Insurance Companies Pay the Price for Allegedly Swindling Seniors

California Insurance Commissioner Steve Poizner and Attorney General Jerry Brown have announced a multi-million-dollar settlement in a case where seniors were potentially mislead into purchasing unsuitable annuities.

Although none of the companies named in the lawsuit has admitted to any wrongdoing, Family First Advanced Estate Planning and Family First Insurance Services of Woodland Hills; John Owen, president of Family First Insurance Services; and American Investors Life Insurance of Kansas will pay to the California Department of Insurance, the California Department of Justice, and affected customers a combined total of $7.2 million.

It's alleged that the insurance companies deceived their victims through a multiple step process. First, representatives visited seniors under the guise of offering estate-planning services. In reality, the companies were using the meetings to gather information about the seniors' finances and gain their trust.

When life insurance agents would later deliver the estate-planning documents, they used the financial information that had been submitted for the estate planning documents to pitch annuities, regardless of the potentially adverse effect these annuities might have on the seniors' financial situations.

"These companies tricked senior citizens into buying annuities that would not pay out for years and had substantial early withdrawal fees — investments that made no sense for elderly people," says Attorney General Brown." California took action against these companies and today's settlement marks the end of their unlawful practices."

Consumers who have been victimized by annuity fraud should report it to the Department of Insurance by calling 1-800-927-HELP, or visiting the Web site at www.insurance.ca.gov.