State claims added to amended lawsuit over National Life IUL illustrations

An Indiana woman suing NLV Financial Corp. and two life insurance subsidiaries over a 2023 indexed universal life policy that returned 0% is tacking on state claims in an amended lawsuit.

Sanya Virani claims the IUL relies on back-tested historical performance that does not match reality and is “a fraudulent sham.” She initially filed suit Oct. 31 in the U.S. District Court for the District of Vermont, where NLV is headquartered.

Also listed as defendants are National Life Insurance Co. and Life Insurance Co. of the Southwest.

In its motion to dismiss “for failure to state a claim,” filed in January, NLV noted that IUL illustrations are “heavily regulated by insurance authorities.” Illustrations are not a contract. Virani’s original 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.

State claims added

Viriani’s amended complaint adds a third claim: Violation of the Massachusetts law commonly known as its Consumer Protection Act, and “Other States’ Similar Unfair and Deceptive Trade Practices Statutes.”

The Massachusetts law prohibits unfair methods of competition and unfair or deceptive acts or practices in trade or commerce. Most states have similar laws.

A National Life spokeswoman said of the amended complaint: "We continue to strongly dispute the plaintiff’s allegations, and we intend to vigorously contest them."

Viriani resided in Massachusetts when she purchased an IUL policy on Sept. 8, 2023, the amended 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 lawsuit 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."

Lawsuit: 'No realistic chance'

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.

"Instead, these returns were based on 'cherry-picked backcasted data which resulted in returns that had, for example, a less than a 1 in 1,000 chance of success," her lawsuit claimed.

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.