of the Final Judgment shall have, fully, finally, and forever released, relinquished, and discharged all Released Claims against the Released Parties and shall have covenanted not to sue the Released Parties with respect to all such Released Claims, and shall be permanently barred and enjoined from asserting, commencing, prosecuting, instituting, assisting, instigating, or in any way participating in the commencement or prosecution of any action or other proceeding, in any forum, asserting any Released Claim, in any capacity, against any of the Released Parties. It also means that all of the Court’s orders in this Lawsuit, whatever they provide, will apply to you and legally bind you, even if you objected to the Settlement.

Please refer to the Stipulation and Agreement of Settlement for the full terms of the release, including definitions of the capitalized terms used in this FAQ.

If you fall within the Class definition, you had to decide whether to stay in the Class or ask to be excluded from the Class. If you decided to exclude yourself, you had to mail a written request to exclude yourself that was postmarked no later than May 21, 2021.

Class Members who excluded themselves are free to file individual lawsuits against LICS about the issues in this Lawsuit.

If you already have your own lawsuit against LICS based on issues raised in this Lawsuit and want to continue with your own lawsuit, you must have asked to be excluded from the Class.

If you start your own lawsuit against LICS after you excluded yourself, you will have to prove your claims. If you intend to file your own individual lawsuit against LICS, you may want to consult with a lawyer soon, because your claims may be subject to a time limit, known as a statute of limitations

The deadline to exclude yourself has passed.

No. If you excluded yourself, do not send in a Proof of Claim Form seeking any settlement relief because you will not be entitled to any benefits from this Settlement.

No. Unless you properly excluded yourself, you give up any rights to sue LICS and the other Released Parties for any and all Released Claims (as those terms are defined in the Stipulation of Settlement). If you did not exclude yourself, you will not be entitled to receive any recovery in any other action against LICS or any of the Released Parties based on or arising out of the Released Claims.

Yes. The Court decided that the law firm of Kasowitz Benson Torres LLP is qualified to represent you and all Class Members. Information about Lead Counsel can be found listed below:

Kasowitz Benson Torres LLP
Veronica Nauts
101 California Street
Suite 3000
San Francisco, CA 94111
1-415-421-6140
www.Kasowitz.com

You will not be charged for these lawyers. If you want to be represented by your own lawyer, you may hire one at your own expense.

That is your decision. Lead Counsel is working on your behalf and on behalf of all Class Members. If you want your own lawyer, you will have to hire and pay that lawyer.

On June 7, 2021, the Court awarded attorneys’ fees and costs in the aggregate of $2,500,000. The Court also awarded a total payment of up$100,000 for all Class Representatives combined. LICS will pay the attorneys’ fees and expenses, and payments to the Class Representatives. These amounts will not come out of the funds for the specific settlement benefits awarded to Class Members.

You can find the Final Judgment and Dismissal and the Order Regarding the Motion for Final Approval here.

Yes. LICS is also represented by counsel. LICS’s counsel do not represent you or any other Class Member.

You were able to tell the Court that you didn’t agree with the Settlement or some part of it.

The deadline to object has passed.

Objecting is telling the Court that you don’t like something about the Settlement. You can object only if you stay in the Class. Excluding yourself is telling the Court that you do not want to be part of the Class and the Settlement. If you exclude yourself, you have no basis to object because the case no longer affects you.

The Court held a hearing to decide whether to approve the Settlement.

The Settlement was approved on June 7, 2021.

The Settlement was approved on June 7, 2021.

The deadline to request to speak at the hearing has passed.

By doing nothing in response to the Notice, you stayed in the Class if you fall within the class definition. Keep in mind that if you did nothing, you gave up all rights ever to bring a lawsuit or action, to continue with a pending lawsuit or action, or to be part of any other lawsuit or action against LICS concerning the claims and legal issues covered and resolved by the Settlement.

Because the Court approved the Settlement on June 7, 2021, you received a Proof of Claim Form that you must have completed and submitted to the Claims Administrator by October 29, 2021 in order to receive the Cash Relief Option, Surrender Charge Credit, and/or Term Insurance Relief provided for in the approved Settlement.

Yes. This website and the Notice provide only a summary of the Settlement. More details are contained in an agreement between the Plaintiffs and LICS called the Stipulation and Agreement of Settlement. The full Stipulation and Agreement of Settlement is on file with the Clerk of Court. To obtain a copy of the Stipulation and Agreement of Settlement and other documents related to the Settlement, please visit the Important Documents page.

For additional information about this Class Action, you can call 1-877-432-3865 (Toll-Free), email info@LSWclassaction.com, or write to Walker v. LICS Class Action, c/o Epiq Class Action & Claims Solutions, Inc., P.O. Box 5053, Portland, OR 97208-5053.

For any information about your Policy other than about this Lawsuit, you can contact LICS or your insurance agent by calling 1-800-732-8939, by emailing LICS at LifeCustomerService@NationalLife.com, or by visiting LICS’s website at www.NationalLife.com.

Please do not call the Court or the Court Clerk.