In settling the lawsuits, American Express admits no wrongdoing and shields itself from any future litigation attacking its sales practices. "We want to resolve all present and future cases, and do the best thing for our clients," says Thomas Joyce, a spokesperson for American Express.

Here's how the litigation unfolded: A December 1996 lawsuit alleged the company encouraged policyholders to buy new life insurance policies with the cash value built up from existing ones, a process known as "churning." A March 1997 lawsuit accused the company of encouraging annuityholders to replace existing annuities or retirement plans with new ones. Finally, an October 1998 lawsuit alleged the company was marketing annuities, which are already tax deferred, packaged in other plans that are also tax deferred, such as individual retirement accounts (IRAs) or 401(k) plans. Thus the tax deferral feature is redundant.

Joyce says that class members will be receiving packages containing their settlement compensation options by late April or early May. All class members — regardless of whether they ever replaced their policy — will automatically receive a three-year accidental death rider on their existing insurance.

If a class member replaced a life insurance policy or annuity, they will either have the option of getting a 50 percent refund of the surrender charge they paid to give up their original life insurance policy or annuity, or go through an arbitration process where the reward will be based on how severely they've been wronged. The arbitration process will be overseen by the plaintiffs' attorneys, according to Joseph Henderson, an attorney with Lockridge Grindall Nauen of Minneapolis, a law firm that participated in the suit.

Policyholders will have 30 days to reply. If a policyholder does not mail a reply, they will lose their option of getting part of their surrender charge back or going to arbitration.

Since the lawsuits were filed, American Express has required that customers sign additional forms that further disclose the fees involved in replacing an annuity or policy. The company also discloses to customers the commissions that financial advisers make on a replacement policy.