The company will pay $10 million in cash refunds to 57,000 current and former service members who bought its products after Dec. 31, 1999. The rest of the money represents the potential cost of raising the future cash value of policies sold to 13,000 other military customers and 22,000 civilians, although the final price tag will depend on how many of those policies are held to maturity.
The company, which is based in Waco, Tex., also agreed to a five-year ban from sales on any military base, one of the longest suspensions ever imposed in the military insurance market.
“American Amicable has been working with state and federal authorities for the past two years,” said Mark Palmer, a spokesman for the company, which has neither admitted nor denied any wrongdoing in the case. “Resolving this and moving forward is in the best interests of our customers, our agents and our employees.”
Mr. Palmer said that the global settlement resolves all outstanding issues between the company and an investigative task force that included the Justice Department, the Securities and Exchange Commission and insurance regulators in 41 states, led by two insurance commissioners, John W. Oxendine of Georgia and Mike Geeslin of Texas.
The investigations were begun in mid-2004, after articles in The New York Times documented widespread and longstanding abuses in the sale of insurance, mutual funds and other financial products to young, financially unsophisticated service members.