The parties have reached a tentative settlement apparently valued at more then $8.25 million in a class action filed against Massachusetts Mutual Life Insurance Company on behalf of all persons who purchased certain permanent, term life, and disability income policies issued by Massachusetts Mutual Life Insurance Company, MML Bay State Life Insurance Company, Connecticut Mutual Life Insurance Company or C.M. Life Insurance Company between January 1, 1983, and December 31, 2003. Persons eligible to take part in the settlement should call the settlement hotline for more information.

Paul Varacallo sued Massachusetts Mutual alleging that he and other proposed class members were deceived by the insurer into buying "vanishing premium" whole life insurance policies. The complaint alleges claims of common law fraud and violations of the New Jersey Consumer Fraud Act.

The policies were allegedly sold under the name "N-pay" policies. These policies were supposed to have shortened the number of years premium payments would be required by having the dividends earned on earlier payments cover later premium costs. Varacallo alleged the representations made by the insurer never came to pass. The policies were sold by independent contract agents; more than 8,250 policies were sold to New Jersey residents by 840 agents. The agents used several policy illustrations in their sales presentations that were created by Massachusetts Mutual.

The lawsuit alleged that Massachusetts Mutual withheld material information from its printed literature and that the carrier knowingly and intentionally inflated its dividend rates to sell N-pay policies. After the District Court initially denied certification of the class, the appeals court reversed the denial, finding class action resolution of the case is the superior method for adjudication of the claims.

"We perceive from the pronouncements of our Supreme Court that there is an overarching principle of equity to consider in the application of the class certification rule. The principle is that class actions should be liberally allowed where consumers are attempting to redress a common grievance under circumstances that would make individual actions uneconomical to pursue," the appeals court held.

The settlement apparently provides certain types of relief to class members, depending upon the type of policy owned during the class period: (1) general policy relief (available only to class members with permanent policies), which would provide a settlement death benefit; or (2) claim review relief (with certain types of claims available to class members with certain types of policies), which would provide relief based on the nature and strength of a class member's claims. Additional relief in the form of written disclosures and changes in policy administration procedures is also being implemented. More information is currently unavailable due to the court’s sealing of all settlement documents.

A call center has been established to assist class members with questions regarding the settlement. The toll-free number is 1-800-242-7026. The hours of the call center are Monday through Saturday from 9:00 a.m. EST to 6:00 p.m. EST. The call center is closed on all legal holidays.

The settlement will not be effective until the court grants it final approval. The court has scheduled a hearing on the matter for November 22, 2004.