First Internet Bank Sues American General Over $1.4 Million Life Insurance Claim
Chicago, IL — August 8, 2025 — First Internet Bank of Indiana has filed a lawsuit against American General Life Insurance Company, alleging the insurer failed to pay a $1.4 million claim tied to a life insurance policy used as collateral for a business loan. The case, lodged in the United States District Court for the Northern District of Illinois, centers on a dispute over insurer obligations in commercial loan agreements.
The controversy stems from a 2001 life insurance policy (No. MM 0131356) issued by Old Line Life Insurance Company of America to Schroeder-Lauer Funeral Home, Ltd., insuring the life of its president, Robert J. Cole, with a face value of $2.65 million. In 2015, Schroeder-Lauer secured a $1.81 million loan from First Colorado National Bank, assigning the policy as collateral, a transfer American General acknowledged in writing. In 2020, First Colorado authorized First Internet Bank to act on its behalf, transferring the assignment accordingly.
Following Cole’s death on January 30, 2024, First Internet Bank submitted a claim on March 4, 2025, for $1,406,674.15—the outstanding loan balance—along with required documentation, including Cole’s death certificate. The bank asserts the policy was in force at the time of death, with clear terms stating, “Proceeds will be payable on the date of the insured’s death… Upon receipt of due proof of the insured’s death, we will pay the insured’s beneficiary the face amount.” Notably, First Internet Bank is not claiming the full policy amount, leaving the remaining proceeds for the named beneficiary, Cheryl Cole.
American General has not yet responded to the lawsuit, and the allegations remain unproven. The case highlights the complexities of collateral assignments in life insurance and raises questions about timely claims processing in commercial arrangements. First Internet Bank, a pioneer in online banking with $5.3 billion in assets as of March 31, 2024, is seeking to recover the claimed amount to settle the outstanding loan balance, potentially setting a precedent for similar disputes in the financial and insurance sectors.