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CA Department of Insurance
CA Department of Insurance
CA Department of Insurance

Insurance company must repay 86-year-old customer after selling an annuity she did not understand

News: 2021 Press Release

For Release: August 5, 2021
Media Calls Only: 916-492-3566
Email Inquiries: cdipress@insurance.ca.gov

Insurance company must repay 86-year-old customer after selling an annuity she did not understand
Department of Insurance action also leads to $150,000 penalty for Jefferson National Life Insurance Company

SACRAMENTO, Calif. — Insurance Commissioner Ricardo Lara announced that Jefferson National Life Insurance Company will return $14,000 in fees charged to an 86-year-old California consumer who purchased an annuity she did not understand – along with a $150,000 penalty for creating an annuity sales process that lacked consumer safeguards. The settlement with the California Department of Insurance comes after an accusation alleging violations of California law.

“My Department steps in when insurance companies do not diligently protect their senior customers,” said Commissioner Lara. “Thanks to our actions, this California consumer will be getting her money back, and this company has implemented new protections to prevent abuses like this in the future.”

In 2018, the Department was notified of the sale of two Jefferson National variable annuities worth approximately $690,000 to an 86-year-old consumer in San Francisco. The consumer, who acted on her investment adviser’s recommendation, later stated she did not understand what a variable annuity was or how much she had invested in the products.

The Department alleged that Jefferson National did not have sufficient protections in place to protect consumers. Its only involvement in this process was that its licensed insurance agent simply had to sign the purchase application for the annuity. The process did not require the company to directly interact with consumers to confirm that they understood the terms of the annuities they were buying, or that the annuities were suitable for consumers’ needs.

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Media notes:



Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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