Cheating and fraudulent conduct is bad and should never be tolerated. When the victims are members of the military and members of their families, however, it is just about as bad as it gets. One company that got caught has now agreed to a settlement. The American Amicable Life Insurance Company has agreed to pay up to $70 million to settle state and federal complaints that it used deceptive sales practices to sell unsuitable insurance products to thousands of American service members across the country and on bases overseas. The company will pay $10 million in cash refunds to 57,000 current and former service members who bought its products after December 31, 1999. The rest of the money represents the potential cost of raising the future cash value of policies sold to 13,000 other military customers and 22,000 civilians, although the final price tag will depend on how many of those policies are held to maturity. The company, which is based in Waco, Tex., also agreed to a five-year ban from sales on any military base, one of the longest suspensions ever imposed in the military insurance market.

The global settlement appears to have resolved all outstanding issues between the company and an investigative task force that included the Justice Department, the Securities and Exchange Commission and insurance regulators in 41 states. The investigations were begun in mid-2004, after articles in The New York Times documented widespread and longstanding abuses in the sale of insurance, mutual funds and other financial products to young, financially unsophisticated service members.

The 20-year term policy combined a very expensive death premium with a slow-growing “savings fund” whose value did not surpass the accumulated premiums on the policy until the last years of its life — by which point, a high percentage of the policies sold to military personnel had long since lapsed, insurance investigators found. As part of the settlement, the company has agreed to stop selling the Horizon Life product in any market, a step Mr. Palmer said went into effect in mid-July. The full settlement agreement can be found on the Internet at www.gainsurance.org, regulators said. Consumers may also direct questions to the company’s consumer service center at (800) 736-7311.

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