Sun Life Lawsuit: $213.5M Settlement, Disability Claims, MFS Case

The biggest active Sun Life lawsuit is a Canadian class action over universal life insurance policies, Fehr v. Sun Life Assurance Company of Canada, which reached a proposed settlement of up to $213.5 million on April 30, 2026. The deal is pending court approval, with a hearing set for September 8, 2026. Sun Life has also faced disability-benefits class actions in Canada and the United States, a $351 million market-timing settlement involving its MFS subsidiary in 2004, and a $3.2 million multistate settlement over unclaimed death benefits in 2014.

The $213.5 Million Universal Life Class Action

The case concerns roughly 230,000 universal life policies sold in Canada between 1987 and 1998 by Metropolitan Life Insurance Company (MetLife) under three product names: Universal Plus, Flexiplus, and Optimet. MetLife’s Canadian operations were bought by Clarica Life Insurance Co. in 1998, and Sun Life acquired Clarica in 2002, inheriting the policies and the disputes attached to them.¹

Policyholders alleged that Sun Life breached the policy contracts by raising cost-of-insurance charges and administrative fees in ways the contract language did not allow. Flexiplus holders claimed rates and fees were wrongfully increased in 2001, 2005, 2015, and the ninth policy year. Universal Plus holders claimed they were billed cost-of-insurance amounts that exceeded the “Maximum Premium” cap written into their contracts.² The products were sold when interest rates were high and performed poorly as rates fell, which fed the dispute over how ongoing charges should be calculated.¹ Earlier claims about sales-agent misrepresentation were ruled too fact-specific for class treatment and excluded.³

What the Settlement Provides

The case is before the Ontario Superior Court of Justice, case number CV-17-11758-00CP. Kim Spencer McPhee Barristers P.C. is class counsel, and CA2 Inc. is the claims administrator.⁴

The two main policy groups are treated differently. Flexiplus policyholders receive monetary compensation for past cost-of-insurance and administrative fee increases, and those still holding active policies get freezes on future rates and fees. Universal Plus policyholders receive monetary compensation for cost-of-insurance charges that exceeded the “Maximum Premium” amounts, and current policyholders get a cap on future charges. Optimet policyholders are excluded from settlement benefits.²

Individual payments have not yet been set and will depend on the policy type and the amount of excess charges paid. Class counsel fees and expenses come out of the settlement fund and require court approval.⁵

Deadlines and What Policyholders Need to Do

The opt-out deadline was September 17, 2021. Policyholders who did not opt out are automatically included and do not need to take any action right now. The settlement approval hearing is scheduled for September 8, 2026.⁵

The Fight Between Sun Life and MetLife

Sun Life has said the settlement will produce an after-tax charge of about $145 million against its first-quarter 2026 earnings, and it plans to seek full reimbursement from MetLife under an indemnity provided when the policies transferred.⁶

MetLife rejects that position. On May 8, 2026, MetLife president and CEO Michel Khalaf told analysts that Sun Life’s indemnity claims were “baseless and misleading” and that MetLife “vigorously dispute[s] that we owe Sun Life any indemnity whatsoever.” Khalaf noted that MetLife was not named as a defendant in the class action and that no legal proceedings between the two companies were underway at that time. Sun Life spokesperson Ariane Richard said the company would pursue the indemnity claim after court approval.⁷

Disability Benefits Lawsuits

Sun Life is one of the largest group disability insurers in North America, and it regularly faces litigation over denied or terminated long-term disability benefits.

Belec v. Sun Life

Giulia Belec, a federal government employee who took medical retirement in 2011, filed an Ontario class action alleging that Sun Life miscalculated cost-of-living adjustments on long-term disability benefits under group policy 12500-G, which covers Canadian federal public servants and is held between the Treasury Board of Canada and Sun Life.⁸

The suit alleges Sun Life calculated annual indexing on the net benefit after deductions rather than the gross benefit, and wrongfully deducted those increases from Canada Pension Plan and Public Service Superannuation Act payments, contrary to the policy.⁹ It initially sought $10 million in punitive and exemplary damages.¹⁰ The Ontario Superior Court certified the case in 2022, defining the class as anyone who received long-term disability benefits under policy 12500-G between January 20, 2005, and the certification date where benefits were indexed and reduced by “other income.” The court denied Sun Life’s summary judgment motion but also declined to include punitive damages as a common issue, citing insufficient evidence of bad faith.

