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GALLAGHER ANNOUNCES LEGISLATION TO STOP ABUSIVE SALES PRACTICES OF ANNUITIES SOLD TO SENIORS
Florida’s Chief Financial Officer Tom Gallagher announced that he is pursuing a bill to prevent abusive sales practices of annuities sold to seniors. An annuity is an insurance contract that offers a guaranteed series of payments over a period of time.
“Annuities can be an effective investment tool for many Floridians wanting a steady stream of income for retirement,” said Gallagher. “But some of our state’s seniors are being preyed upon by agents who are motivated by commission payments, not consideration of a senior’s financial circumstances. We need to hold companies and agents accountable for the products they sell and the investment advice they give.”
Ellen Daniels from Tampa agrees something needs to be done. Daniels’ mother, despite being terminally ill, was convinced to purchase an annuity that was unsuitable. As a result, when extra money was needed for medical bills, the family faced large surrender charges in order to obtain funds from the annuity.
Peter Cantanese, the insurance agent who sold the annuities to the Daniels family also churned multiple annuity policies, rolling existing annuities into new policies and costing the family thousands of dollars in surrender charges. Later he misappropriated $30,000 in additional funds from Daniels’ relatives, for which he was later convicted of Grand Theft. The department is now seeking to revoke his insurance license.
Under the legislation, insurance companies and agents offering annuity products to seniors over the age of 65 would be required to clearly document the basis for selling the product, including consideration of a senior’s financial and tax status, as well as investment objectives.
House Bill 965, sponsored by Representative Dave Murzin, would also give the Department of Financial Services and the Office of Insurance Regulation the authority to take corrective action if a company or agent violated the law. Senator Jeff Atwater is sponsoring the Senate version.
The department has heard from hundreds of seniors and their families who say they were convinced to liquidate CDs, stocks and savings accounts to fund annuities only to discover these actions robbed them of their savings.
Florida is currently home to more than 2.9 million Floridians over the age of 65. According to Gallagher, the state’s senior population is projected to grow by as much as 30 percent, and many of these seniors will look into investing in annuities. Seniors may consider purchasing an “immediate” annuity, where payments begin right away, or “deferred” annuities, which accumulate savings over a period of time before payments begin.