Kyle Busch vs. Pacific Life: The IUL Settlement and Coverage Dispute

Kyle and Samantha Busch sued Pacific Life Insurance Company in October 2025, alleging the insurer and its agent sold them five indexed universal life policies pitched as tax-free retirement plans that instead consumed their premiums in fees and commissions. The Kyle Busch Pacific Life lawsuit claimed the couple paid more than $10.4 million in premiums and lost more than $8.5 million net. The case settled confidentially in February 2026, with terms not disclosed and each side bearing its own legal fees.¹

What the Busches Bought

Between 2018 and 2022, the Busches purchased five indexed universal life (IUL) insurance policies from Pacific Life, together intended to provide more than $90 million in coverage on Kyle Busch’s life.² IUL is a permanent life insurance product whose cash value growth is linked to a market index like the S&P 500 rather than to direct investment in stocks.³

According to the complaint, the policies were presented as “institutionally engineered” tax-free retirement plans that would be fully funded and self-sustaining after five years of $1 million annual premium payments. Once funded, the Busches were told, the policies would generate roughly $800,000 per year in tax-free withdrawals starting at age 52.⁴ The policies were sold by Rodney A. Smith, an Arizona-licensed insurance producer operating through Red River LLC, a Las Vegas company. Smith had been appointed as a Pacific Life producer in January 2017 and marketed himself as a “Wealth Management and Insurance Specialist” and “Retirement Planner.”⁵

The Core Allegations

The Busches filed suit in Lincoln County, North Carolina Superior Court in October 2025, naming Pacific Life and Smith as defendants. The case was removed to the U.S. District Court for the Western District of North Carolina as case number 5:25-cv-00195,⁶ and an amended complaint followed on January 13, 2026.⁵ The complaint alleged violations of North Carolina’s Unfair and Deceptive Trade Practices Act, breach of fiduciary duty, and negligent misrepresentation, and sought recovery of losses plus punitive and treble damages.⁷

Policies Structured to Maximize Commissions

At the heart of the case was the claim that the policies were designed to enrich the agent and insurer rather than the client. Smith allegedly selected an “Increasing Death Benefit” option in the early years, inflating the commissionable portion of the premium, and promised to switch to a less expensive “Level Death Benefit” option in year two but never did. He also allegedly chose 100% Basic Coverage, which was more costly but fully commissionable, and declined a cheaper renewable term option that would have reduced his pay.⁵ The lawsuit said Smith received roughly $3.64 million in commissions, about 35% of premiums, paid upfront before premiums were credited to the policies.⁸

Illustrations That Concealed the Risks

The Busches said the sales pitch relied on illustrations built on unrealistic growth assumptions that hid key internal costs. According to the complaint, neither Smith nor Pacific Life adequately explained the policies’ sensitivity to cap reductions, rising cost-of-insurance charges, or crediting-rate volatility, any of which could force the policies to lapse or demand more premium.⁵ An independent review cited in the lawsuit projected one policy would lapse within 16 months, despite the original five-year funding plan.⁴

The 2022 “Commission Reset”

The complaint also targeted a 2022 internal 1035 exchange, a swap of one policy for another within the same insurer. The Busches alleged Smith, following Pacific Life’s guidance, urged them into the exchange as what the complaint called a “commission reset.” It consumed more than $3.1 million in premiums, generated $664,000 in first-year charges, and projected over $3.5 million in charges across ten years, allegedly with zero economic benefit to the couple.⁸⁹

Pacific Life Employees Named

The amended complaint went past Smith to name three Pacific Life employees the Busches said actively coached the sales strategy: Field Vice President Noah Jacobs, Regional Vice President Tim Breland, and Product Director Barbara Trost. They were accused of advising on policy design, pushing rapid funding, and describing the products as having “guaranteed multipliers” with adjustable “performance factors.”⁵ A January 2021 email quoted in the complaint had Jacobs tying urgency on a $2 million premium payment to the Biden administration’s tax plans, writing that life insurance was “the only place he can still park millions and not worry about where the tax code goes in the future.”⁹

