New financial protection laws to help California seniors
California's elderly are about to get new protections against being victimized by unscrupulous financial product salesmen.
On Jan. 1, a new law takes effect to guard unsophisticated senior citizens from purchasing unneeded annuities that are not likely to provide them with promised financial security.
Annuities are a form of insurance that provide a guaranteed regular income to policyholders.
The law requires insurers to verify that an annuity purchase, replacement or exchange would provide the promised benefits based on a buyer's age, income, liquidity needs, financial goals and other factors. It also mandates that the seller prove that the annuity provides "a tangible net benefit" to its buyer.
The law empowers the state insurance commissioner to pull a sales agent's license, impose fines and demand restitution.
"For far too long, seniors have been victimized by the aggressive marketing and sale of annuity products that may not be suitable for them," California Insurance Commissioner Dave Jones said. "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."
Jones also alerted seniors about another new law that will prohibit financial product sellers from trying to sell unsuitable products to people who recently acquired reverse mortgages to gain access to cash to pay for living expenses.
-- Marc Lifsher
Photo: California Insurance Commissioner Dave Jones. Credit: Katie Falkenberg / For The Times