We’ve been meaning to mention this story, reported in the Wall Street Journal on March 18, 2012:
Last month, Glenn Neasham, an independent insurance agent, was ordered to spend 90 days in jail on a felony-theft conviction for selling a complex annuity to an 83-year-old woman who prosecutors alleged had shown signs of dementia.
The agent’s conviction, by a state-court jury in Lake County, Calif., is sending shivers down the spines of Mr. Neasham’s peers across the country. They can’t recall another case where an agent was sent behind bars for selling an annuity.
In an interview, [Lake County Senior Deputy District Attorney Rachel] Abelson said a $14,000, or 8%, commission “played into his criminal intent.”
The agent here was selling an indexed annuity, which is not quite the same as a variable annuity though no less questionable. Nevertheless, we have to laugh because Mr. Neasham’s impending visit to the pokey brought to mind one of our favorite articles about the awfulness of variable annuities in general and the scandalous way so many agents sell these obscenely expensive and unsuitable products to seniors.
In the article, an August 2004 Newsweek column by Jane Bryant Quinn, the author savaged variable annuities and said she’d like to “blow them to smithereens.” But the part of the Quinn article that’s most relevant here are the remarks of actuary John Biggs, former chair of TIAA-CREF. Biggs was quoted as saying, “I cannot imagine a personal financial situation where I’d recommend a VA as a good idea.” The article concluded with this prediction from Biggs:
Biggs says, darkly, that five years from now insurance execs will be marched, handcuffed, through courts to answer for the way they sell VAs today. It can’t happen too soon.
If you think you may have suffered losses or gotten stuck in an unsuitable variable annuity or indexed annuity, we’ll review your account without cost or obligation and tell you whether we can help you recover all or some of your money.