BALTIMORE (CN) — Turning 100 years old is normally a cause for celebration, but for one Florida man and his family the moment will be overshadowed by a life insurance policy prematurely terminated.
When Gary Lebbin turns 100 in September, the milestone will mark the cancellation and early payout of his Transamerica permanent universal life coverage, exposing the Delray Beach man and his family to costly tax consequences.
According to a federal complaint filed on July 7 in Maryland, where his son lives, Lebbin’s family trust has paid more $1.5 million in premiums over the last three decades with the promise by Transamerica Life Insurance Company of a $3.2 million tax-free payout at the time of his death.
Lebbin emigrated from Germany in 1938 to escape Nazi persecution, eventually opening a paint manufacturing and retail business in the Maryland-D.C. area. He married in 1944 and had two children with his wife of more than 70 years. Roger Lebbin, of Chevy Chase, Maryland, is co-trustee with his sister Carole Sue Lebbin, of the trust that acts as the beneficiary of two life insurance policies their parents bought in the early 1990s.
The family says it was Gary and Bernice Lebbins’ intent to buy individual policies, but that Transamerica’s agent marketed “second-to-die” as a better deal for the family. Had the family purchased the policies they initially wanted, the family would have received the death benefit for Bernice when she died at 97 in 2015. Now with the threat of cancellation, no death benefit will be paid out to the family. To add insult to injury, according to the complaint, the Lebbins have paid an additional $600,000 in premiums on the policies, which Transamerica will retain by not paying any death benefit on the policies.
The central issue, according to the suit, is outdated 1980 Commissioners Standard Ordinary Mortality Tables, which are actuarial tables concerning the probability of death by a certain age. The tables are utilized by insurance companies to value life-insurance policies. The tables only go the age of 100 despite the fact some 37,000 centenarians are alive in the United States today.
Transamerica has since updated its mortality tables, increasing the terminal age to 121, but the Lebbins say it has failed to use the updated information for policyholders like Gary who purchased the insurance prior to the update.
The family seeks an injunction to prevent the cancellation of the Lebbins’ life insurance policy, plus punitive damages.
They are represented by David Rubino with McCarthy Wilson in Rockville, Maryland, and by James Bainbridge of the Bainbridge Law Firm in Plymouth Meeting, Pennsylvania.
“After faithfully paying premiums for over 25 years, Mr. Lebbin now has the burden of knowing that his family will not be able to collect on his life insurance,” Bainbridge said in an email. “Transamerica has unjustly enriched itself at the expense of Mr. Lebbin and his family, and now refuses to live up to its end of the bargain.”
Neither Rubino nor Transamerica have responded to requests for comment.