Annuity Scam Tactics Used to Target Seniors
By Robert J. Boumis
Annuities fraud is a type of scam wherein annuities are sold as a viable investment but then fail to live up to their promised payout. These scams tend to target senior citizens, who depend on annuities and other forms of fixed income after they retire.
Annuities are a type of investment designed to provide either a steady payout or a fixed lump sum after a set length of time. Annuities generate this income by investing your money in anything from bonds to stocks. However, some types of annuities might not be the best type of investment, and some can be potentially fraudulent, especially in the hands of amoral insurance/annuities agents.
Fraudulent annuities tend to use a variety of tactics to deny people the originally-promised payouts. While even legitimate annuities can vary considerably in their terms, certain signs can be a major red flag. For example, some fraudulent annuities have a clause that prevents policyholders from claiming any payout for a number of years — often longer than most people will live. Additionally, some fraudulent annuities charge substantial fees for early withdrawal — above and beyond the usual early withdrawal fees for an annuity.
While fraudulent annuities and legitimate annuities can both vary wildly in their terms, a number of signs can be major red flags. For example, if an annuity is designed to make up more than 35% of a senior’s net worth, there is a good chance the annuity is fraudulent. Additionally, if the surrender fee (the early cash-out fee) is more than 14% of the principal, you should also be suspicious.
Another major tip-off is if you find yourself in a situation where a single agent sold seniors multiple annuities. As mentioned before, if an annuity has a set period before payout that is longer than a senior is likely to live, this is a major sign that an annuity is fraudulent. While a regular annuity may have fees, fraudulent ones tend to have more excessive fees.
Most of the various tactics involved in annuity fraud come down to using red tape and putting the burden of navigating a convoluted bureaucracy on those who paid into the annuity in the first place. In the case of some bad faith annuities, the situation is complicated by the fact that the money cannot be claimed until after the original policyholder has died, further complicating the situation.
Lawsuits have been filed against the perpetrators of insurance fraud. These annuity fraud lawsuits seek to recover either the funds invested in annuities or the promised payout, either by the beneficiary themselves or their next of kin.
If you, or someone you care about, invested in an annuity that did not live up to its promise, you have probably found yourself frustrated. Fraudulent annuities may sound official and unchallengeable, but the legal system is designed to safeguard your rights, and there are steps that you can take steps to regain a measure of control over your situation.
You can start by visiting the Life Insurance, Annuities Fraud Class Action Lawsuit Investigation and obtaining a free evaluation of your case. If you qualify, you will be contacted for a no-obligation, free consultation with an annuity fraud lawyer who will advise you on your best course of action for getting the money you deserve.
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