Scottsdale couple says insurance policy falls flat

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By Jim Carr By Jim Carr

SCOTTSDALE, Ariz. - “When we moved in here it was just bare land.”

David and Cathy Chappell built their Scottsdale home with their own two hands.

They say it was a great investment.

They didn't have a mortgage and were setting themselves up for retirement.

“This was our dream home,” Cathy said.

But the Chappells say those dreams took a turn after they were approached by a financial planner with a sweet-sounding deal.

“You take equity out of your house, you reinvest it into investments that they tell you what is really good, and that will set you up for life,” David said.

One investment was life insurance policies for both of them, something David says was important because of his job as a firefighter.

The Chappells say they were told the policy would cost them a one-time payment of $62,000.
Sounded like a lot, but to David, it was worth it.

“It would pay off the house and my wife would be debt-free if something was to happen to me,” he said.

But, four years later, they say they were shocked to receive a letter from the insurance company asking for more money, or the policy would lapse.

“They took us for $62,000!” David said. “There's nobody in their right mind that could go, that would make a life insurance of $30,000 knowing in four years you're going to have to pay another $30,000.”

The Chappells didn't pay.

Instead, they emailed 3 On Your Side and filed a complaint with Arizona Department f Insurance.
“There's a lot of confusion about life and annuity products.”

Spokesperson Erin Klug warns consumers that the Chappells policy -- a variable universal life insurance policy-- is tied to the stock market and may not perform the way you'd expect.

“So if the investment doesn't do as you expect it to do that could definitely affect the performance of the life insurance policy,” Klug said.

3 On Your Side contacted the financial planner, David Sorrells, and the insurance company, Western Reserve Life.

Both maintain the Chappells were aware of the risks all along.

The Chappells say they were never told.

But without proof, Klug says there's nothing the department can do.

“It's certainly not a matter of whether we believe the Chappells or not it's whether we can prove whether the agency actually didn't explain the policy,” Klug said.

Where does that leave the Chappells?

With no life insurance and no back-up plan.

Because they've lost so much money along the way, they may even have to say good-bye to their dream house.