California Passes Annuity Fraud Law to Protect Seniors

California passed a new fixed annuity law in an effort to protect senior citizens from elderly financial abuse.

Senate Bill 426 was passed by the California legislature, signed by Gov. Jerry Brown and faced no opposition from either house. The annuity fraud law is expected to go into effect in January 2016.

The new law focuses on what many retirement annuity companies already practice but by making it official, supporters of the legislation claim this should help further protect seniors from investment fraud.

The California fixed annuity law will require that when annuities are issued to customers over the age of 65, the death benefit must equal the annuity amount or accumulation value. The annuity legislation also prevents fixed deferred annuity carriers from requiring customers to pay a surrender penalty on the death benefit payment.

Supporters of the measure say the annuity scam law will offer extra security to seniors and their families. The biggest difference annuity investors in California will notice is that without the surrender penalty on death benefits, the overall payout will be higher.

Annuities Explained

Retirement planning is not always easy for many Americans, that’s where annuities come in. Customers invest in an annuity and then receive either a lump sum payment (fixed annuity) or it pays over the course of your lifetime (variable annuity).

A fixed annuity gives investors interest on money invested at rates set by the annuity contract. This type of annuity guarantees a payout on a specific date.

A variable annuity allows investors to receive payments over the course of your lifetime. This type of annuity gives the insurance company permission to invest the senior’s money into stocks, bonds and other investments.

Another type of life insurance annuity is called a bonus annuity. This is often used to lure seniors into buying a variable annuity by adding “bonus credits” to the value of the contract. However, some companies will raise their fees to pay for the bonus, which is essentially bonus annuity fraud.

Annuity Fraud Lawsuits

While some annuities can help seniors plan for retirement they can also lead to elder financial abuse as certain life insurance companies charge high expenses. According to the North American Securities Administrators Association, more than 30 percent of all financial elder abuse involves annuities.
Some of the most common life insurance scams include:

• The same agent sold the senior multiple annuities
• Senior is unlikely to live long enough to collect their payment(s)
• The annuity makes up more than 35% of the senior’s assets
• The surrender fee is more than 14% of the principal

Hundreds of annuity fraud lawsuits have been filed across the country accusing life insurance companies of intentionally trying to deceive senior investors out of their retirement money.

If you or a loved one were a victim of annuity fraud or life insurance scam, you may have legal claim. Contact an attorney to find out if you can join an annuity fraud/life insurance class action lawsuit.

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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