Pacific Life Insurance Company has asked a federal court to dismiss a lawsuit filed by NASCAR driver Kyle Busch and his wife, saying the case is about how the policies were handled - not how they were sold.
In a motion filed in the US District Court for the Western District of North Carolina, the insurer urged the judge to throw out the Buschs’ $8.5 million lawsuit. The couple claims that Indexed Universal Life insurance policies were sold to them as a way to generate tax-free retirement income, without fully explaining the risks involved.
Pacific Life said the Buschs bought five Indexed Universal Life policies between 2018 and 2022, which together provided more than $90 million in life insurance coverage. According to the filing, the policies were meant to offer immediate death benefits and “the opportunity to accumulate cash values when the policies are held for the long term,” as long as premiums were paid and the policies were kept in place.
The insurer argued that the policies failed because Busch did not pay the planned premiums, allowed some policies to lapse, and surrendered others early. Busch has said he lost $10.4 million and sued in October, accusing Pacific Life of failing to disclose the true risks of the policies.
Pacific Life said both Busch and his wife signed multiple documents confirming they understood how the policies worked. These included forms showing they planned to pay premiums and keep the policies for about 30 years, through age 70 and beyond.
“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 lapses. Rather than accept responsibility for their own decisions, Plaintiffs now attempt to blame their negative outcome on the IUL product," Pacific Life wrote in the filing.
Indexed Universal Life policies combine life insurance with a cash value that is tied to a stock market index, often with limits meant to reduce losses during market downturns.
In his lawsuit, Busch said he was told that paying $1 million a year for five years would allow him to withdraw $800,000 annually starting at age 52. He claimed he began asking questions after receiving a sixth premium notice and later learned that most of his money was no longer available.
Pacific Life also argued that some of the claims were filed too late. The company said Busch’s allegations of breach of fiduciary duty and negligent misrepresentation were brought more than seven years after the first policy purchase, beyond the state’s three-year statute of limitations.
“A plaintiff cannot avoid the statute of limitations by remaining ‘willfully blind’: A man should not be allowed to close his eyes to the facts readily observable by ordinary attention, and maintain for his own advantage the position of ignorance. Such a principle would enable a careless man, and by reason of his carelessness, to extend his right to recover for an indefinite length of time.”
The insurer also said the Buschs’ misrepresentation claims are contradicted by what it described as repeated disclosures they acknowledged in writing. Pacific Life said each policy came with a cover letter in bold, capitalized text stating “READ YOUR POLICY CAREFULLY,” along with a 20-day cancellation period during which premiums could be refunded. The company added that both Busch and his wife signed forms confirming they received the policies and understood they were responsible for reviewing them.
The lawsuit also names insurance agent Rodney A. Smith, accusing him of steering the couple into a high-risk product and charging an undisclosed upfront commission of 35%.
