Consumer Alert: How Seniors Can Avoid Annuity Fraud

Annuities are an insurance product that can be a great asset to your financial portfolio — if it is the right product for you.  Sometimes, however, greedy insurance agents may be more concerned with their commission than your financial well-being as they persuade you to purchase a product.

Learn more about annuities and how you can make the best decision for yourself and your loved ones without being taken advantage of.

What is an Annuity?

An annuity is a type of insurance product.  A consumer purchases a product offered by an insurance company, typically through an agent.  The insurance company then makes payments to you at regular intervals, usually monthly, once you pay the premium.

Some annuities are time limited and are paid over a set number of years, while others are paid throughout your life.  Many times, annuities are purchased so the proceeds can provide (or supplement) a retirement income.

How Can an Annuity Help Seniors?

Annuities can help seniors receive regular installments of income for retirement purposes to assist with living expenses.  Annuities are more appropriate for meeting long-term financial goals, so if you are looking for something to meet shorter term goals, another financial product may be more appropriate for your needs.

Fraud Against Seniors

Baby Boomers are a prime target for fraud, and this can be considered a form of financial elder abuse.  Many seniors have their homes paid off, money in the bank for retirement after decades of working and these financial assets can be the object of financial exploitation.

Annuities can provide insurance agents with large commissions on the sale of such products.  Most insurance agents may be trustworthy and have their clients’ best interests in mind, but there are some who take advantage of the situation when it presents itself.  Agents may pressure seniors to purchase an annuity that is not suitable, or may try to get you to change your existing annuity to a new one simply for their own financial gains.

Red Flags In Working with an Annuity Agent

The old adage, “If it sounds too good to be true, it likely is” very clearly depicts how many claims about annuities are.   A sales agent may not be representing a reputable company and can gain access to a senior’s personal financial information while under the pretext of setting up or transferring an annuity.

All annuities have risks and benefits, and you will need to be clear on understanding the risks most clearly so you do not fall victim to an annuity scam. Here are some red flags to consider before jumping in to purchase an annuity:

• High pressure sales pitches with statements like, “The offer is valid for today only” or other ways of being persuaded to sign on the spot are very common red flags. You should always have the chance to think over your options, discuss your options with those your trust, and get a second opinion.
• Free seminars at retirement communities, assisted living centers, churches and other places where seniors gather can be prime targets for high pressure sales and less than truthful explanations given by presenters.
• Sales agents who refer themselves as a “trust expert,” “trust advisor,” “senior estate planner” or “paralegal” are simply sales agents and are not experienced attorneys who are experts in living trusts.
• Downplaying the utility other investments or savings accounts while saying his or her product is superior and carries less risk is misleading and is not providing accurate, unbiased information.
• Some so-called agents create fake insurance companies and try to sell financial products. When a consumer hands over the money to the “agent”, they can disappear and make the scammer nearly impossible to be found.

Ways to Protect Yourself from Annuity Fraud

• Do your research! Be sure you check out a company’s licensure within your state.
• Consider having someone you trust present when you meet with a sales agent so they can also be on the look out for red flags and they can catch things that you may miss as you are trying to understand the products available.
• Obtain all annuity proposals in writing.
• Take your time in making a decision and carefully weigh the risks and benefits and weigh other options that are available to you.
• Obtain full disclosure on any products and make sure you understand all the information completely before you make a purchase.
• Make checks payable to an insurance company, not an individual or agency to ensure your money is directed to the right place.

Annuity Fraud Lawsuit Information

If you think you may be the victim of annuity fraud, you may be entitled to legal compensation to restore your financial losses.  Our experienced attorneys are available to consult with you to discuss your situation and explore your legal options.

Get a Free Life Insurance Claims/Annuity Fraud Lawsuit Review

If you or your loved one purchased a bonus annuity, life insurance policy or Medicaid qualified annuity and it did not turn out as promised, you may need to have an investment fraud lawyer review the policy, the payments, and the potential benefits. You may be surprised at what they find, and you may even qualify for financial compensation beyond what the policy promised.

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