Prudential Improperly Collected Life Insurance Premiums and Informed Claimants They Were Ineligible

Posted on April 28th, 2023 at 12:44 PM
Prudential Improperly Collected Life Insurance Premiums and Informed Claimants They Were  Ineligible

From the desk of Jim Eccleston at Eccleston Law 

The Department of Labor (DOL) has agreed to a settlement with Prudential after the insurer improperly collected life insurance premiums from customers and subsequently denied coverage claiming ineligibility.

Prudential improperly denied nearly 200 life insurance claims filed between 2017 and 2020, according to the DOL. The policies, which would have paid out between $3 to $7 million, were part of employer-sponsored insurance where some workers had opted in for supplemental coverage. According to the DOL, Prudential denied claims in cases where workers chose coverage in plans that utilized a different company as the record keeper. When Prudential is a group plan’s record keeper, it often determines whether a worker meets the criteria for supplemental coverage. However, when a different company serves as record keeper, the company doesn’t ensure that workers are eligible for those policies even while collecting premiums that are sent to Prudential, according to the settlement.

“Participants were paying premiums for life insurance policies that never existed. The DOL will continue to work to end this disturbing practice, and we urge all insurers to examine their practices to ensure they do not engage in similar conduct”, according to the DOL. The DOL further noted that “parallel investigations have found that other life insurers also engaged in similar practices”, but no other companies were named. The settlement agreement now restricts Prudential from denying life insurance claims on the basis of ineligibility if the company has collected premiums for more than three months.

 

Eccleston Law LLC represents financial advisors and investors nationwide in securities, employment, transition, regulatory and disciplinary matters.

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next

This was the best of all possible outcomes and I cannot thank you and the team enough.

Michael S.

LATEST NEWS AND ARTICLES

February 5, 2026
FINRA Fines Broker-Dealer for Repeated Form CRS Disclosure Failures

The Financial Industry Regulatory Authority (FINRA) fined VSI Securities Inc., formerly known as Venecredit Securities Inc., $20,000 for failing to accurately disclose the firm’s disciplinary history in its customer relationship summary, known as Form CRS.

February 4, 2026
Investor Redemptions Rise in Nontraded BDCs Amid Credit Concerns

Financial advisors and their clients have increased redemptions from nontraded business development companies (BDCs) following a series of high-profile corporate bankruptcies, according to InvestmentNews. The surge highlights growing investor concern about liquidity and credit exposure within these high-yield but often risky investment ...

February 3, 2026
FINRA Accuses Spartan Capital of Widespread Churning That Allegedly Harmed Customers

The Financial Industry Regulatory Authority (FINRA) has brought a disciplinary complaint against Spartan Capital Securities and several senior leaders of the New York City–based broker-dealer, alleging that the firm facilitated excessive trading that generated millions of dollars in revenue while causing substantial losses to customers.