South Carolina couple sue advisor, Symetra over IUL-funded plan

A South Carolina couple claims that using an indexed universal life policy in a retirement planning strategy cost them substantial life savings.

Beth and David Yokel, of Greenville County, claim their advisor sold them on a retirement plan centered around loans from a Symetra Accumulator IUL policy. Four years of premium payments totaling $800,000 was supposed to yield "three or more decades of steady income in the form of tax-free loans," the lawsuit claims.

Unrealistic illustrations led the Yokels to buy into the plan, the lawsuit claims. The Yokels are suing Matthew Dixon, their advisor, a pair of advisor firms he was associated with, and Symetra Life Insurance Co.

A Symetra spokeswoman said the insurer will not comment on the lawsuit. Dixon could not be reached for comment.

'Not particularly sophisticated'

The Yokels say Dixon became their financial advisor in 2019. He had previously been a part of Black Harbor Wealth Management and TruNorth Advisors. Black Harbor was sued several times for IUL plans that allegedly went bad.

Some of the lawsuits naming Dixon and Black Harbor relate to a wide-ranging scam involving Future Income Payments. Using various marketing efforts, FIP solicited pensioners by offering them a lump sum in exchange for a portion of their future pension payments.

FIP called the practice “structured cash flows” and the company used brokers and insurance producers to find investors – often retired veterans, teachers and firefighters. Ringleader Scott Kohn of California was sentenced to 10 years in prison.

The Yokels were just looking for sound financial advice when Dixon pitched an IUL, they say in their complaint.

"The Yokels are not particularly sophisticated about financial and investment advisors and therefore relied on the expertise, competence, and honesty of Dixon, Black Harbor, and TruNorth in making decisions regarding their retirement," the complaint reads.

Assets liquidated

Dixon advised the couple to liquidate many of their existing individual retirement accounts and other traditional retirement accounts they owned as well as a previously purchased universal life insurance policy, the complaint says. In their place, Dixon sold them a Symetra Accumulator IUL paid over four years with $200,000 annual payments.

The Yokels would be able to take tax-free loans from the policy to pay "$50,000 to $55,000 in tax-free retirement income annually for three decades or more," the complaint states.

"As represented by Dixon, Black Harbor, and TruNorth, Plaintiffs would not have to pay back the IUL policy loans during the policy holder’s lifetime because the loans cannot exceed the policy’s accumulated cash value and the insurance company uses the death benefit to pay off loan amounts and any accrued interest," the Yokels say in their complaint.

The advisors showed the Yokels "a series of illustrations" showing the IUL policy delivering three decades of $50,000 annual income, the complaint says.

The Yokels' complaint recounts how IUL illustrations bedeviled regulators, who do not want to reopen the overall life insurance illustration model reg. The current illustrations regulation was adopted in 1997, well before complex indexed universal life insurance products existed.

Instead of a full rework, regulators settled on Actuarial Guideline 49 in 2015 as the first check on IUL illustrations. Insurers quickly got around AG 49 by offering IUL products with multipliers and bonuses. That led to AG 49-A, adopted in late 2020, followed by AG 49-B in 2023.

The NAIC's Indexed Universal Life Illustration Subgroup hinted at a full illustrations rework late in 2022, opening a comment period that only asked for revision "concepts" for the model. That effort went nowhere and the subgroup's 2024 work charges revealed no plans for illustrations.

Multiplier bolstered illustration

One of the ways that Symetra was able to illustrate long-term cash value appreciation in its Accumulator IUL policy was to apply an internal multiplier to indexed crediting rates after the third year of a policy, the Yokels say.

This unspecified, non-guaranteed multiplier was supposed to represent the performance of the policy index. In the Yokels’ case, the application of this multiplier allowed the Symetra Accumulator IUL to illustrate returns sufficient to sustain decades of loans on the policy based on only $800,000 in premiums and without reducing cash values or the death benefit amount needed to pay off the loans after the policy holder’s death, the complaint states.

"This is misleading and deceptive because the illustration purports to reflect policy growth at a relatively conservative Initial Interest rate of between 6% and 7% (depending on the date of the illustration) in accordance with AG 49," the complaint says. "In reality, however, the illustrated account values in policy year 3 and beyond are boosted by the multiplier, such that the year-over-year growth in the illustration far exceeds the stated interest rate."

The Yokels turned to a new advisor in June 2023 and "became aware that the Symetra IUL policy they purchased was wholly incapable of producing $50,000 of tax-free retirement income annually over decades," the complaint reads.

The couple is left to either pour more money into the policy, or allow it to lapse and lose all premiums paid to date, the complaint says.

InsuranceNewsNet Senior Editor John Hilton 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.

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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.