Last modified Wed., August 16, 2006 - 04:07 PM
Originally created Thursday, August 17, 2006

Service members and civilians due American-Amicable refunds

By Clark Pierce, Staff Writer

The American-Amicable Life Insur-ance Company of Waco, Texas and its affiliates - Pioneer American Insurance Company and Pioneer Security Life Insurance Company - will be required to provide immediate cash refunds and increased policy benefits totaling $70 million.

''After more than two years of investigations, we're delighted to see this settlement announced,'' said Dave Faraldo, director of NAS Jacksonville Navy-Marine Corps Relief Society, and a financial planning advocate for service men and women.

''Perhaps the best news is that these companies are also banned from military bases for five years, and may not use any military personnel membership listings for sales or solicitation purposes. Their deceptive sales practices targeted mostly young and financially unsophisticated Sailors and Marines. This settlement covers 4,600 policy holders in Florida,'' said Faraldo.

On Aug. 3, Georgia Insurance Commis-sioner John Oxendine, Texas Insurance Commissioner Mike Geeslin, the U.S. Department of Justice and the U.S. Securities and Exchange Commission announced the multi-state and federal settlements regarding the improper sale of insurance and investment products to U.S. military personnel.

Oxendine said in a news release that approximately 57,000 current and former service members will receive cash refunds and modifications to their existing insurance policies, if active. An additional 13,000 service members and 22,000 civilians will receive increased cash surrender benefits for a total of 92,000 policyholders who will benefit from this settlement.

The settlement alleges that the American-Amicable companies violated insurance and consumer protection statutes in the sale and marketing of certain life insurance products to U.S. service members.

The term life policies were sold primarily to military personnel, and were often represented as investment products. Under the settlement, the companies will be required to:

Make cash payments to former and current service members who were issued a ''Horizon Life'' policy from Jan. 1, 2000 through July 28, 2006.

Increase the cash surrender value for all in-force ''Horizon Life'' and ''Wealth Builder'' policies regardless of when the policy was issued or military status.

In a related matter, the Department of Defense (DoD) published new rules and regulations for on-base financial solicitation in the July 10, 2006 edition of the Federal Register. The new policy aims to protect service men and women from unfair and deceptive advertising practices and prohibits base personnel from representing outside providers. Highlights include:

Installation commanders will ensure the insurance agent's license status and complaint history are checked with the appropriate state or federal regulators before granting permission to solicit on the installation.

Before approving insurance and financial product agents' permission to solicit, base commanders shall review the list of agents and companies barred, banned or limited from soliciting on DoD installations.

Base commanders shall make disinterested third-party insurance counseling available to personnel before entering into a contract for insurance or securities.

Prohibits use of manipulative, deceptive or fraudulent devices and schemes, including misleading advertising and sales literature. All financial products that contain insurance features must clearly explain the insurance features.

Military departments shall develop and disseminate information and provide educational programs for service members on their personal financial affairs, including such subjects as insurance, government benefits, savings, budgeting, and other financial education and assistance requirements outlined in DoD Instruction 1342.27.

Credit unions and banks operating on DoD installations are required to provide financial counseling services as integral part of their financial services offerings.