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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Annuities for seniors

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: An insurance agent sold my mother who is 77 years old an annuity with a 15 year surrender charge. Now she can not get her money back. My attorney says that it was inappropriate and illegal product sale for a person her age. What can I do to get her money back?

A: The issue of suitability of annuities for seniors is an important issue, but there is no solid boundary between what is appropriate and what is not. It depends on the owner's overall financial objective. Annuities are attractive to seniors because of the strong guarantees not available in stocks and bonds and the higher rates of return as compared with bank CDs. The legal approach to solving this problem, even if valid, might not be the best approach. An easier approach would simply be to ask the insurer to waive the surrender charge based on the facts you outlined here. Most annuities are purchased with funds are not intended for use as an income source within the owner's lifetime, so the surrender charge is not usually an important an issue. Secondly, most insurance companies waive the surrender charges for a variety of financial planning situations, including the need to annuitize and receive income. If annuities are the investment of choice, then the entire issue of surrender charges can be avoided simply by selecting an annuity without any surrender charge. Most non-commissioned financial advisers are familiar with these products that are a better deal for many investors. Two of the most popular issuers of annuities without surrender charges are Ameritas and Vanguard. More information is available from the links on the page listed below. If you do pursue a legal settlement with the insurer, your attorney may want to obtain an independent third party opinion on the suitability of the transactions. If so, I would be available to provide that expert testimony as needed.


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