Myers v. Deutsche Bank, FINRA ID # 11-02623 (San Francisco, CA, 2/12/2013) -
Customers who purchased premium-financed life insurance recover $834,193 in compensatory damages and $100,000 in attorney fees.
What is premium-financed life insurance?
For affluent people who don't want to liquidate other assets to pay for life insurance, borrowing funds from a third party to cover the cost of a policy and paying it back in installments -- a practice called premium financing. For some it can seem a practical to be a solution.
But financial planners warn that such a strategy is vulnerable to abuse -- and the elderly in particular, need to be wary of it. If interest rates go up, the client can end up owing more for the premiums than the policy is worth.
Another concern is the credit quality of the company that writes the policy. If there's a downgrade, the lender may not pay additional premiums, or it may call for the loan's collateral.
Premium financing can be a way for a life insurance agent or premium finance company to make huge fees and commissions, but it could leave the client who signed for the loan left holding the bag.
If you suffered an investment loss due to your stock broker or financial advisor’s advice, call Soreide Law Group to speak with an attorney at 888-760-6552.
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