Articles Posted in Insurance Litigation

South Florida Variable and Fixed Annuity Fraud, Misrepresentation, Breach of Fiduciary Duty and Twisting FINRA Arbitration and Litigation Attorney:

We recently were presented with the following factual situation. A single 82 year old, long retired woman received a “cold call” from a mortgage broker, who, after repeated telephone calls and visits to the woman’s home, convinced her to refinance her residence, She somehow got the woman to believe that it would be beneficial to pay off her $200,000 fixed rate, first mortgage, on her house that she had owned for many years, and to take out a new variable rate mortgage for almost $1,000,000 and put the difference in the bank for emergencies. If that was not enough, the 82 year old woman took the net proceeds to deposit into a bank account and the securities arm of the bank got a hold of her. Instead of telling the woman that it was a terrible idea to have taken out the new first mortgage, the securities arm of the bank sold the woman an annuity for $500,000, which started paying her monthly for 10 years. All of the payments that the woman got went to make the monthly mortgage payments. Obviously, the problem that this created for the woman was that after 10 years she would not be getting any more income from the annuity and the principal balance of the mortgage would be unchanged, thereby building into the transaction an automatic default in the mortgage. This is but one of many examples that could be given to show the extent to which some variable sellers will go to sell a product because of the large commission associate with the product.

While variable annuities can be appropriate as an investment under the right circumstances, as an investor, you should be aware of their restrictive features, understand that substantial taxes and charges may apply if you withdraw your money early, and guard against fear-inducing sales tactics.