Mr. Porfirio knew or should have known this. To ensure the couple understood what they were purchasing, Mr. Porfirio drew up a letter of understanding for their signature. It listed these highlights:
- The annuity was guaranteed by the WA State Guaranty Fund
- The annuity was being purchased as a simplified way to access funds to cover HHC expenses
- The annuity was being purchased to ensure adequate retirement income
- The annuity was being purchased to establish an emergency fund with easy access to unforeseen expenses
Here are the findings of fact by the Insurance Commissioner regarding the American National annuity that Mr. Porfirio (seemingly) obscured (Read the case here):
- It contained a 10-year surrender schedule (listed only as 10 year declining), and a 10-percent-per-year free withdrawal cap (this limitation was not listed at all by the agent).
- Its nursing home expense waiver and disability insurance waiver had upper age limits of 80 and 65 respectively, which neither qualified for.
- Due to their ages, neither of the consumers qualified to be the annuitants (maximum age 85). The couple was therefore listed as owners, and their son as the annuitant (giving rise to a 37-year amortization schedule).
The American National annuity was funded in part by a 2002 annuity: This replacement was not listed. One year later in 2011, the couple needed full-time home care totaling $15,000 per month. The annuity they purchased as a simplified way to cover those expenses only permitted around $3,600 per month in penalty-free withdrawals. Anything more would’ve incurred substantial penalties. Fortunately, we are told, American National did right by the customers and allowed them to terminate the unsuitable policy without penalty and receive their money back. Mr. Porfirio was found guilty of several Washington regulations, including the following:
- Misrepresenting the terms of a policy.
- Using the existence of the WA Insurance Guaranty Association in connection with a sale or solicitation.
- Recommending an unsuitable annuity.
- Failing to disclose a replacement.
- Failing to disclose the penalties and surrender fees in connection with an annuity.
And to make it all go away? He paid a $2,000 fine. Quite different from Glenn Neasham’s story, isn’t it? In Glenn’s case, there was reasonable doubt whether his client was cognitively impaired. Yet in this case, Mr. Porfirio knew.
Do we not throw the book at Mr. Porfirio because the son had power of attorney and was present? Or because Washington state does not have the powerful elder financial abuse laws (and prosecutorial saliva) that California has? What do you think? Would Glenn’s case have been different had it happened in your state? Would Mr. Porfirio have received harsher justice had he practiced in California? Please tell me below.