Annuities Fraud

Alabama, Georgia, Florida

Annuities
Annuities are retirement benefits offered by insurance companies that are paid to you on a regular basis-quarterly, semi-annual, or annual. You can never outlive the income from an annuity.

There are two basic types of annuities; fixed, which pay a certain income backed by dollar investments like mortgages; and variable, which differ in payment based on the value of your stock and bond investments. Identified by state regulators as one of the top 10 scams in America, variable annuities are more often tied to fraud, though fixed annuities have also been involved in scams.

Aggressive Marketing
Annuities often generate high agent commissions-anywhere from 2 to 20 times higher than those generated from mutual funds. This leads to aggressive marketing and a high rate of fraud, especially when senior citizens are the targeted investors.

Variable annuities are often sold using scare tactics: a seller might promise these investments offer protection from a seizure of assets or a lawsuit. A combination of insurance policy and mutual funds, variable annuities are often sold as having a "guaranteed" principal, and are typically purchased with a large lump-sum payment.

The Fine Print
Annuity fraud arises when the annuities seller misrepresents or omits facts about the investment to the unsuspecting investor. Your broker might leave out facts about the steep penalties for early withdrawal or forget to mention that the "guaranteed" principal only occurs in the event of death.

Only insurance agents and brokers who are also insurance agents may lawfully sell annuities. If your salesperson did not deal honestly with you, you may be able to cancel the purchase and possibly collect damages.

The most common problems with variable annuities sales are:

Unsuitable recommendations and sales
Frequent switching
Market timing and late trading
Improper sales contests
Churning and excessive fees
False disclosures
Unfair or preferential customer treatment

Unsuspecting Investors
Many elderly investors mistakenly think annuities are safe investments, but this is a misconception because both variable and fixed annuities can be very risky. Annuities seem attractive for people looking for a fixed income from early retirement. You might think you'll receive a set amount per year for the rest of your life, but unfortunately this isn't always the case. If you are over 70 years old, need immediate income, and do not need insurance, a variable annuity is rarely suitable.

If you or a loved one has been victimized by annuities fraud, contact the mutual fund fraud attorneys at Burke, Harvey & Frankowski. Serving Florida, Georgia and Alabama, our experienced attorneys can help you understand your rights and reclaim your losses. Call or e-mail us today for a free consultation.

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