National

Annuity sales to elderly worry regulators

Raleigh resident Rosalie Whittington was 80 and had dementia when an insurance agent sold her more than $200,000 worth of annuities designed to provide monthly income — when she was 105.

An even larger investment, bought from the same agent during late 2006 and early 2007, was crafted to start paying off in monthly installments — when the federal retiree was 90.

Skyrocketing annuities sales, totaling $24.8 billion nationally last year, are causing high levels of concern for state and federal regulators, as well as families of elderly investors, who may be effectively locked out of their own assets for decades at a time. Annuities are contracts between an insurance company and a buyer that provide income to the investor at a time set in advance.

"I personally would not recommend an annuity to someone of that age," said Mike Blawas, owner of Wakefield Financial Planning in Raleigh. "An annuity is a complicated product with very high fees and is usually only the right product for a very small percentage of investors."

In all, Whittington put more than $1 million — carefully assembled from savings and investments since 1960 -- into a complex type of policy known as equity-indexed annuities. A regulators group calls these instruments "among the most pervasive products involved in senior investment fraud."

Read the complete story at newsobserver.com

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