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Consumer
Senior abuse part of financial reform package
MADISON, Wis. (12/2/09)--States could get as much as $500,000 each to investigate and prosecute people engaging in fraud against seniors under provisions of financial reform legislation making its way through Congress. The bills set aside $8 million for states to bulk up senior protection, with sales of annuities getting special attention. “The proposed tougher oversight of annuities is poised to make a big leap forward because it’s hitching a ride on high-profile regulatory reform legislation--a top priority of the Obama administration,” reports CNN/Money (Nov. 16). Annual sales of fixed annuities jumped 50% in 2008 to $190.3 billion, according to the Insurance Information Institute; sales are running at more than $164 billion this year. While many types of annuities are useful for seniors, many are also complex and confusing. Fixed and equity-indexed annuities are regulated by state insurance agencies; the Securities and Exchange Commission regulates variable annuities. Financial exploitation of seniors is one of the top three classes of elder abuse in the country, according to a November report in Credit Union Magazine. Elder financial abuse is reported to cost at least $2.6 billion a year, and trusted professionals represent nearly one out of every five perpetrators of elder abuse. Here are some tips when considering the purchase of an annuity, from the office of Minnesota Attorney General Lori Swanson:
* Avoid solicitations. Be on guard against telemarketers who “cold-call” you with “investment tips” or send unsolicited mailings. * Be careful of “seminars.” Some unscrupulous agents advertise estate planning or wealth management seminars, when their goal is to sell seniors deferred annuities, which may be inappropriate for their financial circumstances. * Review the terms. A legitimate professional selling you an appropriate investment will understand that you want to take your time making the right decision. * Avoid high-pressure sales pitches. Beware of agents who contact you repeatedly, offer you a “limited time offer,” show up at your home without an appointment, or won’t meet you if family members are present. * Beware of bonuses. Some companies offer bonuses to entice investors. Often, benefits may be offset by high fees and restrictions. * Long-term consequences. How long must you keep the money in the annuity before you are paid income on it? Will the annuity allow you to gain access to the money when you need it? What “surrender charges” or penalties apply if you need access to your money early?
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