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Seniors & Annuities

SENIOR CITIZENS VICTIMIZED IN ANNUITIES FRAUD
Even Smart Professionals Have Been Scammed with Fraudulent Schemes

     A class action has been filed in behalf of seniors who have invested billions of dollars in annuities but may not live long enough to receive their expected benefits. Parallel investigations have also been launched by the California Department of Insurance and the Attorney General’s Office into the complaints. Evidence of unscrupulous practices of brokers and insurance companies in the sale of annuities have surfaced.

     A widow claims that a deferred annuity policy was sold to her 73 year-old husband who is now deceased. The broker who sold the policy convinced him to cash in the $43,000 value of his old annuity and invest the proceeds in a new annuity sold by a rival insurance company which yields a much higher monthly payment. However, hidden under the technical language of the new policy – and left unexplained by the broker – is the fact that benefits under the new annuity will not be paid until the beneficiary is 115 years old.

     An annuity is a financial product sold by life insurance companies which can provide you with an income for as long as you live in a series of regular payments. There are generally two types of annuities. The first is when consumer/policy holder pays a lump sum to a life insurance company which then pays out right away in periodic installments. This type is known as an immediate annuity – the payments to you start immediately.

     The second, and more common, is where money paid by the policyholder accumulates at interest over a period of time. The accumulated amounts will then be paid out to the policyholder or survivor in periodic installments, usually when he/she retires, in order to supplement the retirement income. This type is known as a deferred annuity – the payments are deferred for a number of years and include death benefits to survivors. They are commonly sold by insurance companies and have become a popular retirement vehicle for the elderly.

     According to the lawsuit, the maturity date (the time the first payment becomes due after the period of deferment) of the annuity in question is so far out into the future that, for all intents and purposes, it is only illusory. No one is expected to live that long – beyond 115 years – and a promise to pay when a beneficiary reaches that age is unrealistic and fraudulent.

     The annuities in question put off the payoff period until 2045. In the first 13 years, policyholders cannot withdraw their money without suffering surrender charges which could be as high as 22% of the amount withdrawn. According to the lawsuit, if senior citizens do not get their monthly payments until after their life expectancies, it is nothing more than a criminal scheme to part the elderly from his money. In some cases, they may also involve elder abuse.

     If you or your elderly parent have purchased a deferred annuity, it is in your best interest to review your policy for any possibility that it contains an illusory maturity date. Do not wait until it is too late. Consult an attorney experienced in insurance bad faith to know your rights.
 

© Law Offices C. Joe Sayas, Jr.