There have been multiple instances in the news of insurance companies exploiting the elderly to increase their own commissions and profits without delivering promised and quality products. As more and more life insurance fraud and annuities fraud is brought to light, including deceptive insurance sales tactics, fraudulent insurance policy sales and annuity fraud, it becomes clear that the American public needs to stand up to these huge businesses and protect our most vulnerable citizens, the elderly.
In has been proven, for instance, the Prudential Life Insurance, one of the most solid and reputable companies in the industry used deceptive sales tactics to encourage existing customers to buy insurance policies that were beyond their budget and beyond their needs. In some instances, sales reps erroneously informed prospects that they could increase their coverage exponentially without paying any additional premiums or fees. Prudential actually arranged for these unsuspecting customers to take loans out against existing policies to cover the new premiums. At the end of the day they were left with high premium payments and virtually value-less original life insurance policies.
Ultimately, in March of 1997, numerous victims came together and their case was certified as a class action by the New Jersey district court. The plaintiffs prevailed and the Prudential Life Insurance Company agreed to compensate over 8 million policy holders approximately $410 million. This represented people who had purchased life insurance policies between 1982 and 1995, when deceptive sales tactics were rampant throughout the company. Additionally, plaintiffs in the “class” could take their individual claim to an alternative arbitration panel or they were offered a basic claim package which incorporated several benefits including awards of loans and improved terms on policies.
Another disturbing practice across America is the sales of deferred annuities to seniors. An annuity is an investment method wherein you buy an “annuity” from an insurance company by investing a lump sum which ensures a specific return on your investment. You may receive your money and your return in a lump sum, in the case of a deferred annuity, or you may receive small payments over a period of time throughout your life, as in an immediate annuity. Some insurance companies are luring seniors into these inappropriate investment opportunities through annuities fraud by lying about high rates of return and using some scare tactics without disclosing the high fees associated with the annuities or the fact that their money could be locked up because of prohibitive penalties for years to come. This deprives seniors of important capital they need to live on throughout their retirement.
There are other examples of investment fraud, deceptive sales tactics and nefarious practices by the insurance companies but these are two of the most despicable. If you or a loved one has been hurt by deceptive sales tactics or inadvisable investments, you should contact an attorney. Too often, the elderly in our country are scared into or overwhelmed by deceptive sales tactics and they end up putting their money into unwise investments or losing their money to investment fraud. Help protect yourself and your loved ones by uncovering these illegal practices through litigation.