Pacific Life Insurance Company has asked a federal judge in the Western District of North Carolina to dismiss an $8.5 million lawsuit brought by NASCAR star Kyle Busch and his wife, Samantha, who claim the insurer misrepresented life insurance policies that were marketed as providing tax-free retirement income.
The litigation is pending before the same court that recently heard a high-profile, Michael Jordan-led antitrust lawsuit against NASCAR.
In its filing, Pacific Life arguess the Buschs knowingly purchased five Indexed Universal Life insurance policies between 2018 and 2022 that were designed to provide more than $90 million in combined life insurance coverage, not short-term retirement income.
According to the insurer, the policies were structured to deliver immediate death-benefit protection while allowing the accumulation of cash value over time, provided the policies were funded and managed over the long term. Pacific Life argues the Buschs failed to meet those requirements, allowing some policies to lapse and surrendering others before they could perform as intended.
“Instead of keeping the policies long enough to capitalize on their growth potential, Plaintiffs failed to timely pay planned premiums, failed to monitor allocation of their policy values between indexed and fixed accounts and surrendered the policies or allowed them to lapse,” Pacific Life wrote in its motion. “Rather than accept responsibility for their own decisions, Plaintiffs now attempt to blame their negative outcome on the IUL product.”
Busch, a NASCAR Cup Series champion, alleges in his complaint that Pacific Life and its agent failed to disclose the true risks associated with the policies. He claims he was told that by paying approximately $1 million per year for five years, he could later withdraw about $800,000 annually beginning at age 52, while maintaining life insurance coverage.
According to the lawsuit, Busch discovered after receiving a sixth premium notice that most of the cash value in the policies had been depleted. The complaint alleges total losses of $10.4 million and asserts claims for fraud, negligent misrepresentation, breach of fiduciary duty and unfair and deceptive trade practices.
Indexed Universal Life policies combine permanent life insurance with a cash-value component tied to a market index, such as the S&P 500. While such policies are often marketed as offering downside protection, their performance depends heavily on funding levels, policy charges, interest crediting methods and how cash values are allocated.
Pacific Life argues that the Buschs acknowledged those risks in writing. The insurer said both Kyle and Samantha Busch signed multiple disclosures confirming they understood the policies required long-term funding and active management, and that performance would vary depending on premium payments and allocation decisions.
The filing also states the Buschs indicated an intent to fund the policies for decades, with some documents reflecting planned premium payments over 30 years, through age 70 and beyond. Each policy included a cover letter, printed in bold, capitalized text, urging policyholders to “READ YOUR POLICY CAREFULLY” and advising them of a 20-day period during which the policies could be canceled for a full refund.
Pacific Life further argues that several of the Buschs’ claims are barred by North Carolina’s three-year statute of limitations. Busch began purchasing the policies more than seven years ago, the insurer said, and cannot revive expired claims by alleging he failed to investigate the policies’ performance.
“A plaintiff cannot avoid the statute of limitations by remaining ‘willfully blind,’” Pacific Life wrote. “A man should not be allowed to close his eyes to the facts readily observable by ordinary attention.”
In addition to Pacific Life, the Buschs named insurance agent Rodney A. Smith as a defendant. The complaint alleges Smith steered them into an unsustainable, high-risk product and charged an undisclosed upfront commission of approximately 35%.
The court has not yet ruled on Pacific Life’s motion to dismiss.
