Nearly 12 years after investing in a PHL Variable Insurance Co. policy to fund their retirement, Glenda and Lowell Thompson of Moulton, Alabama, find themselves living in uncertainty. The company that once promised financial stability is now under state control — and its policyholders are locked into a moratorium on benefits.
The couple, married for 65 years, shared their concerns in a heartfelt letter submitted during a recent public comment period.
“I find myself being anxious and extremely worried for months, losing sleep over this money we invested,” Glenda wrote. “We have saved and saved to have money for our care when we are older.”
Their story mirrors that of many retirees who built their retirement plans around PHL Variable policies — only to face years of financial limbo.
Connecticut Insurance Commissioner Andrew Mais has asked a state Superior Court to loosen the moratorium to allow more flexibility for universal life and fixed index annuity owners.
The moratorium, imposed in May 2024, was designed to prevent “a run on the bank” while regulators developed a long-term rehabilitation plan for the financially troubled insurer. Mais acknowledged that some policyholders are unlikely to receive full benefits, given the company’s financial condition.
That plan, expected later this year, will depend on efforts to sell all or part of the PHL Variable business.
According to court filings, the requested changes would give policyholders limited ways to access funds:
For universal life policyholders:
Reduce the face amount of death benefits in exchange for lower premiums moving forward, or
Convert the policy into a fixed-value claim (based on adjusted surrender value) with no ongoing premium obligation.
For fixed indexed annuity owners:
Activate the income rider, if applicable under contract terms, or
Take a one-time, surrender-charge-free distribution of the “Free Withdrawal Amount” — typically around 10% of the account value.
These adjustments are intended to provide modest relief to policyholders while preserving enough liquidity for the company’s broader rehabilitation plan.
A smaller group of high-dollar policyholders, including institutional investors and estate planners, are strongly opposing the proposed cap on benefits.
Obra Capital Management, representing clients who collectively own 61 PHL Variable policies, submitted a letter criticizing the lack of transparency.
“Without comprehensive financial information available now, the Court, Obra, and other policyholders cannot meaningfully evaluate whether the proposed modifications serve the best interests of policyholders as a whole,” the firm stated.
Obra and other large policyholders argue that capping death or maturity benefits at $300,000 unfairly divides customers into two groups — those “under the cap,” who will be paid in full, and those “over the cap,” who will receive less than promised.
While corporate policyholders debate figures and formulas, retirees like the Thompsons face urgent, human consequences.
Glenda described years of hard work and perseverance — surviving breast cancer, earning a sonography degree at age 51, and working into her 80s — only to see their savings frozen. Her husband Lowell, a retired Monsanto factory worker and farmer, is now legally blind and recovering from a 2023 heart attack.
“We both are old and do not have the time to wait for a long process of rehabilitation,” she wrote.
Judge Daniel J. Klau of the Connecticut Superior Court will hold a public hearing on October 21 to review the moratorium modification request.
Among the many voices weighing in is Janette K. Degen, 73, of Elida, Ohio. Degen, a retired U.S. Postal Service employee, said she depends on nearly $45,000 per year from her PHL Variable annuity — funds she cannot currently access.
“I should not have to be gravely ill or lose my spouse to receive my own money that I saved during my working career,” she wrote.
As policyholders await the court’s decision, many say their retirement security — and faith in the insurance system — hangs in the balance.
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