Bernie Audet (CRD#: 1317819), a registered representative with MML Investors Services, LLC (CRD#: 10409) in Newtown Square, Pennsylvania, is currently involved in two pending customer disputes over variable universal life insurance policies, according to his BrokerCheck record accessed on October 23, 2019.
In a customer dispute filed on September 24, 2019, the owner of a variable universal life insurance policy is alleging that “the representative misrepresented and failed to disclose material information regarding VUL [variable universal life] policies issued on the lives of several company employees when soliciting the sales beginning in October of 2017.” The dispute is pending.
This is not the only pending dispute in which Bernie Audet is involved. On April 12, 2017, he became involved in a dispute in which a client alleged that he misrepresented variable life insurance policies and breached his fiduciary duty. The dispute is pending.
What is variable universal life insurance? Variable universal life insurance (VUL) is an alternative to traditional whole life insurance in that it allows for the cash-value component of the insurance to be invested. The cash value is invested in sub-accounts that work similarly to mutual funds. The cash component can be invested to produce potentially greater returns but can also lead to losses. Indeed, the term “variable” is used to describe variable universal life insurance because these investments can fluctuate. Furthermore, the returns have a floor (typically 0%) and a ceiling, which could potentially limit one’s returns. The SEC warns,
“Variable life insurance involves investment risks, just like mutual funds do. If the investment options you selected for your policy perform poorly, you could lose money, including your initial investment.” This is just one of the drawbacks to VUL policies. The sub-accounts carry management fees ranging from 0.5% to 2%. The SEC lists many potential fees, including:
- Sales fees imposed on premiums
- Surrender charge
- Mortality and expense (M&E) risk fees
- Cost of insurance
- Administration fees
- Loan interest
- Underlying fund expenses
- Fees and expenses for optional features
- Transaction fees
It is also worth noting that an investment advisor’s commission for recommending a variable universal life insurance policy can be as high as 70% to 100% of the first-year premium. Thus, some unscrupulous advisors try to convince investors to take out VULs so that they can generate generous commissions for themselves. If you have concerns about variable universal life insurance policies, you may benefit from consulting a securities attorney.
The two complaints described previously are not the only disclosures on Bernie Audet’s BrokerCheck report. On January 23, 2009, Bernie Audet became involved in a dispute in which a client alleges that Bernie Audet gave them incorrect information about rider fees and variable life insurance. The customer alleged that “The representative gave incorrect information in June 2008 when he was advised to postpone the planned termination of a variable life insurance policy so he could receive a refund of rider fees if the contract was surrendered at a later date. When he followed the representative’s advice and surrendered the contract at a later date, he learned a refund of rider fees was no longer available.” The customer sought $59,218.85 in damages. The matter was settled for $48,173.19.
When “the value of an existing life insurance policy was transferred to a new variable life insurance policy in June 2007,” a “third party” raised concerns. Filing a complaint on June 6, 2008, the third party alleged that Bernie Audet had provided inaccurate information regarding the tax ramifications. The matter was settled for $195,000.
On May 1, 2006, Bernie Audet became involved in another customer dispute. A client alleged that Bernie Audet misrepresented a variable universal life insurance policy and a variable survivorship life insurance policy. The client requested $742,914.55 in damages, and the dispute was settled for $527,450.23.
VUL policies typically require that the policy holder pay a monthly premium to ensure continuous coverage, but it appears that Bernie Audet may not have properly educated his clients to this effect. On September 22, 2004, a client alleged that “he was told that a single contribution to his insurance policy would keep it in force for his lifetime.” The client, who held the policy with New England Financial, requested $13,468.79 in damages; the matter was settled for $30,654.00. In another complaint, filed on May 13, 2008, a customer alleged that “when she purchased a variable life insurance policy in August 2003 she did not believe she would be making installment payments into the policy. No specific compensatory damages were alleged.” The dispute was settled for $75,000.
A 34-year veteran of the securities industry, Bernie Audet has worked for four brokerage firms. In addition to MML Investors Services, LLC, Bernie Audet has also worked for:
- MSI Financial Services, Inc. (CRD#: 14251) of Newtown Square, Pennsylvania
- New England Securities (CRD#: 615) of Newtown Square, Pennsylvania
- Travelers Equities Sales, Inc. (CRD#: 833) of El Segundo, California
If Bernie Audet was your broker or if you have questions about variable universal life insurance, don’t hesitate to contact a securities attorney. Call (877) 238-4175 or email email@example.com for your free case consultation with the securities attorneys of Fitapelli Kurta.