Annuity Fraud Plagues Elderly Community

Annuity Fraud Plagues Elderly Community

By Amanda Antell

An annuity is an insurance product provided by various companies that pays a steady stream of income to the policyholder, making it a popular investment and retirement plan for many Americans. Many of these policyholders are in the elderly community, with many of them relying on the annuities to take care of them in their golden years. When insurance companies take advantage of this population and actually scam their elderly policyholders out of their annuity investments, it is called annuity fraud.

Annuities typically work two ways in the United States: you can either pay the annuity investment in one lump sum, called a fixed annuity, or pay it over the course of the person’s life, called a variable annuity. While both involve paying the insurance company money, there are different benefits associated with them.

With variable annuities, the policyholder’s annuities get invested into stocks, bonds and other authorized investments made by the policyholder. This type of annuity offers tax-deferrable payments which are determined based on the performance of the investments. With fixed annuities, the set payment by the policyholder garners interest over the years and provides a guaranteed payout on a specific date or on a designated payment schedule. 

While annuities are designed to be a way to secure a senior’s future, they have also become a way for insurance companies to abuse their elderly clients’ trust and finances, leading many seniors to become victims of annuity fraud. Legal experts are growing concerned due to how many of these cases they have been seeing over the years. The four most common signs of annuity fraud occur when:

• The senior is unlikely to live long enough to collect their payments
• The annuity makes up more than 35 percent of the senior’s assets
• The Surrender Fee (the amount the senior will have to pay if they cash-in an annuity early) is more than 14 percent of the principal
• The same agent sold the senior multiple annuities

According to legal statistics, more than one-third of all cases of financial elder abuse involve annuities. In the past few years, hundreds of investment fraud lawsuits and class action lawsuits have been filed against various insurance companies, alleging financial elder abuse and annuity fraud.

Example of Annuity Fraud 

In 2004, an annuities fraud lawsuit was filed by two senior citizens who alleged charges of financial fraud against five insurance companies who had reportedly sold senior citizens fake annuities. The couple alleged that the companies were not setting dates until after the recipient’s time of death, and had been charging their elderly clients severe fees.

The primary defendant companies in this case had allegedly told potential senior clients that if they chose annuities, they would avoid large tax penalties and experience other significant benefits. Allegedly, none of these seniors had a lawyer present, and the company had been said to use high-pressure and deceitful sales tactics. 

File an Annuity Lawsuit Today

If you believe that you or a loved one have been the victim of annuities fraud, you have legal options. Please visit the Life Insurance, Annuities Fraud Class Action Lawsuit Investigation. There, you can submit your claim for a free legal review and if it qualifies for legal action, a seasoned annuity lawyer will contact you for a free, no-obligation consultation. You will be guided through the litigation process at no out-of-pocket expenses or hidden fees. The annuity attorneys working this investigation do not get paid until you do.

All class action and lawsuit news updates are listed in the Lawsuit News section of Top Class Actions