The Agent’s Prior Discipline

The complaint said the North Carolina Department of Insurance had previously disciplined Smith for providing false and misleading information on his license application, including failing to disclose a criminal conviction. The Busches alleged Pacific Life failed to supervise him and that his record alone should have kept him from selling complex, high-value policies.¹⁰

Pacific Life’s Response

Pacific Life moved to dismiss in January 2026. The insurer argued the Busches bore responsibility for their own outcomes, pointing to signed documents in which they acknowledged the policy terms and indicated they planned to hold the policies for roughly 30 years.¹¹

Pacific Life said the policies failed because the Busches did not pay the planned premiums, did not monitor how policy values were allocated, and either surrendered policies or let them lapse. The company noted each policy carried a bold capitalized notice telling the owner to read it carefully, along with a 20-day cancellation window.¹¹ It also raised a statute-of-limitations defense, arguing that the fiduciary duty and negligent misrepresentation claims came more than seven years after the initial policies were purchased, past North Carolina’s three-year limit.¹

How the Case Ended

Before the court ruled on the motion to dismiss, the parties settled. A joint notice to dismiss was filed on February 25, 2026, with the settlement confirmed the following day.¹² The case was formally terminated on March 13, 2026, following a stipulation of dismissal.¹³

The financial terms are confidential. Pacific Life said “both sides worked constructively to achieve a confidential result that is mutually acceptable and avoids further legal proceedings,” and each side agreed to bear its own legal fees.¹ Because the settlement resolved the case before any ruling on the merits or on the motion to dismiss, no court finding was made on the underlying allegations.

The Coverage Dispute After Busch’s Death

Kyle Busch died on May 21, 2026, and afterward some voices in the insurance industry suggested the Busches had been poorly advised, claiming the lapse of the IUL policies had cost the family tens of millions in death benefits. The couple’s attorney, Robert Rikard, called those claims a “fabrication.”¹⁴

According to Rikard, two of the original Pacific Life policies had no cash value before the litigation even began and were terminated. The remaining policies were handled through a structured transition in which the family retained an independent insurance specialist to evaluate the portfolio and recommend replacement coverage that provides a “substantial lifetime death benefit.” Rikard said the family “did not walk away from their coverage” but “replaced it with better coverage.” Life insurance consultant Bobby Samuelson gave a matching account, saying the Pacific Life policies had lapsed well before the lawsuit and that Busch’s remaining coverage had been exchanged for more suitable policies.²

Samuelson, who publishes the newsletter Life Product Review, also offered his own analysis of the original policies. He found the couple paid $3.75 million in premiums across the first four policy years while charges over the same period totaled $4.15 million, and he called the policies “doomed to fail.” He identified the $44.5 million death benefit as a primary structural defect, saying its size drove massive cost-of-insurance charges and ballooning agent commissions.¹⁵

1
Insurance Journal. Kyle Busch Settles Lawsuit With Pacific Life
2
InsuranceNewsNet. Kyle Busch Attorney Rips False Narrative Around Life Insurance Coverage
3
Insurance Business Magazine. Kyle Busch’s Insurance Fight Ends Quietly but IUL Scrutiny Grows
4
Levin Law. NASCAR Champ Sues for IUL Losses
5
Retirement Income Journal. Amended Busch Complaint
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Law360. Busch v. Pacific Life Insurance Company
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ThinkAdvisor. NASCAR Champ Kyle Busch, Pacific Life Settle IUL Lawsuit
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Insurance and Estates. IUL Lawsuits Kyle Busch
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ALM. Kyle Busch vs Pacific Life Complaint
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Yahoo Finance. Kyle Busch Sues Insurance Firm
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Insurance Business Magazine. NASCAR Star Kyle Busch Insurance Lawsuit – Insurer Moves to Dismiss
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Autoweek. Kyle Busch Settles Lawsuit With Pacific Life
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PACER Monitor. Busch et al v. Pacific Life Insurance Company et al
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The Mirror. NASCAR Kyle Busch Lawsuit Insurance
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Retirement Income Journal. Insurance Professionals Comment on Kyle Busch Case