There’s a lot of action in the life settlement world these days, some good and some bad. A class-action lawsuit against American Equity Investment Life Insurance Co. resulted in over $16 million in damages awarded to seniors across the country. As many as 24,000 seniors who purchased deferred annuities were rewarded in the settlement.
The suit was initially filed in 2001 and covers the period from 1997 to 2007, when, according to the suit, American Equity and a Dallas-based legal and insurance marketing firm participated in a living trust mill. Insurance agents encouraged elderly couples to buy a living trust, then, posing as representatives of the law firm, Advanced Legal Marketing Services and Addison Insurance Marketing, persuaded the victims to sell those trusts for deferred annuities.
American Equity has agreed to annuitize victims’ funds with a 2.4 percent bonus and to waive any penalties they might have incurred. American Equity has also agreed not to sell deferred annuities when it knows sales leads were obtained through living trusts.
On the other hand, Hawaii Gov. Linda Lingle recently signed into law a bill that will protect consumers from fraudulent sales practices by requiring brokers and insurance salesmen who deal with life settlement to be licensed, as well as allowing the Department of Commerce and Consumer Affairs to investigate those involved in these transactions.