People that responded to the mailers were then asked specific questions to find out if they are indeed “qualified prospects” for a sales presentation. The problem with the first company is the mailer said: Dear Annuity Holder:
This notice is to inform you that you may have an annuity that has reached the end of its surrender period. Please contact Bob Walker in the annuity service center to discuss your options.
Madigan’s complaint is alleging that “Investors Union”, the accused company, “has no way of knowing whether consumers have an annuity or whether such an annuity has reached the end of its surrender period.” Furthermore when a potential prospect is identified ostensibly a “free review” is set-up but the review turns out to be a sales presentation for annuities.
The second lawsuit is against Senior Benefit Services and is along similar lines as the first except that the second mailers focus on “probate information, Medicare and elder law updates.” The seniors end up meeting with an insurance sales agent trying to sell an annuity product. One unfortunate example involved “insurance agent who persuaded the senior citizen to use $170,000 from an IRA, representing nearly all of the senior’s liquid assets, to purchase a deferred equity indexed annuity with significant surrender charges issued by American Investors Life Insurance Co.”
I will be the first to tell you that annuity products are great products for the right person. They are not a cure-all or made to fit every situation but instead are appropriate for the right person, like every financial product on the market. Without going into great detail about the different types of annuities and how they work I will list some important questions from the press release to ask yourself before buying an annuity.
- How long can I leave my money in the annuity?
- What do I expect to use the money for in the future?
- Am I interested in a variable annuity with the potential for higher earnings that are not guaranteed and willing to risk losing the principal?
- Is a guaranteed interest rate more important to me, with little or no risk of losing the principal?
- Or, am I somewhere in between these two extremes and willing to take some risks?
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