Deadline For Insurance Settlement Looms

Washington Insurance Commissioner Deborah Senn Tuesday warned Prudential Life Insurance Co. policyholders they must decide by June 1 if they want to participate in a multibillion-dollar settlement against the insurer.

If a yellow “election form” is not signed and postmarked by that date, policyholders will forfeit their right to no- or low-interest loans to pay policy premiums, enhanced policies or other forms of relief.

The awards are compensation for misleading sales practices used by Prudential agents from 1982 to 1995.

Some, Senn said, were so subtle that many victims may not realize that they were deceived.

Prudential agreed to make restitution in a settlement accepted earlier this year by a federal judge in New Jersey. Some eight million policyholders could be affected.

Senn said the cost to Prudential could eventually reach $3 billion.

But of 100,000 Washington residents entitled to compensation, only 10,000 have returned the election form, she said, and time is running out.

“People are tremendously confused,” Senn said. “It’s the stress of having to make difficult decisions.”

Although the information sent to policyholders is complex, the initial decision is fairly simple, she said. They can check off some form of basic relief, or opt for alternative dispute resolution, which may give them additional compensation.

By calling a special hotline - 1-800-627-7938 - consumers can get guidance based on their individual circumstances, she said.

A Burien couple traveling with Senn said they received invaluable advice.

“We’re just trying to get out to tell people to fill those forms out,” said JoAnn Womack. “We aren’t sure we have anything.”

She said they bought three policies beginning in 1964, and in 1985 took out a loan against one. Their agent told them dividends from all three would not only repay the loan, but the premiums as well.

When they called the hotline, they discovered nothing had ever been paid on the loan, Womack said. Accrued interest had nearly doubled their debt.

They also discovered language in a policy bought in 1989 that will nearly triple their premium in 2005.

“It’s been a nightmare,” Womack said.

Senn said the couple will probably score well in a system designed to provide the most compensation to those who suffered the most.

“We’ll do everything we can to see that the Womacks are made whole,” she said.

, DataTimes