Lewis-Abdulhaadi: Dependent Child Life Insurance

In the U.S., Lewis-Abdulhaadi v. Union Security Insurance Co. et al. (E.D. Pa., Docket No. 2:21-cv-03805) alleged that Sun Life Assurance Co. of Canada and Union Security Insurance Co. accepted premiums for dependent child life coverage and then refused to pay benefits on the ground that the children were ineligible. The settlement provides full or partial benefit payments to participants who lost a child while actively paying premiums, along with ongoing coverage and the option to convert existing coverage into individual policies. It was expected to benefit at least 77 people.¹¹

Individual Denial Cases

Sun Life also faces steady individual litigation from policyholders challenging benefit denials. A common trigger is the shift from an “own occupation” standard to an “any occupation” standard, which typically happens after 24 months of benefits. After that point, a claimant must show they cannot perform any job suited to their education and experience, not just their previous job, and terminations and lump-sum buyout offers often follow. In August 2025, a federal court ruled that Sun Life could not use a claimant’s severance agreement to block a disability benefits claim.¹²

The 2004 MFS Market-Timing Settlement

In February 2004, Massachusetts Financial Services (MFS), a Sun Life subsidiary, agreed to pay $351 million to settle charges from the U.S. Securities and Exchange Commission, the New York Attorney General, and the New Hampshire Bureau of Securities Regulation.¹³

Regulators found that MFS allowed certain investors to engage in “market timing,” making rapid in-and-out trades in mutual funds whose prospectuses said such trading was not permitted. The SEC called the prospectus language “false and misleading.” Internally, MFS had classified some funds as “unrestricted” and steered known market timers toward them from late 1999 through October 2003. Regulators also identified illegal late trading, in which orders placed after market close received the same-day price.¹⁴

The payment broke down into $175 million in disgorgement for harmed shareholders, $50 million in SEC penalties, $1 million to the New Hampshire regulator, and $125 million in fee reductions over five years mandated by the New York Attorney General. MFS CEO John Ballen was suspended from the industry for nine months and ordered to pay $315,000; President Kevin Parke received a six-month suspension and the same financial penalty. Robert Manning replaced both. The respondents settled without admitting or denying the findings.¹⁴

Death Benefits and Unclaimed Property Settlement

In November 2014, Sun Life agreed to pay $3.2 million to resolve a multistate investigation into how it handled death benefits. Regulators alleged the company used the Social Security Administration’s Death Master File selectively, checking it to identify deceased annuity holders so payments could stop, but not using the same data to find beneficiaries of unpaid life insurance policies. Florida was the managing lead state, with California, Connecticut, Illinois, Michigan, New Hampshire, North Dakota, and Pennsylvania also participating. Sun Life was required to compare its records against the Death Master File monthly, provide quarterly reports to lead states for 36 months, and submit to a compliance examination 39 months after the agreement concluded.¹⁵

1
Insurance Business Magazine. Sun Life’s $213.5 Million MetLife Settlement Spotlights Long-Tail Risk in Universal Life
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Sun Life Class Action. Sun Life Class Action – Home
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Yahoo Finance Canada. Sun Life’s $213.5 Million Class Action Settlement
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Top Class Actions. $213.5M Sun Life Premiums Class Action Settlement
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Sun Life Class Action. Sun Life Class Action – FAQ
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Sun Life Financial. Sun Life Reaches Settlement in Principle to Resolve Class Action
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Insurance Portal. MetLife Says It Does Not Owe Sun Life Another Cent
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Public Service Alliance of Canada. Disability Insurance
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Ontario Superior Court of Justice. Belec v. Sun Life Assurance Company of Canada, 2022 ONSC 3522
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Investment Executive. Sun Life Faces Proposed $10M Class Action
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Bloomberg Law. Sun Life, Union Security Settle Over Child Life Insurance Plans
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Kantor & Kantor. Press Releases
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CBC News. Sun Life Subsidiary to Pay $351 Million US to Settle Fund Trading Case
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U.S. Securities and Exchange Commission. SEC Settles Enforcement Proceedings Against MFS
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InsuranceNewsNet. Sun Life to Pay $3.2M to Settle Unclaimed Property Complaints