National Life: plaintiff promotes ‘odd theory’ in IUL lawsuit over 0% return

Claiming that a plaintiff’s lawsuit over a disappointing indexed universal life (IUL) return rests on “an odd theory,” NLV Financial Corp. is asking a Vermont court to dismiss the complaint.

Sanya Virani, of Fortville, Ind., sued NLV Financial Corp. and two life insurance subsidiaries over a 2023 indexed universal life policy that returned 0% after one year.

Sanya Virani claims that the illustrations she was shown rely on back-tested historical performance that does not match reality and is “a fraudulent sham.” Virani is locked into a product that is not performing as promised and comes with costly surrender fees if she were to terminate the policy, her complaint states.

Virani filed the lawsuit in the U.S. District Court for the District of Vermont, where NLV is headquartered, and requested class-action status. Also listed as defendants are National Life Insurance Co. and Life Insurance Co. of the Southwest. The complaint is just the latest in a series of lawsuits nationwide by dissatisfied IUL policyholders.

In its motion to dismiss filed Monday, NLV claims that IUL illustrations are “heavily regulated by insurance authorities.” Illustrations are not a contract.

Virani’s complaint claims breach of contract and RICO violations, which NLV characterized as “a posterchild” for judicial scrutiny.

“The notion that Defendants are operating a racketeering enterprise to commit mail and wire fraud—as opposed to making routine issuances of life insurance policies—is baseless,” the motion reads.

No IUL return at all

Virani purchased an IUL policy on Sept. 8, 2023, the complaint said, with a face or base coverage amount of $2,767,336. The policy offered Virani interest crediting strategies, including “Fixed-Term Strategies” and “Indexed Strategies” – the returns from which are credited to the policy’s accumulated value.

The lawsuit describes the US Pacesetter No Cap Annual Point-to-Point Indexed Strategy.

Virani allocated 100% of the accumulated value under her policy to the US Pacesetter Index, the complaint states. According to her 2024 Annual Statement issued by National Life, 0% interest was credited to her account as a result of that allocation for the period September 22, 2023, to September 21, 2024.

The plaintiff claims the Pacesetter Index was a “fraudulent sham” that advertised returns it could never deliver since the index "did not exist prior to December 10, 2021,” the complaint states.

Many proprietary indices haven’t been around long enough to have a significant performance history. So many insurers are using “backtested” hypothetical performance from proprietary index components. But critics say this results in misleading illustrations untethered from reality.

NLV pointed out that Virani was not given an illustration until after she purchased the IUL. Her claims do not make sense, the company said in its motion.

"Plaintiff’s allegations rest on an odd theory that, for no apparent benefit, Defendants decided to 'dupe' plaintiff by including on ... her illustration a table of 'hypothetical' historical returns that did not to her satisfaction announce the readily available public information that two of the listed indices have not existed for twenty years."

High surrender charge

To date, Virani has paid “tens of thousands of dollars to defendants in policy premiums,” the complaint said. She could cancel and surrender the policy. However, the surrender charge is $49,618.33 in the first year of the policy, gradually declining to $5,202.59 in the tenth year, the complaint stated.

Virani claims that her policy had “no realistic chance” of ever attaining the historical returns shown in the back-tested history accompanying the index she chose.

Virani acknowledged signing a statement that read: “I have received a copy of this illustration and understand that any non-guaranteed elements illustrated are subject to change and could be either higher or lower.”

Still, her attorneys say that should not shield the defendants from liability.

“The disclaimers in no way protect Defendants from this claim that the Indices and their Illustrations are fundamentally a false promise and fraudulent sales scheme,” the complaint reads. “Indeed, if ‘historical’ Illustrations have no value as a ‘representation of past or future performance’ of crediting rates, it is logical to question why they are provided to consumers.”

© Entire contents copyright 2025 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.