Talcott and Hartford Agree to $11 Million Settlement Over Alleged Life Insurance Premium Tax Overcharges

Talcott Resolution Life Insurance Company and related entities have agreed to an $11 million class action settlement to resolve allegations that they, along with policy administrator Prudential, improperly calculated and charged premium tax fees on certain universal and variable universal life insurance policies. If you own or previously owned an affected life insurance policy issued by Talcott or Hartford, you may be eligible to receive a direct cash payment from the settlement fund without needing to file a claim form.

The settlement resolves a lawsuit filed in federal court alleging that the insurers miscalculated state premium tax rates, failed to adjust rates when policyholders moved, and applied higher retaliatory tax rates to policyholders across multiple states. Defendants deny all allegations of wrongdoing but agreed to the $11 million settlement to avoid the expense and uncertainty of continued litigation.

What Was Alleged in the Talcott Premium Tax Lawsuit?

The lawsuit, titled Arbuckle Funding LLC et al. v. Talcott Resolution Life & Annuity Insurance Company et al., was brought in the U.S. District Court for the Southern District of New York. Plaintiffs alleged that Talcott Resolution Life Insurance Company, Talcott Resolution Life & Annuity Insurance Company (formerly known as Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company), and policy administrator The Prudential Insurance Company of America mismanaged premium tax deductions taken from policy values.

Specifically, the plaintiffs claimed that the insurers committed four primary systemic errors when assessing premium tax charges:

• Address Change Failure: The companies allegedly failed to update premium tax rates when policyholders relocated to states with different statutory tax rates.

• Rate Update Failure: The insurers allegedly failed to update their internal systems when states changed their statutory premium tax rates over time.

• Retaliatory Tax Overcharges: The companies allegedly charged policyholders residing in states with low statutory rates a higher tax rate based on Connecticut’s statutory rate under state “retaliatory tax” laws, rather than applying the policyholder’s home state rate.

• New York Overcharges: The insurers allegedly charged policyholders residing in New York premium tax rates that exceeded statutory caps.

Under state insurance laws, insurers are assessed premium taxes by state governments, which are often passed through to policyholders. However, plaintiffs argued that the policy contracts required these fees to reflect the specific, applicable statutory tax rates of the policyholder’s state of residence rather than blanket higher rates.

How the $11 Million Settlement Benefits Policyholders

To resolve the claims, the defendants established an $11 million cash settlement fund. In addition to financial compensation, the settlement requires structural changes to how premium tax charges are calculated going forward.

The settlement fund will cover administrative costs, court-approved service awards for lead plaintiffs, attorneys’ fees, and net cash distributions to eligible class members. Furthermore, Talcott and Prudential have agreed to prospective business practice modifications, ensuring that retaliatory tax rates will no longer be applied inappropriately to policyholders residing in lower-tax states and that state rate changes and address updates will be accurately tracked in billing systems.

The defendants deny any liability, and the court has not ruled on the merits of the claims. Both sides reached an agreement to provide certainty and immediate compensation to policyholders.

Who Is Eligible to Receive a Cash Payment?

You may be eligible for a cash payout if you own or previously owned a universal life or variable universal life insurance policy issued by Hartford Life Insurance Company, Hartford Life and Annuity Insurance Company, Talcott Resolution Life Insurance Company, or Talcott Resolution Life & Annuity Insurance Company that included terms tying premium tax deductions to your state or municipality of residence.

Eligibility applies to policyholders who experienced any of the four alleged overcharge categories during the relevant policy periods:

• Address Change & Rate Update Overcharges: Policyholders who moved or experienced state tax rate changes that were not properly adjusted in their billing accounts. These policyholders are slated to receive up to 100% of their calculated overcharges, net of administrative and legal deductions.

• Retaliatory Tax & New York Overcharges: Policyholders residing in New York or states such as Arizona, Connecticut, District of Columbia, Idaho, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Nebraska, New Hampshire, Ohio, Oregon, South Carolina, or Wyoming who were charged higher rates. Payouts for this group will be calculated on a pro-rata basis from the remaining net settlement fund.

Because this settlement covers automatic account adjustments based on historical policy records, no claim form is required to receive payment. Eligible class members will be identified directly through the insurers’ administrative files.

Legal Framework Governing Insurance Fee Disclosures and Contract Terms

When insurance companies issue life insurance policies, the policy contract serves as a binding legal agreement. Charges deducted from a policy’s cash value—such as administrative fees, cost of insurance (COI) charges, and state premium tax pass-throughs—must conform strictly to the terms set forth in the policy documents.

Under state contract law and insurance regulatory frameworks, insurers cannot charge fees that exceed statutory limits or conflict with explicit contractual representations. When an insurer promises that a tax charge will reflect the rate of the policyholder’s state of residence, failing to update those rates upon notification of a address change or legislative rate cut constitutes a potential breach of contract.

Class action litigation allows policyholders—who may individually lose small amounts per month to improper fee deductions—to pool their resources and hold financial institutions accountable for systemic billing errors across tens of thousands of accounts.

Key Dates and What Happens Next in the Settlement Process

The settlement has received preliminary approval from the court, establishing the framework for notice and final distribution. The key upcoming dates for policyholders include:

• Opt-Out and Objection Deadline: Class members wishing to exclude themselves from the settlement or object to its terms must submit their requests in writing by the court-established deadline.

• Final Approval Hearing: The court will hold a Final Fairness Hearing on September 24, 2026, to evaluate whether the $11 million agreement is fair, reasonable, and adequate, and to consider requested attorneys’ fees and administrative costs.

• Payment Distribution: If the court grants final approval and any appeals are resolved, settlement payments will be distributed automatically by check or account credit to eligible policyholders.

For official updates, long-form notices, or to review court documents, policyholders can visit the administrator’s official settlement website.