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Prudential's Policyholder Remediation Plan letters:
You are eligible to receive the highest level of relief
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The Prudential Insurance Company of America
Policyholder Remediation Plan
Box 780, Newark, NJ 07101
Tel 800-778-5659
January 31, 1999
Claim Number:
Policy Number:
Insured:
Policyowner:
[POLICYHOLDER NAME AND ADDRESS]
DEAR [POLICYHOLDER]:
We have completed our evaluation of your claim in the Alternative Dispute Resolution (ADR) Process involving your above Prudential life insurance policy. This determination affects only this claim; you will receive separate notices if you have any other pending ADR claim(s). We are pleased to inform you that you are eligible to receive the highest level of relief available for the type of claim(s) described below. If you have any questions or believe there is an error in the amount(s) or the relief provided, or in the type of claim(s) described, please call the Customer Liaison Group at (800) 778-5659.
Prudential is offering you a choice of relief to address your claim. Before we can finish processing your claim, you must let us know which form or relief you prefer among the choices available.
Please read all these materials carefully about the relief available regarding your claim. Then make your choice on the enclosed Selection Form. The completed Selection Form and enclosed Tax Withholding Election Form must be returned to us by March 17, 1999.
Please do no hesitate to call me if you feel you do not completely understand your choices or if you need more specific information to make your selection.
Summary of Relief Choices
Based on a careful review of your claim and other information in your claim file, we have determined that all of the provisions of your life insurance policy may not have been fully explained to you when you purchased the policy. Therefore, we would like to offer you the following choices of relief:
Choice A. REFUND OF PREMIUMS
This Choice essentially allows you to reverse the purchase of your policy and get money back.
or
Choice B. EXTRA CHOICE
sentence200
[Editor's note: The above sentence is taken verbatim from Prudential's letter and appears to be the result of a computer glitch.]
or
Choice C. BASIC CLAIM RELIEF
This choice generally allows you to select the Basic Claim Relief options originally made available to you with the election materials for this plan. This option, however, may not be as valuable as the options listed above.
Each of these choices is described in more detail in the following attachment, along with general tax information.
Please note, however, Prudential cannot provide you with tax advice about the tax treatment of these choices of relief as applied to your individual situation. You should consult with your tax advisors as to how the general tax information applies to your individual situation. Any taxable income is generally reportable to you and the IRS by Prudential on a Form 1099-R and may be subject to withholding.
Amounts contained in this letter may not reflect recent transactions on your policy.
A Notice also is enclosed informing you that Prudential is considering reorganization from a mutual life insurance company to a stock life insurance company. Prudential will ensure that your choice of relief in the ADR Process now will not preclude your possible future right to participate if Prudential does demutualize, as the Notice more fully describes.
Making your Selection
To select the relief you desire, mark the box for that choice on the enclosed Selection Form. Please make sure that:
you select only one choice on the Selection Form;
everyone with an ownership interest signs and dates the Selection Form;
you complete, sign and date the Tax Withholding Election From;
you return the Selection From and Tax Withholding Election From in this postpaid envelope by March 17, 1999; and
you do not send any payment with the Selection Form.
Please use the enclosed postpaid envelope. (Note that the delivery address is a post office box. Many delivery services may not be used when the delivery address is a post office box and the following address should be used instead; 213 Washington Street, Mail Drop 16 GC2, Newark, New Jersey 07102.) We will send you a confirmation letter once we receive your Selection Form. We will also notify you as soon as possible about the implementation of the choice of relief you selected.
It is important to return your Selection Form on or before March 17, 1999. If your Selection Form is not returned to us by March 17, 1999, you will waive your right to any relief in the ADR Process.
Please read the accompanying material carefully before you make your decision. If you have any questions, please call our Customer Liaison Group at (800) 778-5859. You can reach us Monday through Friday between 6:00 a.m. and 11:00 p.m. Eastern time. Staff members are also available 24 hours a day, 7 days a week, at this number to answer general questions about your claim. Hearing and speech-impaired policyowners with TDD/TYY equipment can contact us at (800) 953-6078.
Throughout this process, Prudential has been committed to doing the right thing for its customers. Nothing is more important to us. As we complete the remediation process, please accept our sincere apology. It is our hope that you will give Prudential an opportunity to serve you in the future.
Sincerely,
[customer service rep name]
Customer Liaison
Choice A. - REFUND OF PREMIUMS
REFUND OF PREMIUMS - This Choice essentially allows you to reverse the purchase of your policy No. [number here] and get money back. Under this Choice, we will refund to you in cash all of the premiums paid for that policy, after making the deductions listed below, if applicable, for a refund of approximately [dollar amount here], plus interest.
Deduction -- We are subtracting any amounts that were paid from your policy (including those used to pay part or all of a policy premium). Examples include:
a policy loan;
a cash dividend;
a withdrawal, surrender, or partial surrender.
Interest -- We will add interest to the refunded payments. Interest will be calculated from the date each payment was made and from the date each deduction (if any) was made. We will use the interest rates in effect over the same period for policy funds left with us under a settlement option, increased by 1.5%. The settlement option interest rate changes periodically. In 1982 the rate was 8.00%. It reached a peak of 9.25% in 1989. The rate for 1998 was 4.35%. The interest rate in effect during 1998 and later will be adjusted annually.
Tax Information -- As a general rule, the amount returned to you will be treated as a distribution from a life insurance policy (or policies) for tax purposes. Distributions from life insurance policies are taxable income to the extent the amount of the distributions exceeds the cost basis. In general, cost basis is gross premiums paid for the policy less any untaxed amounts previously received.
However, if your life policy was classified as a modified endowment contract, Contributions from the policy are taxable income to the extent the policy's cash value (before any surrender charges) exceeds the policy's cost basis. This taxable income may also be subject to a penalty tax of 10 percent unless it is distributed to you on or after age 59 1/2.
Choice B. - EXTRA CHOICE
EXTRA CHOICE Extra Choice for Allegation 12
[Editor's note: The above sentence is taken verbatim from Prudential's letter and appears to be the result of a computer glitch.]
Choice C. - BASIC CLAIM RELIEF
BASIC CLAIM RELIEF - Under this Choice, we will make available to you the Basic Claim Relief options listed on your Election Form, adjusted to reflect the current status of your policy.
Please contact us at (800) 778-5659 to verify the options available to you.
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British Citizens:
Canadian Citizens:
