Annunities – a good tool but with abuse potential

Joseph H. Aughtman (Shareholder, Beasley Allen Law Firm, Montgomery, AL) has recently published his article entitled The Annuity Conundrum: Responding to the Abuse of Elderly Investors, The Brief, Fall 2008, at 39.

Here is a summary of his article:

Unlike retirement plans, there is no limit as to how much one can invest in annuities, under which an investor provides principal for which the issuer guarantees fixed or variable payments over time. Typically issued by insurance companies, annuities are marketed as instruments to protect investors’ principal. A lawyer specializing in insurance and financial services class actions explains how annuities have been used as instruments to defraud investors—especially senior citizens—and how plaintiffs firms have initiated class actions to curb such fraudulent practices.