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Annuity Fraud Lawsuits Help Scammed Seniors
By Amanda Antell
Annuities sold by insurance companies are meant to serve as long-term investments, with the attractive idea of high-interest payouts to the shareholders. Unfortunately, scams involving life insurance or annuity fraud are becoming more prevalent among senior citizens, forcing many victims and/or their families to sue the offending company.
As an example, in 2011 hundreds of Arizona senior citizens had invested their retirement savings into annuity investments made by Scottsdale-based estate-planning company National Future Benefits Unlimited. The company allegedly garnered large commissions by intimidating or misleading their elderly clients into bailing out existing annuities and buying new ones.
These decisions left their clients having to pay large surrender fees and facing potential tax liabilities. National Future Benefits was investigated by Arizona Adult Protective Services, due to a case involving an elderly couple that triggered an elder-abuse claim. The annuity scam lawsuit led to an $866,000 settlement being awarded to the couple.
Ideally, annuity companies are supposed to evaluate their clients’ financial needs, structural retirement plans, prepare financial trusts, draft wills, and prepare other documents. However, according to the elderly couple’s lawsuit, agents from National Future Benefits falsely told clients all over America who were facing financial trouble that if they didn’t invest in their annuities, then they would lose all their money.
The annuity scam lawsuit further alleges that to avoid complying with regulations, the company avoided having the clients sign a liability form that advised them to consult with their annuity providers, and told their clients to pay their fees directly to the company’s financial agents.
National Future Benefits denied these allegations and maintained that proper forms were filled out. The company argued that because of market changes and timing, it was sometimes in the client’s best interest to surrender an annuity rather than make an immediate transfer to another one.
Overview of Annuity Fraud Litigation
Annuity fraud litigation is becoming a legal epidemic as the elderly are becoming targets of various financial scams, with the goal of scheming them out of their money. Among these scams, annuity fraud is one of the most common.
Annuities work by making a lump-sum payment or series of payments into the annuity, and ideally, the annuity would pay the policyholder on a future date or on a payment schedule. The two annuity types most lawsuits focus on are variable annuities and fixed annuities:
- Variable Annuity: Annuity in which the insurance company invests the policyholder’s money into stocks, bonds, and other investments.
- Fixed Annuity: Annuity in which the policyholder’s money earns interest at rates set by the annuity contract. A fixed annuity provides a guaranteed payout on a specific date.
Ideally, annuities can be used as legitimate and useful retirement planning tools, they can also be costly due to their high investment costs. Additionally, it has been recently discovered that there are people who are using annuities to scam the policyholders out of their money. Here are the four most common signs of annuity fraud:
- The senior is unlikely to live long enough to collect the payments.
- The annuity makes up more than 35% of the policyholder’s assets.
- The Surrender Fee (the amount the policyholder will have to pay if they cash-in an annuity early) is more than 14% of the principal.
- The same agent sold the policyholder multiple annuities.
File an Annuity Fraud Lawsuit Today
According to legal statistics, over one-third of all cases of financial elder abuse involve annuities fraud. In the past few years, hundreds of annuity lawsuits have been filed against companies and brokers accused of defrauding elderly investors.
If you or your loved one were sold a life insurance policy or an annuity that did not turn out as promised, you may be able to obtain compensation through an individual lawsuit or by joining a class action lawsuit against the offending company. Learn more and obtain a free case evaluation by visiting the Life Insurance, Annuities Fraud Class Action Lawsuit Investigation.
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