The Texas Department of Insurance (TDI) is advising
seniors to be cautious before handing over personal information to
anyone selling unsolicited life insurance policies or annuity
products.
TDI has recently been informed of suspicious sales practices
occurring throughout the United States involving insurance agents
obtaining personal, financial, and medical information from
seniors. In these cases, agents obtain the information by asking
seniors to complete studies or surveys or by asking nursing home
personnel to gather the information on their behalf.
Agents and companies are likely either using the personal
information to sell seniors an annuity product or selling the
information to entities involved with zero premium life insurance
arrangements. People or legal entities involved with zero premium
life insurance arrangements purchase a life insurance policy on
another person and pay the premiums to receive the majority of
death benefits. In exchange, the consumer typically receives a
lump sum payment or opts to have their beneficiaries receive a
portion of the death benefit.
Seniors are often targeted for insurance products because they are
more likely than others to feel they need the coverage, and many
worry that they’ll become a burden to family if they don’t have
enough insurance. Seniors considering purchasing coverage should
take precautions, including being wary of agents who:
• Contact you
unsolicited. Not all agents who contact you are
dishonest, but it is a good idea to be cautious.
•
Use high-pressure tactics. Common
tactics include offering a “last chance deal” or appealing to your
sympathy or emotions. Any decision to buy insurance should be made
rationally and be based on a sound assessment of your financial
needs.
•
Urge you to cash in an
existing annuity or life insurance policy to buy a new annuity,
life insurance policy, or other investment. Generally, annuities
and life insurance are worth more the longer you keep them.
Changing to a new annuity or policy can often cause you to lose
money over the first three to five years.
•
Claim to be from Medicare, Social
Security, or another government agency. The government
does not sell insurance. An agent or broker who claims to be
associated with the government is breaking the law.
In addition, TDI offers the following tips to seniors buying
insurance products:
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•
Carefully consider your need for life
insurance or an annuity. Older people whose children
are grown and independent are less likely to need life insurance.
A well-planned savings program can decrease a family’s need for
life insurance as wage earners near retirement age. If you are
already retired, an annuity is probably not a good option, as it
can take many years for the contract to become profitable.
Annuities are generally best used to provide for retirement when
purchased at least five to 10 years before you retire.
•
Get quotes from several companies.
Each insurance company uses its own underwriting guidelines. One
company may sell you a policy at a substantially lower premium
than another may.
•
Verify that the agent and company are
licensed. Agents and companies must be licensed in
Texas to sell insurance. To verify a license, visit the TDI
website at www.tdi.state.tx.us or call the Consumer Help Line at
1-800-252-3439.
•
Take your time to consider.
It’s probably not a good idea to purchase a policy on the first
visit with an agent. Take all the time you need to make a
decision. If you feel you are being pressured to make a decision
quickly, go elsewhere.
•
Ask for advice. If you need
help choosing a policy, have a friend or family member visit the
agent with you. The agent shouldn’t object. Also, consider seeking
advice from an accountant, attorney, or financial adviser.
•
Buy the policy that’s right for you.
The more a policy costs, the more an agent or broker typically
earns as a commission. When shopping for life insurance, keep in
mind that the policy that’s best for your agent or broker might
not be the best for your insurance needs.
•
Use your “free-look” period.
Most life insurance policies and annuities will provide you with a
10-day “free look” period during which time you can cancel the
contract for any reason and receive a full refund. If you are
replacing your life insurance policy or annuity contract, you have
a 30-day “free look” period. Use this time to reread the contract
and make sure it meets your financial needs.
For More Information or Assistance
For answers to general insurance questions, call the Consumer Help
Line at 1-800-252-3439.
TDI publishes two publications –
Understanding Annuities and Understanding Life
Insurance – to help consumers understand annuities and life
insurance. For printed copies of these or other consumer
publications, call the 24-hour Publications Order Line at
1-800-599-SHOP (7467).
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