Annuities Fraud Exploits Life Insurance Policyholders

Annuities Fraud Exploits Life Insurance Policyholders

By Robert J. Boumis

Everyone has their strong suits, but no one knows everything. Con artists exploit this aspect of human nature. Many people don’t know the details of an investment strategy or the nuanced differences of different financial arrangements. Within this vacuum, annuities fraud thrives.

In annuities fraud, people are sold investment products in bad faith – a legal term meaning that the financial institution does not intend to make good on promises to investors and policyholders. Annuities fraud can take the form of very seemingly legitimate investments. 

Annuities fraud often targets the elderly because this demographic often has lump sumps of money saved up for retirement, receives guaranteed income in the form of pensions and Social Security, and is often in the market for investment products to protect their retirement income. 

While fraudulent annuities can vary wildly, certain factors can be red flags.

When purchasing an annuity, several things can tip you off. First, only a licensed broker can sell annuities, and you can find licensed brokers on the Security Exchange Commission website to verify their status a legitimate broker. Beware of people identifying themselves as “annuities experts” or “financial consultants.” Additionally, if your broker suddenly tries to get you to cash out of an annuity and move the money into a new one, it could be a sign of annuities fraud.

Most legitimate annuities are designed in such a way that it makes the most sense to leave your money in place according to the terms of the initial investment. Similarly, annuities sold at “free lunches” to groups, sometimes recruited directly from retirement homes, are a major red flag. 

Sometimes, the terms of the annuity itself can reveal cause for concern. If you have an annuity with a payout date so far in the future that you’re unlikely to see it, the annuity could be fraudulent. Additionally, while all annuities have early cash-out fees for people who decide they want to take out their money, fraudulent annuities may have a higher-than-average early withdrawal penalty. Be on guard for annuities with a surrender period of more than seven years or an early withdrawal penalty of more than 14 percent of the sum of the annuity. 

In addition to criminal action against fraudsters, lawsuits have been filed against the perpetrators of annuities fraud. These lawsuits seek to recover the monies invested in fraudulent annuities, or even enforce the terms of annuities depending on the nature of the fraudulent activities.

If you or someone you care about has been taken in by annuities fraud, or if you’re not sure if you’ve been taken in by annuities fraud, it’s important to take action. It’s natural to feel a little embarrassed, but you must not let that influence your actions. Instead, you can take steps to assert your rights and take back what’s yours. You can start by visiting the Life Insurance, Annuities Fraud Class Action Lawsuit Investigation. Here, you can enter information about your situation for a legal review by a trained expert with a background in this type of litigation. The initial consultation is completely free of charge and from here, you can receive additional guidance on the best steps to take in your exact situation.  

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