The Oregon Department of Consumer and Business Services this week ordered a life insurance company to change the way it sells annuities after finding that the company sold policies to seniors who couldn’t afford them.
At the department’s direction, Bankers Life and Casualty Company has
already given refunds to about 20 seniors who were sold annuities that
took most or all their money, leaving them unable to pay other
expenses. The department’s order requires Bankers to review additional
annuity sales, offer refunds to those for whom the sales were
unsuitable, take steps to protect future clients, and pay a $150,000
"Oregon has strong standards that protect seniors
against unsuitable sales of financial products," DCBS Director Cory
Streisinger said. "Many seniors are worried about how to secure their
financial future, and they have a right to expect that products offered
to them will meet their needs, not take advantage of them."
department adopted rules protecting seniors against unsuitable sales of
annuities in January 2005, and the order requires a review of certain
annuities sold since that date. Bankers will be required to contract
with an independent firm to conduct the review. Annuities found to be
unsuitable, based on criteria established by the department, may be
canceled without surrender charges.
The department’s order will also require more scrutiny of annuity applications by Bankers in the future.
company will need to document that it has researched a client’s age,
financial situation, and insurance objectives well enough to know
whether the client can afford the annuity and whether it is appropriate
for the client’s needs. The state’s recent investigation of Bankers
concluded that the company, in at least 20 cases involving 30
annuities, failed to do adequate research regarding its clients’
situations, or encouraged seniors to put most or all of their financial
assets into an annuity without considering their expenses and debt.
annuity is an insurance contract purchased with an initial payment or
series of payments that provides the purchaser with a future income
stream. Many annuities include high up-front costs and penalties for
Bankers has Oregon branch offices in
Portland, Eugene and Medford. The department previously took actions
against two Bankers agents in Eugene for unsuitable sales. One agent
surrendered her license in lieu of enforcement after the department
found that she failed to research a client’s financial situation before
recommending an annuity. The other agent was fined $2,000 for
recommending that a client incur unnecessary state and federal taxes by
cashing in three annuities with Bankers – to buy a new annuity with
Bankers – even though the client could have kept the original annuities
with the company.
Bankers cooperated in developing the action plan contained in the department’s order, and agreed to the order and the fine.
The investigation into Bankers’ annuity sales is part of the
department’s ongoing emphasis on helping senior citizens protect
themselves against insurance and financial abuse. The department
reached about 2,000 consumers during the past year at presentations
about these issues and provided new information about insurance and
financial abuse on its Web site and through free publications. Consumer
advocates in the department’s Insurance Division are also available to
provide free help with insurance questions and complaints and are
available to speak to groups about insurance issues. They can be
reached at (888) 877-4894.