This case involves a dispute over life insurance policies that were purchased for the benefit of a small credit union in an economically depressed area. A condition of the policy’s sale allowed the insurance company to adjust the monthly deduction rate of the policies after their sale based on the overall mortality rate of the policyholders who purchased the policies through the credit union. After the insurance company saw a higher than expected mortality rate among members of the credit union, the company raised the monthly deduction rate by a significant margin. It was alleged that the company sold the policies with a racial bias, knowing that the expected mortality rate of the group would be statistically higher than average due to their comparative lack of access to resources.
Question(s) For Expert Witness
- 1. Please describe your experience working in life insurance sales and marketing.
- 2. Are you familiar with charitable life insurance policies?
Expert Witness Response E-082315
I have been involved in the review and analysis of life insurance policies for over thirty years as a Life Insurance Producer, a Risk Manager, and as an Employee Benefits Manager. In addition I have worked as a consultant for a life insurance marketing group. I am familiar with life insurance applications for Company-Owned Life Insurance (COLI), where companies take out life insurance policies on key employees. Some sources cite surveys that maintain that almost 70% of the Fortune 1000 companies use a COLI program. In addition, I am familiar with the programs of Bank-Owned Life Insurance (BOLI). I have handled Life Insurance Suitability cases in this state, and I am familiar with Insurance Code Section 10110.2 (h) Notwithstanding subdivisions (a), (f), and (g), a charitable organization that meets the requirements of Section 214 or 23701d of the Revenue and Taxation Code may effectuate life or disability insurance on an insured who consents to the issuance of that insurance. I believe it would be important to review any written contracts that exist in this case as to the obligations of the various parties.