New Fla. Law Protects Elderly Residents against Annuities Fraud

New Fla. Law Protects Elderly Residents against Annuities Fraud

By Amanda Antell

A law has been passed in Florida to better protect the elderly from annuity fraud. According to the law, called the Suitability in Annuity Transaction Model Regulation, insurance companies can only sell variable annuities to elderly clients who can reasonably afford and collect from the annuity investment.

This regulation originally came from a 2010 Florida policy from the National Association of Insurance Commissioners (NAIC) that was meant to protect all consumers, especially the elderly, from inappropriate variable annuity purchases. Under these regulations, insurance annuity representatives were not allowed to pitch an inappropriate product to elderly investors.

These regulations essentially mean that insurance companies could face major fines and investigations if they are found guilty of targeting elderly clients who are clearly not set up to either afford or collect from an annuity investment. The update that was given to this policy gives the elderly even more protection against insurance investors, by making updates the language of this state law, putting the policy into more specific terms to protect elderly investors specifically. On June 6, 2013, Florida Governor Rick Scott signed the language change of the bill, and it took effect on October 1, 2013.  

Under the new state policy, insurance companies must produce evidence for believing that a specific elderly client is suitable for the particular annuity plan they are presenting. This evidence includes various financial forms that the clients must fill out, showing that he or she is informed about their rights and that they are aware of the financial obligations that go with the annuity. If the company is found being uncooperative intentionally or unintentionally, the company will face major fines, and possibly be subjected to a state investigation.

Additionally, the window for allowing an unconditional refund for any annuity plan sold by an insurance company has now been expanded from 14 to 21 days. It also prohibits any insurance representatives from attempting to dissuade a potential client from answering any of the questions pertaining to suitability of the annuity truthfully, or filing a complaint in the event of a problem.

Overview of Annuity Fraud

An annuity is an insurance product provided by insurance companies that would ideally pay a steady stream of income to the policyholder, making it a popular investment and retirement plan for many American seniors. Despite the convenience of the description, many legal experts are growing concerned due to the rising number of cases of annuity fraud. 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.

File an Annuity Lawsuit

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