Guides
Cost-of-insurance lawsuits against life insurers: cases and outcomes
Why policyholders sue over universal life cost-of-insurance increases, with documented verdicts and settlements and the status of the Lincoln case.
Over the past decade policyholders have filed dozens of class actions claiming that insurers raised the monthly cost-of-insurance (COI) charge on universal life policies in ways the contracts did not allow. Several ended in settlements of tens or hundreds of millions of dollars, and juries have found for policyholders in some Missouri cases. The largest recent settlement, a $147.5 million deal with Lincoln and Connecticut General, was overturned on appeal on August 11, 2026, and is not final.
Status as of October 4, 2026. Settlements are not findings of wrongdoing, and every policy's contract wording differs. For what to do when you get an increase notice, see universal life cost-of-insurance increases and what to do.
What the lawsuits claim
In a universal life policy the insurer deducts a monthly cost of insurance charge. The contract lists a guaranteed maximum rate and lets the insurer set a lower current rate, usually "based on its expectations of future" factors such as mortality, interest, expenses and persistency. According to a WilmerHale client alert on the litigation (April 2016), recurring claims are that:
- The increase breached the contract. The policy limits which factors may drive an increase, and the insurer relied on others.
- Non-mortality factors were used. For example, recovering profit margins or earlier pricing shortfalls rather than a change in expected mortality.
- Increases were discriminatory. Plaintiffs allege that increases targeted certain groups, such as older insureds or large policies, without an underwriting basis.
- Related claims. Breach of the duty of good faith and fair dealing, and, in some cases, fraud or misrepresentation.
Insurers generally respond that the contract gives them discretion, that experience (longevity, interest rates, lapse rates) changed, and that the increases were actuarially supported. Courts have reached different results depending on the contract language, which is why outcomes are not uniform.
Documented cases
| Insurer | Court | Outcome (as reported) |
|---|---|---|
| Transamerica | Settlement announced Oct. 4, 2018 | $195 million for roughly 70,000 policies after increases of up to 38%; five-year protection from further increases (Consumer Watchdog) |
| AXA Equitable (now Equitable) | S.D.N.Y., Brach Family Foundation v. AXA Equitable | $307.5 million settlement; about 1,700 policyholders, 2016 increases on 2004–2007 policies; $101.08 million in fees awarded October 2023 |
| State Farm | W.D. Mo., Vogt v. State Farm Life | June 2018 jury verdict of about $34.3 million for roughly 24,000 Missouri policyholders; affirmed by the Eighth Circuit (2020), which also affirmed about $4.5 million in prejudgment interest (Missouri Lawyers Media) |
| Banner Life and William Penn | D. Md. | About $38.2 million settlement (about $40 million with other relief) over 2015 increases; final approval May 26, 2020; cash fund, five-year COI freeze (Beasley Allen) |
| Genworth | E.D. Va. | $25 million settlement over 2019 increases on Gold and Gold II policies; approved Oct. 19, 2022; seven-year bar on new higher rate schedules (Susman Godfrey) |
| Kansas City Life | W.D. Mo. and Jackson County, Mo. | Three earlier jury verdicts for policyholders (the largest, Karr, $28.36 million); $45 million settlement announced July 29, 2025 resolving five pending class actions (Missouri Lawyers Media) |
| Lincoln Financial and Connecticut General | D. Conn., then Second Circuit | $147.5 million settlement class approved by the district court; on Aug. 11, 2026 the Second Circuit reversed the certification and vacated the judgment (see below) |
Plaintiffs in these cases include ordinary policyholders, trusts, and life settlement investors that bought policies from the original owners.
The Lincoln and Connecticut General case in detail
According to the Second Circuit's opinion in Glover v. Connecticut General Life Insurance Co. (No. 25-1760, decided August 11, 2026), the case began in 2016 and the parties reached a settlement agreement in March 2024 that offered $147.5 million to a class of owners of policies issued or administered by either defendant that were active on or after May 27, 2010. It would also have ended related class actions in Pennsylvania and New York. Objectors argued that the named plaintiffs, who had bought policies from Connecticut General and Lincoln themselves, were not typical of class members whose policies were issued by other Lincoln affiliates and who would struggle to prove a direct contract with the defendants. The Second Circuit agreed under its precedent in Mazzei v. Money Store, reversed the order certifying the settlement class, vacated the judgment, and remanded for further proceedings. The court did not rule on whether the increases were improper, and the settlement's fate after remand is not decided.
What this means for a policyholder
- A lawsuit does not answer your question. Your contract's rate-setting wording and your policy's issue date decide your position. Locate the "cost of insurance rates" provision and the maximum rate table.
- Settlements come with notices. If you receive one, read the deadlines and the remedy. Do nothing and you may be bound by a release; opt out and you give up the payment but keep your own claim.
- Relief is often a rate freeze plus cash. The settlements above typically combined a cash fund with a multi-year bar on new increases.
- Policies lapse after increases. If a notice shows your policy may run out of funds, price the options in why universal life policies lapse, and how to prevent it and use the keep, surrender or sell your policy? before deciding.
A checklist if you are affected
- Keep every increase notice and annual statement.
- Request an how to request and read an in-force illustration showing the new rate.
- Find the policy's COI provision and note any listed factors.
- Check whether a class settlement covers your insurer (settlement websites and the court docket list covered policies and deadlines).
- Talk to an attorney before opting out or signing a release (when to hire a life insurance lawyer).
Key takeaways
- COI lawsuits claim insurers raised universal life charges using factors the contract did not allow; outcomes turn on each contract's wording.
- Documented results include settlements for Transamerica ($195 million), AXA Equitable ($307.5 million), Banner Life (about $38.2 million), Genworth ($25 million) and Kansas City Life ($45 million), and a $34.3 million jury verdict against State Farm Life that was upheld on appeal.
- The $147.5 million Lincoln and Connecticut General settlement class was reversed by the Second Circuit on August 11, 2026 and is not final.
- If you receive an increase or settlement notice, keep records, get an illustration, and read the contract before acting.