Annuity Fraud Alert: Be Aware of Allianz Life Insurance Co. Practices

One of the most common occurrences of elder abuse is financial exploitation, with many adults becoming a victim of annuity fraud. Allianz Life Insurance Company of North America has recently been on the public chopping block for this, after making false promises to numerous elderly people regarding annuity products. The buyers had been promised that their annuities would quickly increase in value and would offer high returns, as long as they met a significant requirement.

This requirement was that they buyers had to defer annuitization, or taking money from the person’s account on a scheduled basis, for at least five years. Buyers would then be forced to take the remaining deferred annuity payments, over a ten year period. During these periods, Allianz had allegedly “haircut” the leftover money in the account after the policyholder annuitized the policy between six to 10 years.

According to critics of Allianz, the insurance company allegedly knew that the majority of customers who met their annuitization requirements would most likely annuitize their contracts after five to ten years. This would result in the policyholder suffering monetary losses in their Allianz funds account, and would receive lower annuity payments.

The deferred annuities Allianz offered, had also imposed harsh surrender penalties when policyholders did not meet annuitization requirements. Policyholders complained that the two-tier structure of the annuities allowed the penalties to increase over time, and would never be resolved.

To make matters worse, Allianz had allegedly used highly complicated language to explain the consequences of the policy, when selling to potential customers. The complicated nature of the deferred annuities, along with the complicated language of the policy contracts, has tricked numerous customers into signing up for bad annuity policies.

Overview of Annuity Fraud Complications

A deferred annuity is an annuity product that delays income payments, installments, or lump sums until the investor wishes to claim them. These annuities have two phases, with the first being the saving and the second being income. The savings phase has the policyholder invest money into the account, while the income phase is when the policy is converted into an annuity and the policyholder starts receiving payments.

Deferred annuities can be either variable or fixed, and would ideally allow elderly civilians to live a comfortable retirement, while increasing their income through sound investments.

Unfortunately, annuity and other insurance scams have become increasingly common in the United States, especially against the elderly. While legitimate insurance companies and agents will give reliable financial guidance, there are just as many looking for an easy target in this vulnerable consumer population.

Experts warn that fraudsters know how to manipulate the insurance products to their favor, and know exactly what to say during the sales pitch. Furthermore, some scammers will even go through the trouble of creating fake insurance companies to win over potential victims, but disappear once they have the customer’s money.

Legal experts state that the best way to combat annuity fraud is research and to ask as many questions as possible. Oftentimes, fraudsters will convince elderly customers to invest in expensive annuities that would hold for ten to 15 years, or would force consumers to pay a hefty penalty fee for cashing out; as the case with Allianz. From this, insurance agents receive a big commission check, while the customer is left with a nearly worthless investment.

Using an alternative method, the agency will get the policyholder to convert one annuity into a different annuity with a different insurance company, to get the commission from the sale.

It is important to note that not all annuity policies are scams, and often work out favorably for the customers under proper care of the insurance companies. Experts warn that there are several signs that customers can look out for, in trying to identify annuity fraud:

• The annuity takes up more than 35% of the senior’s assets
• The penalty fee is more than 14% of the principal
• The same agent sold the senior multiple annuities to same customer

If you or a loved one purchased an annuity from Allianz Life Insurance Co. and were hit with high surrender fees or the product did not turn out tho be as described, an experienced lawyer can review your situation at no charge to you to assist you in understanding 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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