Vermont judge sides with National Life on IUL illustrations lawsuit

A Vermont judge sided with National Life companies in a lawsuit over an indexed universal life policy that returned 0%.

Chief District Judge Christina Reiss awarded summary judgment for National Life on breach of contract, deception, and racketeering claims made by Sanya Virani, of Indiana. However, the judge gave Virani 20 days from Monday to refile an amended complaint.

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

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.

Evidence lacking

Virani failed to state a valid claim that she was deceived during her life insurance purchase, Judge Reiss wrote.

"Plaintiff does not assert that the Illustration or Policy contained any steering language that induced her to obtain the Policy and deposit her Accumulated Value into one Index rather than another," her ruling states. "She similarly does not claim that she was coerced into purchasing the Policy rather than obtaining different insurance from a different company.

"She also does not contend that Defendants benefitted more from her selection of the Pacesetter Index as opposed to other available Indices."

Virani also alleged that National Life's sales practices, through marketing organizations on down to its on-the-ground salespeople, violates the Racketeer Influenced and Corrupt Organizations Act [RICO]. Judge Reiss rejected that claim as well.

The complaint "does not identify a single communication between the alleged enterprise members, nor does it describe any specific actions in furtherance of the allegedly fraudulent scheme other than those attendant in the purchase and sale of insurance," Reiss wrote. "An enterprise is not plausibly alleged in this manner."

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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.