Insurance Agent’s Jail Time In Annuity Case Serves as Warning to
Other Insurance Agents
While regulators and various state authorities
continue to be disturbed by the sale of “indexed” annuities, insurance agents continue to sell them. After all, the marketing pitch
is great (“guaranteed” principal protection), the commissions
(often 12% or more) are too enticing to pass up, and regulators’
unease never really seemed to be an issue.
That is, until last month, when Glenn Neasham, an independent insurance
sentenced to 90 days in jail for selling just such an annuity to an 83-year-old woman who may have
shown signs of dementia.
The State of California alleged that Neasham, doing business as Glenn
Neasham Insurance Agency, sold a $175,000 annuity to an 83-year-old woman
who supposedly lacked the mental capacity to enter into the contract.
The annuity’s purchase required her to withdraw her savings from
a certificate of deposit, which investigators alleged was not in her best
"Insurance agents or brokers who steal from vulnerable seniors will
not get away with their shameful tricks,"
said Commissioner Poizner in a 2010 press release. "CDI investigators will continue working to track down any unscrupulous
agent who preys on California's seniors."
As expected, Neasham asserted in his defense that the woman seemed mentally
competent when he sold her the annuity, and that he felt he had acted
appropriately. It’s worth asking, however, how any insurance agent
can say they “acted appropriately” when selling sucha clearly inappropriate product to seniors, especially when dementia is one of the most common ailments in the elderly.
(It currently affectsfour to five million Americans, and the numbers are growing.)
Hopefully, the conviction against Neasham will serve as a warning to other
insurance agents that they can be held responsible for selling complex
annuities to people who do not understand the risks and downfalls of such products.