Klein v Southwestern Life Insurance Company
Policyholders Sue Southwestern Life Insurance Company for Selling Useless "Child Rider" Coverage
Ten related class actions have been filed against Southwestern Life Insurance Company on behalf of all U.S. purchasers of Southwestern Life policies that included child rider coverage. The actions allege that Southwestern Life breached its contracts with class members, committed fraud, and was negligent in its representations about the child riders that it sold. The actions seek unspecified compensatory damages.
A rider is an addition to a life insurance policy that provides extra coverage sold to persons who have already purchased an insurance policy from the insurance company. Riders can be sold either at the time of or after the sale of the main policy. Once the insured person buys a rider, an extra premium is often added to the original policy premium. One particular rider is sold to policyholders as a way to insure the lives of their children. This is commonly known as a "child rider," and pays an additional amount in case the child dies. Southwestern Life, like many insurance companies, sells child rider products as an additional benefit added to a base whole life policy that provides insurance coverage for the children of the insured.
The actions allege that Southwestern Life sets up plans that lead policyholders to pay on their children for years after they are grown and no longer eligible for coverage, leaving them in a situation where they have no chance for a payout if the children die. Though a policyholder has the option to terminate a rider at any time, Southwestern Life allegedly makes no attempt to notify policyholders that they are no longer eligible to get a payout because their children outgrow the age limits of the policies.
The actions filed thus far have been consolidated into multidistrict litigation docket 3:03-md-1528. The individual actions are: Duke v. Southwestern Life (4:03cv6, Northern District Court of Mississippi); Riley v. Johnson (2:03cv18, Northern District Court of Mississippi); Sanitsky v. Southwestern Life (2:02cv3202, Central District Court of California); Smith v. Southwestern Life (3:03cv436, Southern District Court of Mississippi); Rowe v. Southwestern Life, (1:03cv304, Middle District Court of Alabama); Currie v. Southwestern Life (1:03cv303, Middle District Court of Alabama); Rowe v. Southwestern Life, (1:03cv345, Middle District Court of Alabama); Currie v. Southwestern Life (1:03cv343, Middle District Court of Alabama); Currie v. Southwestern Life (1:03cv344, Middle District Court of Alabama); and Rowe v. Southwestern Life, (1:03cv346, Middle District Court of Alabama).
