‘Confusopolies’ May Make Annuities Fraud Easier

Business cartoonist Scott Adams (creator of the Dilbert comic) coined the term “confusopoly” to describe industries that create markets for themselves by making their products next to impossible to understand — forcing consumers to rely on various salespeople to navigate their options.

Financial products like annuities can be a classic example. There are many types of investments and financial products available, particularly to retirees. And many of these products can be almost incomprehensible to an outsider. This could potentially allow for fraud and other forms of financial exploitation, particularly with annuities.

Annuities are a type of financial product designed to provide steady income. The classic example is life insurance, where a person pays a set amount over time and their beneficiaries get a payout or a series of payments on the policyholder’s death. Additionally, the policyholder may cash out the policy early for a reduced amount. Most life insurance policies follow this general pattern. However, annuities have many rules, terms, and other complications that make them very difficult for a layman to understand without the help of an agent — who is most likely compensated with commissions.

Within this nebulous realm, some annuities may stray into the territory of fraud, or at the very least ethically-shaky territory. For example, some annuities may be designed in such a way that it is almost impossible for policyholders (or their beneficiaries in the case of life insurance) to see their investment. These policies may have waiting periods to claim the payout on a policy that is years longer than the policyholder is likely to survive. Or they may require an excessive cash-out fee.

Unfortunately, annuities fraud, and other forms of financial fraud, often target the elderly. This is for several reasons. First, the elderly often have nest eggs, including life savings and 401(k) plans. Additionally, retiring seniors are often in need of financial advice as they enter the world of retirement planning, Social Security, and other financial issues that most people do not have to worry about until retirement. Lastly, and perhaps most cynically, the elderly are potentially less savvy about newer financial options, making them easier to exploit by the very people they seek out to help them navigate financial planning for retirement.

It’s unfortunate that anyone would take advantage of someone, especially potentially-vulnerable populations like the elderly. In some cases, lawsuits have been filed by the victims of alleged financial fraud. These lawsuits seek to recoup monies lost to fraudulent annuities. Certain laws, like the Employee Retirement Savings Act (ERISA) and various state insurance laws allow people to file annuity fraud lawsuits.

Join a Free Annuity Fraud/Life Insurance Class Action Lawsuit Investigation

If you or your loved were told that a life insurance policy or annuity was an appropriate investment 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.

Submit your information to a skilled investment fraud lawyer for a free review of your case. You will not be charged, and any consultation is free. Submit your information now!

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