An annuity issuer is battling with a Minnesota official over the official’s allegations that the annuity issuer tied up older consumers’ savings for too long a period.
Minnesota Attorney General Lori Swanson has filed a suit against American Equity Investment Life Insurance Company, a unit of American Equity Investment Life Holding Company, West Des Moines, Iowa, in a state court in Hennepin County, Minn.
Swanson estimates American Equity sold about $46 million in long-term annuities from 2000 through 2006 to 1,200 Minnesota residents who were over 75 years of age at the time of purchase.
The annuities locked up the older purchasers’ savings for 10 to 16 years, and some of the annuities imposed a 25% surrender charge during early contract years, Swanson says in a statement about the Hennepin County suit.
“It was not uncommon for the insurance company to tie up over 50% of the senior citizen’s net worth,” Swanson says.
In the Hennepin County suit, Swanson has accused American Equity of violating state insurance suitability law and state laws dealing with fraud, false advertising and deceptive trade practices. The suit seeks restitution, injunctive relief and civil penalties.
Swanson filed a similar suit against another annuity issuer, Allianz Life Insurance Company of North America, Minneapolis, in January.