About 4,700 Hawai'i residents and military personnel will receive part of a $70 million settlement agreed to by a Waco, Texas-based insurance company accused of deceptive sales practices.

Nationally, the settlement affects about 90,000 people who bought the policies from American Amicable Life Insurance Co. and affiliates. The policies were sold over a 6 1/2-year period that ended last month.

American Amicable was accused of misleading buyers of its Horizon Life insurance product, which combined a term life insurance policy with an investment fund. A lawsuit filed by the U.S. Securities and Exchange Commission alleged agents used deceiving sales pitches, including suggesting purchasers could become millionaires when in reality participants earned little or nothing from the investments.

"The marketing was especially shameful," said Jina Choi, bureau chief of the SEC's San Francisco district office. "They believed they were buying an investment that could bring them lots of money."

The company's agents also misled buyers by saying the insurance portion wasn't costing anything, the SEC lawsuit alleged. Most service members shun buying life insurance since they already are offered low-cost products through the military, the lawsuit said.

A spokesman for American Amicable declined to comment on the allegations or to discuss whether any of the deceptive practices took place in Hawai'i. The company's settlement of the lawsuit and issues raised by state insurance commissioners did not include an admission of wrongdoing.

The company issued a statement saying the settlement was in the best interest of customers, employees and agents. American Amicable stopped selling the Horizon Life policies as of July 15.

J.P. Schmidt, Hawai'i insurance commissioner, said the state participated in a settlement to secure settlement benefits for people here. He said most people were young recruits who bought the policies during their basic training in other states and later transferred here.

"They were being told this is a good thing to buy and they bought it," said Schmidt. "It's clearly not a good policy for them."

He said he checked with military commanders a couple of years ago to make sure the policies weren't being offered here when complaints began cropping up.

American Amicable and its Pioneer American Insurance Co. and Pioneer Security Life Insurance Co. agreed to pay $10 million to 57,000 military members who bought the policies. It also is providing about $60 million of relief in the form of policy revisions for existing Horizon Life policies.

Those include boosting the cash surrender value for existing Horizon Life policies and ending a practice of automatically using funds from the investment portion of the product to pay for missed premium payments.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.