Responding to Recent U.S. Census Data Insurance Commissioner Dave Jones Reminds Seniors New Annuity Protections Take Effect January 1, 2012
News: 2011 Press Release
Responding to new U.S. Census data released this week indicating a rapidly-growing older population, Insurance Commissioner Dave Jones today reminded consumers that new sweeping annuity protections take effect January 1, 2012.
"For far too long, seniors have been victimized by the aggressive marketing and sale of annuity products that may not be suitable for them," said Commissioner Jones. "Consumers have unwittingly bought these products not realizing that their invested funds will not be available to them, or their funds are terribly expensive to recover if they want to withdraw their money to pay for immediate expenses. This can be financially devastating to seniors on a fixed income. A new law, AB 689, sponsored by the Department, will help protect the hard-earned financial security of the growing number of older Californians."
New census figures show the number of individuals 65 and older is rising faster than the total U.S. population. According to the 2010 Census, there were 40.3 million people in that age group - increasing by 5.3 million since the 2000 Census.
"These statistics point to an even greater need for the new law, which gives us the tools to go after scam artists preying on innocent seniors," said Commissioner Jones.
AB 689 will require insurers to verify that an annuity purchase, replacement or exchange is reasonably suitable for the consumer based on an evaluation of the individual's age, income, liquidity needs and financial objectives, among other factors. It also requires that a consumer receive a tangible net benefit from the purchase of the annuity. The Commissioner can revoke an agent's license, impose fines, and/or order that lost funds be restored to the consumer when unsuitable annuity is sold.
Another new law, taking effect in January, will protect seniors from being persuaded to use the proceeds of a reverse mortgage to buy unsuitable insurance products. AB 793, sponsored by the Department, will stop agents and brokers - knowing a senior has just acquired a reverse mortgage - from soliciting those same funds from the individual for a non-casualty insurance product.
"A reverse mortgage should be a senior's last option when needing cash to meet an immediate need," said Commissioner Jones. "This new law will help return the concept of a reverse mortgage to its original intent and protect seniors from being sold something they simply don't need."
Commissioner Jones encourages consumers to learn more about their options by visiting the California Department of insurance web site at www.insurance.ca.gov.
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.
