Penn Mutual Life Insurance Co. and a group of plaintiffs have filed a court motion alleging that a group of Montana funeral directors suffered millions of dollars in losses due to poor financial advice.
In the filing, Penn Mutual and several financial companies are asking the court to hold the estate of the deceased attorney Janette Krutzfeldt Jones responsible for the losses. Jones, who advised mortician Todd F. Stevenson and his family, recommended that they secure individual universal life insurance policies and finance some of the premiums through a third-party lender.
The suit names Corey Jones, representative of Jones’s estate, as well as Todd S. Steadman, trustee for several Stevenson family trusts.
The original lawsuit claims the Stevenson family was advised by Jones, Steadman, and others to purchase multiple life insurance policies from various insurers, with some policies utilizing premium financing.
The plaintiffs allege that advisers and lenders provided misleading or incomplete loan packages and policy illustrations, failing to disclose interest-rate and collateral risks, according to court documents.
The Massachusetts Mutual Life Insurance Co. was also named as a defendant in the original suit, alongside Penn Mutual.
Premium financing and universal life insurance policies are often marketed for their flexibility and potential for cash value growth, but they carry significant risks. According to the New York Department of Financial Services (DFS), universal life insurance policies can lapse if the policyholder does not pay enough to cover increasing internal charges, or if the policy’s cash value underperforms due to lower-than-expected interest rates or market returns.
In its experience, DFS said it has received numerous consumer complaints about such policies, warning that “many found that their policies had lapsed and had little to no value due to declines in interest rates, market volatility and other factors, or they were required to pay large additional premium payments to keep their coverage in effect.”
“Plaintiffs’ decisions to purchase multiple insurance policies (providing significant and valuable life insurance coverage at all times to present) and obtain premium financing loans to pay for premiums on certain of those policies (so they would not have to use liquid assets or liquidate assets to do so) were undertaken with the advice and assistance of independent legal counsel, Ms. Jones,” the most recent filing said.
The third-party complaint asserts that Jones, as attorney to the Stevenson family, owed a duty of reasonable care, which included providing competent advice and representation.
“Insofar as plaintiffs allege the life insurance policies and premium financing they obtained are not suitable to their needs, and to the extent such allegations are true, Ms. Jones breached the duty she owed to the Stevenson plaintiffs in her capacity as their attorney on behalf of Krutzfeldt & Jones,” the filing said.
Penn Mutual and the other filers are seeking to have liability apportioned at trial to the estate of Jones, Steadman, and the law firm Krutzfeldt & Jones for any damages sustained by the Stevenson family.
