Improper Sales of Annuities

Improper Sales of Annuities

A Columbus, Ohio, Consumer Law Attorney Discusses Improper Sales of Annuities

An annuity works like an insurance policy for future income. Purchasing an annuity contract from an insurance company or other issuer allows a person to pay a specified amount in increments called premiums in order to receive future payments. Some annuities offer tax benefits, and many pay off in the event of the contract holder’s death. Such promises appeal to many investors, but the assurances can be used rather easily to sell annuities that are not suited to the investment needs of a particular investor. Improper sales of annuities cost investors up front and in the future when they expect to reap the benefits of their financial planning. Holding companies and salespeople accountable for improperly selling annuities is essential, and it is a responsibility the Columbus investment fraud attorneys with Leist Warner take very seriously.


Potential Pitfalls for Annuity Purchasers

The first thing all investors must understand about annuities is that the contracts are neither savings accounts nor stocks. Contract terms limit the maximum amount investors can pay into an annuity, and returns on the investment will never be higher than a total percentage specified in the contract. These realities point to the first important lesson in how to spot whether a company or agent is engaging in improper sales practices: Never believe any claims about an opportunity being “unlimited.”

Variable premium and variable interest rate annuity contracts can be sold legally, but such investments come with risks for losing principal (i.e., the money put in by the investor). Management fees also tend to be higher on variable annuities than on fixed-rate contracts. Before signing papers on a variable annuity, an investor should make sure all the financial risks, costs, and terms have been fully explained, which highlights the second indication of possible fraud. When companies and salespeople dismiss consumers’ concerns or must be pressed repeatedly to be completely honest about contract provisions, trusting them to manage one’s investments can be a mistake.

Laws enforced by the federal Securities and Exchange Commission, the Ohio Department of Commerce, and the Ohio Department of Insurance place legal duties on annuity issuers and brokers to act ethically and in investors’ interests, but violations of those statutes occur frequently. Just a few of the most high-profile cases of improper sales of annuity involved these illegal and unprofessional practices:

  • Offering plans that do not reach full value until after the contract holder can be expected to die (e.g., a 10-year annuity for a 90 year old).
  • Convincing investors to purchase a new annuity by, in part, not disclosing that a currently held annuity provides the same benefits.
  • Hiding or misstating fees.
  • Overpromising benefits and investment returns.
  • Failing to properly fund annuity accounts, making paying investors impossible.


Do Not Get Victimized by Improper Annuity Sales

Lawyers in the Columbus, OH, office of Leist Warner have helped people overcome all kinds of insurance claim denials, unethical insurance policy sales practices, and improper sales of annuities. Individuals who fall prey to fraud, false advertising, misrepresentations, and financial wrongdoing at the hands of insurers, banks, investment advisers, brokers, and salespeople are entitled under law to seek reimbursement and compensation. Ask us for help in seeing that justice is done and that you get the money you not only deserve but have been relying upon for support. Call (614) 222-1000 or reach out to us online. We offer no-cost consultations.

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