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St. Petersburg, Florida

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Bob Carroll
Bob Carroll
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Annuities Sometimes Are Unwise Investments

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When is an annuity a scam played on the purchaser? I nominate the circumstances of this purchaser’s dealings with an insurance agent in New Port Richey.

The Great Annuity Rip-Off

Seven years ago, when Alice Bouchard was 85 and needed her money to be easily accessible, an insurance agent sold her a deferred annuity that tied up her money until she was 101. If she had needed to withdraw the money during the first five years after buying the annuity, she would have paid a massive 25% surrender charge.

And if that weren’t bad enough, the agent paid Bouchard regular annual visits and persuaded her to sell the annuities she had purchased in past years and buy new ones. Each time, she had to pay surrender charges. Then, she says, without her knowledge the agent began shifting money to other family members after she reached 90 (the maximum age at which you can buy an annuity from most companies).

Bouchard, who lives in New Port Richey, Fla., and her daughter, Sister Carole Bouchard, a member of the Society of Sisters for the Church, eventually sought the advice of a financial planner, who contacted the Florida Department of Financial Services. Investigators discovered that Bouchard had paid more than $6,500 in surrender charges and taxes, and she had lost ownership of $293,000 that had been transferred to various members of her family. The agent had cleared $138,000 in commissions.

The agent preyed on Bouchard’s fear of losing money by promising that she’d get the benefits of investing without the risk–a typical ploy of salespeople who push unsuitable annuities, regulators say. And it’s a ploy that seniors and people nearing retirement will encounter more frequently.

This is far from a unique story about the sales of many insurance products and annuities to the elderly. All we civil trial lawyers can do is to try to correct the harm that has been done and recover the money lost. Family members have to be the initial guardians of the assets of their older relatives – unless they are dipping into the honey pot themselves.