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Lincoln National Life Insurance

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Lincoln National Life Insurance

PO Box 21008

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Lincoln National Corporation functions as a holding company, allowing the business to acquire and obtain multiple sub-businesses underneath the corporate umbrella. As a result, Lincoln National has corporate ownership of multiple insurance companies as well as investment management businesses all affiliated with the same organization.

Established in 1968 as a corporation, Lincoln National originally began operations as a business in 1905.

Today, the company functions with four main elements as follows:

Lincoln Retirement
Life Insurance
Investment Management
Lincoln Financial Media

In addition, Lincoln National has a number of subsidiaries operating underneath the holding company umbrella, which include:

First Penn-Pacific Life Insurance Company
Lincoln National Life Insurance Company
Lincoln Life & Annuity Company of New York
Lincoln Financial Distributors
Lincoln Financial Advisers and Sagemark Consulting
First Penn-Pacific Life Insurance Company
Lincoln Financial Media

Lincoln life insurance policies are, as a result, sold through multiple offices and subsidiary companies, depending on the particular regional market. Additionally, the company also takes advantage of independent insurance brokers as well as company agents. Insurance products include all traditional categories of insurance products including term, permanent and whole life policy plans.

Over the years Lincoln National has placed itself in some very powerful and painful legal situations and litigation over how the company has managed its insurance policies, particularly life insurance.

Like a number of insurance companies, Lincoln National invested in and sought federal protection of methodologies and tools used for estimating financial outcomes. These tools are commonly used in a proprietary method by different insurance companies to essentially figure out what their profit margins will be over time. In the particular case of U.S. Patent 7,089,201, Lincoln had patent-protected a means by which to calculate and determine the outcome of retirement income gains and benefits. The specific tool was used for calculating profits derived from variable annuities. Lincoln National had a number of annuity products based on this methodology, so the patent was important to keep the uniqueness and market monopoly of the given product in the company's hands.

In 2006 the company decided it was necessary to sue Transamerica Life for patent design infringement of Lincoln's retirement benefit methodology patent. The same kind of lawsuit was filed against Jackson National Life the following year. In the beginning of 2009, a state court jury found that the company had indeed had its patent infringed upon by Transamerica's actions and Lincoln was owed lost revenue in the form of royalties. As a result, Transamerica ended up having to pay the company a judgement of $13 million, which represented approximately 0.11 percent of the $12 billion in annuity policies Transamerica gained as a result of using the same patented methodology without permission. In the grand scheme of things it was a small price for Transamerica to pay, but Lincoln established a confirmed patent hold over its annuity calculation methodology that no other insurance and financial services company was going to cross afterwards. It in fact ended up becoming a new revenue stream for Lincoln as any company that wanted to use the approach had to then pay a licensing fee to the company for permission of use.

Unfortunately, while Lincoln did well in patent court, it did not do so well in contract court when it came to cases where the company was trying to get out of having to honor its life insurance policies already issued. In a 2009 case, the company tried a two-pronged legal approach. It sued to hold onto all the premiums it had been paid on a policy as well as the death benefit in the case by rescission of the related contract. However, Lincoln also tried to assert it should still be able to collect policy premiums during the period of litigation as well, causing in effect a double-recovery for the company with the related policy it was trying to cancel and walk away from. The case never made it to full hearing with the New York Supreme Court. Instead, in a summary judgment against the company, the court found that the policyholder had a clearcut contract in place, and Lincoln effective gave up any argument to rescind the contract when it continued to demand and accept the premiums during the litigation of the case. In other words, the court pretty much told Lincoln it couldn't have recovery both ways, both with a cancelled contract and still taking payments in the meantime.

The company spent three years of court-fighting and back-and-forth lawsuits in both state and federal courtrooms over a life insurance policy with one Arthur Kramer, a prominent New York attorney. It was not until April 2011 that Lincoln National agreed to put away its own lawsuit in a dismissal and give up on fighting the payment of a $10 million life insurance policy claim associated with Kramer. The core of the fight was over whether the company could get out of having to pay on the life insurance policy when the policy holder essentially died only two years after the policy was signed and issued. Kramer died in 2008 and the life insurance policy in question was written only a few years earlier. The payout up front would have meant Lincoln would have taken a serious financial hit with very little payment into the company prior to the death benefit claim, which is why Lincoln chose to fight in court instead. The company saw litigation, ironically, as the cheaper route.

However, Lincoln's legal arguments were rejected by the state courts as well as the New York state Court of Appeals. The appellate court saw the move as a way to legally violate the agreement had Lincoln been awarded judgment. From the court's perspective, doing so would have legally nullified any point having had a life insurance policy with the company since Lincoln essentially would not have paid on the claim if left off the hook. The court instead found that Lincoln had to fulfill its contractual policy agreements and pay on the death benefit related in the case. Otherwise, the case would have been precedent-setting, allowing life insurance companies across the country off the hook from their contracts while easily collecting the premium payments each month prior to a claim being filed.

In the same year, Lincoln also suffered a heavy hit from the California courts as well. The company had worked on a multi-year campaign to cancel out a numerous bundle of life insurance policies it had issued to senior citizens from 2004 to 2008. Early on in the related litigation, Lincoln's legal team though it had a good chance of winning the strategy as the lower court awarded judgment in the company's favor. However, the decision was appealed to the California Courts of Appeal. In that review, it was found that while a lower court determined a given customer's policy was invalid, the appellate court was far more concerned about the precedent being set allowing a life insurance company to renege on its agreement, having collected premiums the whole time the customer was alive only to cancel the policy at the time of the death benefit claim.
In the case, the appellate court took a very similar bend to that of the New York appellate courts, going so far as to cite the New York case as the basis for much of its logic in the California case. Further, the California appellate court also cited a federal case that Lincoln had lost separately, where the federal government held Lincoln was not allowed to rescind agreements it had put into place just because the claim now was expensive.

Lincoln National today is a smaller company than it was two decades ago. The corporation has had to downsize a number of business branches, selling of the parts for liquidation. These included the sale of Lincoln Reinsurance, K&K Insurance Specialists, American States, a good portion of disability insurance accounts. All of these corporate divisions or subsidiaries were sold off to competitors in the same type of insurance market, thereby decreasing the reach of Lincoln National in exchange for ready cash.

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