Predatory Insurance Sales Practices

These practices involve insurance agents holding informational meetings or seminars about finances, living trusts as a way to avoid probate, or insurance investments that guarantee you will not outlive your retirement savings. These sessions are often held in senior centers, religious institutions, and restaurants. Attendees are required to sign in and give the agent their names, addresses, and phone numbers. Some time after the session the agent, who may claim to be a “specialist” or “advisor,” will contact the attendees to set up a meeting in their homes. It is in these one-on-one meetings that attendees can get pressured into buying an insurance product that is completely inappropriate for their needs. .  If you attend one of these information sessions you should not give any personal information to the agent.  And you should talk to a trusted advisor before making any changes in your investments and insurance.  Beware of limited-time offers and other tactics used to force you into a quick decision.

Although the vast majority of life insurance agents are honest, there are some who take advantage of persons whose trust they have gained, especially seniors, and take money from them to buy unnecessary insurance or annuities with promises of high returns.  In some cases these financial predators convert the money to their own use.

To prevent this fraud you should first check the agent’s license.  It is required to be printed on all business cards, quotes, and advertisements.  You can check it on the California Department of Insurance (CDI) website at www.insurance.ca.gov.  Look under Agents & Brokers for the page entitled Checking License Status.  You can check by name or license number.  You should also check out the insurance company.  In the CDI website look under Seniors on the page entitled Before You Buy Insurance and click on Check out the Insurance Company to verify that it is authorized to conduct business in California.  You can also get this information by calling the CDI at (800) 927-4357 between 8 a.m. and 5 p.m. Monday through Friday.

Then for the sale of a life insurance or annuity policy in your home, you must receive a written notice from the agent at least 24 hours before the meeting.  The notice must include the reason for the meeting, and the names, license numbers, and phone numbers of all persons coming to your home.  It must also state that: (1) others are invited to attend, e.g., family and friends, (2) you have the right to end the meeting at any time, (3) you have the right to contact the CDI for more information or to lodge a complaint, and (4) prior to purchase of a life or annuity policy you are entitled to a full disclosure of all surrender charges and related time frames in connection with the purchase.  You must also be provided with all information relating to benefits and negative consequences regarding the replacement of an existing policy or annuity.

If you purchase a policy or annuity, you then have 30 days to review it, and it you return it by the 30th day after you receive it, you are entitled to a full refund of your premium in a timely manner.  If you believe you’ve been the target of insurance fraud, call the CDI consumer hotline at (800) 927-4357 between 8 a.m. and 5 p.m. Monday through Friday.