AVONDALE, Ariz. (AP) — Kyle Busch bought what he thought was a safe life insurance plan that would provide him with a self-funded income until he retired.
When Pacific Life Insurance Company sent out the sixth premium notice on a supposed five-year payment plan — and most of the money he invested was gone — the two-time NASCAR Cup Series champion knew something was wrong.
“I thought, wait a second, what am I getting a sixth-year bonus for?” Busch said at Phoenix Raceway on Saturday. “We got a call from the guy who sold me the insurance policies and he was taking me around in all these circles and couldn’t answer the questions, so I thought, this is suspicious.”
Once Bush and his wife Samantha realized something was wrong, they contacted an independent firm, which discovered that their policy would expire in 16 months and the entire $10.4 million they had invested was gone.
Now the Bushes are suing Pacific Life for $8.5 million, alleging the insurer failed to disclose the true risks of the policies and made false and negligent statements about what should have been tax-free retirement income.
Bush said he was told that if he paid $1 million over five years, once he turned 52 he could receive $800,000 a year. Instead, he was told that his money would go into an insurance company account rather than be invested in the market, so his investment never grew as the market rose.
“It was a lie,” Busch said on the eve of NASCAR’s season finale. “I looked at it and thought: This sounds too good to be true, but you have to have faith in those who are looking at it for you.”
This is an indexed universal life insurance, which is a combination of life insurance that provides a death benefit with a cash value component. Growth in monetary value is tied to a stock market index that supposedly has built-in protection against market downturns.
Once Bush realized what had happened to him, his lawyer found other people who had invested in IUL and lost all their money.
“These insurance companies are too big to bother with the little people, so we're going to attack them,” he said. “It’s not just about race car drivers or athletes or the rich people of the world, and that’s why we’re presenting it publicly.”
The suit also names Pacific Life agent Rodney A. Smith for turning Busch into an unsustainable, high-risk product and charging a 35% upfront fee they were unaware of.
“I was like, 'Wow, before my money even went to Pac Life, this guy got a 35% commission,'” Busch said. “It was after the fact.”
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