Closer Look at Annuity Fraud Lawsuits

Annuities are a popular way for the elderly community to invest their retirement money and earn a bigger pay-off.  They can be especially lucrative for insurance companies, because they often charge high upfront commission fees, along with other charges.  Some have complained that these charges were so severe, that even when their annuities did payoff, it only broke even.

Most financial expert state that while variable annuities, in particular, can be genuine investment opportunities. They should only be pitched to investors who can maintain the investment for twenty to thirty years.  Fixed annuities are found to be more reliable because of their specified pay-out date.  Many investment companies have been found to be at the center of federal investigations for selling annuity contracts to the elderly community.

For example, the insurance company, Morgan Stanley had been served a subpoena by Massachusetts Secretary of the Commonwealth, William Galvin.  This action wishes to investigate the company’s detailed financial accounts of their annuity sales, including information such as: variable revenue-sharing arrangements, compensation, and whether the products receive preferred sales treatment.  This subpoena stemmed from a recent lawsuit against Morgan Stanley, which claimed the company held illegitimate contingent fee agreements, where a portion of the revenue was paid to the brokerage as an incentive to sell the annuities.  The suit further alleged that the brokers received bonuses based on the number of sales, and that these employees deliberately presented false or misleading financial information on the product.

The example of Morgan Stanley shows that the size of the insurance company does not dictate whether or not they feel the need to commit annuity fraud.  Insurance companies typically target elderly investors who do not have a strong legal or financial background, and are typically expected to not live long-enough to see substantial results.

Overview of Annuity Fraud

In simple terms, annuities are investment products that are provided by various companies which pays a steady stream of income to the policyholder.  Due to the fact these companies handle the specific financial growth or depletion of these investments; it makes it a popular investment option to the elderly because of the low-commitment level.  However, it is low-commitment level that has allowed some of these companies to take advantage of these policyholders, scamming the elderly out of their retirement investment, this is called annuity fraud.  Annuity fraud is when elderly policyholders pay the annuity investments, but receive nothing back on the designated dates of compensation.

Legal experts are growing concerned due to how many cases of Annuity fraud that have been sprouting over the years.  Taking the characteristics from recent cases, the four most common signs of annuity fraud are:

• Senior is unlikely to live long enough to collect their payments.
• The annuity makes up more than 35% 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% of the principal.
• The same agent sold the senior multiple annuities.

According to legal and financial statistics, over 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 these charges.

Free Help for Filing an Annuity Fraud Lawsuit

If you believe that you or a loved one have been the victim of an annuity financial scam, 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.