A preliminary agreement has been reached in a class action lawsuit against American Equity Investment Life Insurance Co. involving the sale of deferred annuities to seniors.
According to a statement from the Evans Law Firm, one of the law firms that represented the plaintiffs, the preliminary agreement was handed down last month in the U.S. District Court, Central District of California, Western Division. It involved two class actions suits brought against American Equity Investment Life Insurance Co. for alleged deceptive sales practices in regards to the sale of deferred annuity products to senior citizens. The suit contended that the products were marketed to seniors without disclosing all the costs and risks associated with the annuities.
The case involved two separate class actions that were eventually combined into one. There is a California-only class that covered California residents at least 60 years old who purchased an American Equity deferred annuity between Jan. 3, 2000 and June 30, 2011. The second is a nationwide class consisting of non-California residents who purchased the product between Jan.3, 2000 and Dec. 31, 2009. Those plaintiffs were at least 65 years old at the time of purchase. All told, the proposed settlement encompasses more than 110,000 seniors, according to the Evans Law Firm.
Ingrid Evans of the Evans Law Firm said the maximum payout by American Equity could reach $40 million. Other proposed settlement benefits may include: An annuitization bonus up to 10.75 percent of the annuity’s accumulation value on the date of annuitization; a 1.75 percent enhancement of annuity payments to previously annuitized policies; up to a 67.5 percent refund of previously incurred surrender charges; or up to a 67.5 percent reduction of surrender charges incurred in the future.
Executives from American Equity declined to give an official statement on the case. However, in the court document, the company denied any wrongdoing and said the settlement was agreed to in order not disrupt its ongoing business operations and to conclude a lengthy litigation.
A final settlement is scheduled to be reached by late January, according to Elliot Wong, an attorney with the Evans Law Firm.