The National Association of Securities Dealers has issued an “Investor Alert” warning of a rise in deceptive sales practices in the sale of annuities to senior citizens
The NASD also states that consumer confusion about annuities has also risen. “This is due, in part, to questionable or deceptive sales practices employed by companies and agents looking to take advantage of uninformed consumers,” it adds.
An “annuity” is defined in the release as “a contract in which an insurance company makes a series of income payments at regular intervals in return for a premium or premiums you have paid.”
“There are several types of annuities, all of which carry varying levels of risk and guarantees,” the release states. It then lists Single Premium Annuity, Multiple Premium Annuity, Immediate Annuity, Deferred Annuity, Fixed Annuity, Variable Annuity and Equity-Indexed Annuity) but fails to indicate the particular risks of each.
The NASD advises investors to beware of “red flags” of possible deceptive sales practices, including high-pressure sales pitches, “limited-time” deals and tactics to move investors from one annuity to another. There is also a warning about unlicensed agents. The alert adds: “Remember, if it seems too good to be true, it probably is!”
Others warn that the use of terms such as “insurance” and “guarantee” are often misleading and can deceive seniors into believing annuities are always safe, which is not the case. Part of the deception is to mask whether one can even get out of an annuity and, if so, the downside risk and/or penalties involved.
However, none of these warnings are helpful to senior citizens and others who have already been scammed!
If you or someone you know may have been a victim of annuity fraud contact Shepherd Smith and Edwards. We have helped thousands of investors recover losses. You may contact our law firm to arrange a free confidential consultation with one of our attorneys.
The complete text of this and other NASD Investor Alerts is available at http://www.nasd.com/InvestorInformation/InvestorAlerts/index.htm