NASCAR driver Kyle Busch and his wife are in a legal battle with Pacific Life Insurance Company over several life insurance policies. The couple filed an $8.5 million lawsuit in October, claiming the policies were sold to them as a way to secure tax-free retirement income without properly explaining the risks. Pacific Life disagrees and has asked a federal court to dismiss the case.
According to court documents filed in the US District Court for the Western District of North Carolina, the Buschs purchased five Indexed Universal Life (IUL) insurance policies between 2018 and 2022. These policies offered over $90 million in coverage and were designed to provide both immediate death benefits and the chance to build cash value over time, as long as premiums were paid and the policies remained active.
Pacific Life says the real issue is how the Buschs managed the policies. The insurer points out that the couple did not pay premiums as planned, let some policies lapse, and surrendered others early. The company claims that Kyle Busch’s financial loss of $10.4 million was a result of these actions, not the policies themselves.
The insurance company also stated that both Busch and his wife signed multiple documents confirming they understood how the policies worked. These papers included plans to pay premiums for about 30 years, aiming to keep the policies through age 70 and beyond.
In their response, Pacific Life wrote that the couple failed to keep the policies long enough to benefit from their growth potential and did not monitor how their account values were allocated between indexed and fixed options. Instead of accepting responsibility for these decisions, the Buschs are blaming the insurance product, according to the company.
Indexed Universal Life policies are a mix of life insurance and an investment element tied to a stock market index. They often come with protections to limit losses during downturns. Busch claims he was told that paying $1 million a year for five years would allow him to withdraw $800,000 annually starting at age 52. However, he began to question this after receiving a sixth premium notice and later found most of his money was no longer available.
Pacific Life has also argued that some of Busch’s claims are too old to be valid. Breach of fiduciary duty and negligent misrepresentation claims were filed more than seven years after the first policy was purchased, which the insurer says is beyond North Carolina’s three-year limit for such suits.
The insurer adds that the couple’s misrepresentation claims contradict the many disclosures they acknowledged in writing. Each policy included a bold cover letter urging the insured to “READ YOUR POLICY CAREFULLY” and offered a 20-day cancellation period with a refund of premiums. Both Kyle Busch and his wife signed forms confirming they received the policies and accepted responsibility for reviewing them.
The lawsuit also names insurance agent Rodney A. Smith, accusing him of pushing the Buschs into a high-risk product and charging a 35% upfront commission without disclosing it.
As this case moves forward, it highlights the importance of understanding insurance products fully and managing them carefully. The court will have to decide whether Pacific Life’s policies were misrepresented or if the Buschs’ own handling of the policies led to their financial losses.