Commissioner Dave Jones Reminds Seniors New Annuity Protections
Take Effect January 1, 2012
Responding
to new U.S. Census data released this week indicating a rapidly-growing older
population, Insurance Commissioner Dave Jones today reminded consumers that new
sweeping annuity protections take effect January 1, 2012.
“For
far too long, seniors have been victimized by the aggressive marketing and sale
of annuity products that may not be suitable for them,” said Commissioner
Jones. “Consumers have unwittingly bought these products not realizing that
their invested funds will not be available to them, or their funds are terribly
expensive to recover if they want to withdraw their money to pay for immediate
expenses. This can be financially devastating to seniors on a fixed income. A
new law, AB 689, sponsored by the Department, will help protect the hard-earned
financial security of the growing number of older Californians.”
New
census figures show the number of individuals 65 and older is rising faster
than the total U.S. population. According to the 2010 Census, there were 40.3
million people in that age group – increasing by 5.3 million since the 2000
Census.
“These
statistics point to an even greater need for the new law, which gives us the
tools to go after scam artists preying on innocent seniors,” said Commissioner
Jones.
AB
689 will require insurers to verify that an annuity purchase, replacement or
exchange is reasonably suitable for the consumer based on an evaluation of the
individual’s age, income, liquidity needs and financial objectives, among other
factors. It also requires that a consumer receive a tangible net benefit from
the purchase of the annuity. The Commissioner can revoke an agent’s license,
impose fines, and/or order that lost funds be restored to the consumer when
unsuitable annuity is sold.
Another
new law, taking effect in January, will protect seniors from being persuaded to
use the proceeds of a reverse mortgage to buy unsuitable insurance products. AB
793, sponsored by the Department, will stop agents and brokers – knowing a
senior has just acquired a reverse mortgage – from soliciting those same funds
from the individual for a non-casualty insurance product.
“A
reverse mortgage should be a senior’s last option when needing cash to meet an immediate
need,” said Commissioner Jones. “This new law will help return the concept of a
reverse mortgage to its original intent and protect seniors from being sold
something they simply don’t need.”
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