It has been suggested that some bloodthirsty law firm may soon flood the cable TV airwaves with ads asking, “Are you a senior who bought an indexed annuity? If so, you may be eligible to recover damages in a legal action…”
That’s the kind of door the “theft” conviction in the California court case of Glenn Neasham seems to have opened. Neasham is the independent insurance agent who sold a $175,000 Allianz MasterDex 10 annuity to an 83-year-old woman in 2008. There are several key questions surrounding the specifics of the case, including whether or not she had shown signs of dementia by the time of the sale — and far too many to address in limited space here. (Read as much background about it as you have time for by typing “Glenn Neasham” into the search box at www.LifeHealthPro.com and www.ProducersWeb.com.)
But one thing’s for sure: independent annuity producers are running scared in the wake of the Feb. 29 verdict, which has Neasham in financial ruin and scheduled to serve 60 days in jail starting April 18, pending an appeal. They are justifiably spooked that the case could set a damning precedent that puts annuity producers at risk. They worry that this is not necessarily a unique set of circumstances that won’t be duplicated.
Who’s going to stand up for them? If the Neasham case has taught us anything, it’s that the independent producer is essentially on his own if legal action emerges in a situation such as this. Keep that in mind. While many fellow producers have rallied around Neasham, claiming he has been railroaded by pretty much everyone involved, annuity carriers and industry trade organizations have remained deafeningly silent. The lesson: don’t count on the carrier to stand behind you, and don’t plan on any industry trade groups to step up on your behalf, either. I have come across no statements of support from any industry organization.
The result may well be that a significant number of independent producers might just stop selling FIAs to anyone who seems to be at any significant risk of being diagnosed with dementia or Alzheimer’s within five years of the time of sale. How far do you need to go to protect yourself? Would a signed, notarized document from the client’s doctor certifying their mental competency at the time of the sale do it?
I’ve read several dozen remarks from producers who have chimed in via the comment boxes below the many articles that have been written about this case. The underlying theme seems to be that whenever there’s any doubt, just walk away.
I fear that as a result of this case as it stands now, they will be walking away an awful lot.