A proposed class action alleges that excessive cost-of-insurance charges may have reduced the account values of certain Sun Life universal life policies.

A proposed class action alleges that Sun Life Assurance Company of Canada may have deducted excessive cost-of-insurance charges from certain universal life and variable universal life insurance policies. Current and former policyholders may want to review their policies and annual statements to determine whether their account values were affected.

How Universal Life Insurance Works

Universal life insurance generally combines permanent life insurance coverage with a cash value or account value component. Policyholders make premium payments, which are credited to the policy after authorized expenses and deductions are applied.

The insurer may deduct monthly charges from the policy’s account value, including the cost of providing insurance coverage and certain administrative expenses. The remaining balance may earn interest and can help pay future policy charges.

These deductions can significantly affect the long-term performance of a policy. When monthly charges rise or remain higher than expected, the policy’s accumulated value may decline more quickly. A policyholder may then be required to make additional premium payments to maintain coverage and prevent the policy from lapsing.

What Does the Proposed Class Action Allege?

The proposed class action alleges that certain Sun Life policies required cost-of-insurance rates to be determined using expectations concerning factors such as future mortality experience, policy persistency, expenses, and taxes. It alleges that Sun Life did not calculate those rates in the manner required by the policies and may have used other undisclosed or unauthorized considerations.

The action further alleges that Sun Life failed to appropriately reduce cost-of-insurance rates when mortality and tax expectations improved. According to the allegations, this caused policyholders’ account values to be reduced by charges greater than those authorized by their policies.

How Policyholders May Be Affected

You may have been affected if you currently own or previously owned a Sun Life universal life or variable universal life insurance policy.

Possible warning signs include:

• Cost-of-insurance charges that increased unexpectedly;
• Account or cash values that declined faster than anticipated;
• Requests for additional premium payments;
• Notices warning that the policy could lapse;
• Policy performance that differed substantially from earlier illustrations; or
• Monthly deductions that were difficult to understand or verify.

Because insurance statements generally disclose the amount deducted without explaining the actuarial calculations behind the rate, many policyholders may not realize that there could be a problem.

Documents You Should Keep

Policyholders should preserve their complete insurance policy, annual statements, premium notices, policy illustrations, lapse warnings, payment records, and correspondence with Sun Life or their insurance agent.

These documents may help determine how the policy was administered, which charges were deducted, and whether the policy’s account value was affected.

Learn More About Your Rights

If you currently own or previously owned a Sun Life universal life or variable universal life insurance policy, complete the form on this page to learn whether you may be affected.

Providing your information may help attorneys determine whether your policy contains the relevant cost-of-insurance provisions and whether your policy account may have been reduced by the charges at issue. Completing the form does not create an attorney-client relationship or guarantee that you will qualify as a class member or receive compensation.

The allegations described above have not been proven in court. Sun Life may dispute the allegations and assert defenses. No class has been certified, and there has been no determination that Sun Life is liable to any policyholder.