Kyle Busch and wife Samantha have filed a lawsuit that claims losses of more than $8.5 million after being misled into purchasing complex life insurance policies they were led to believe were safe retirement plans.
The complaint was filed on October 14 in Lincoln County, North Carolina and accuses Pacific Life Insurance Company of misrepresenting Indexed Universal Life (IUL) policies as ‘tax-free retirement plans’ that would provide self-funding retirement income.
“I never thought something like this could happen to us,” said the two-time Cup Series champion in a statement. “These policies were sold to us as part of a retirement plan — something safe and secure that would grow tax-free and protect our family long after racing. We trusted the people who sold them, and the name Pacific Life. But the reality is far different.”
According to the complaint, the Busch family paid over $10.4 million in premiums based on what they claim were misleading illustrations, undisclosed costs and general lies of what they would receive in return.
From the filing:
“Upon information and belief, to induce Plaintiffs, Pacific Life presented multiple illustrations before ultimately having Plaintiffs sign a placeholder illustration that could later be changed in violation of state insurance regulations. The illustrations presented to Plaintiffs were never fixed representations that could be considered appropriate disclosures.”
The suit says their out-of-pocket losses exceed $8.58 million after accounting for the remaining cash value of the policy that continues to erode due to increased costs.
The suit was also filed against an agent, Rodney A. Smith, operating through his business, Red River LLC, and claims that he and Pacific Life marketed the policies using speculative projections that did not disclose to Busch the accurate risks and costs of the policy.
“What was pitched as retirement income turned out to be a financial trap,” said the NASCAR champion.
Busch, in the complaint, accuse Pacific Life of failing to supervise Smith, despite what he claims was a history of disciplinary issues.
From the filing:
“In addition to the widespread misconduct and fundamental flaws in these policy designs, Pacific Life failed Plaintiffs by even allowing Rodney Smith to be involved in these transactions. Smith’s regulatory history in North Carolina alone should have prevented him from structuring, marketing, or selling such complex and high-value IUL policies.
“The North Carolina Department of Insurance disciplined Smith for providing
false and misleading information on his license application, including failing to disclose a
criminal conviction.
“These violations were matters of public record and should have disqualified
Smith from marketing, servicing, or selling complex, high-value financial products on
behalf of Pacific Life.
“Pacific Life either knew or should have known of this history but nonetheless
entrusted him with multimillion-dollar product sales to the Plaintiffs.
“Neither Pacific Life nor Smith disclosed these conflicts or disciplinary
histories to Plaintiffs, even as they marketed themselves as fiduciary-level retirement
professionals performing at the highest of ethical standards.”
For her part, Samantha Busch says the complaint has been filed to also bring awareness to others’ who are at risk of having a similar experience.
“Now that we are going through this process, I am learning how completely misrepresented these products can be when they’re sold,” she said. “It makes me worry about families, retirees, and anyone trying to plan responsibly for their future who may be hearing those same promises. If this could happen to us, it could happen to anyone.”
Pacific Life Insurance has not responded to a request for comment.
The complaint in full can be read here.
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