What You Need to Know
- California Insurance Commissioner Ricardo Lara levied the penalty.
- Life insurer also to repay $14,000 to senior client.
- Jefferson National created an annuity sales process that lacked consumer safeguards, the insurance commissioner said.
California Insurance Commissioner Ricardo Lara has levied a $150,000 penalty against Jefferson National Life Insurance Company for creating an annuity sales process that lacked consumer safeguards. Lara also ordered the life insurer to repay $14,000 to an 86-year-old consumer who purchased an annuity she didn’t understand.
Nationwide acquired Jefferson National in 2017.
According to the settlement agreement with the California Department of Insurance, the department was notified in 2018 of the sale of two Jefferson National variable annuities worth roughly $690,000 to an 86-year-old consumer in San Francisco.
The transactions were the result of a relationship the consumer formed with a bank-based financial advisor in 2008, according to another California department document.
The advisor left to start her own wealth management firm, and the consumer agreed to pay the advisor a fee equal to 1% of assets under management for advisory services. The consumer paid for part of the cost of the new annuities involved in the California department case with cash from older annuities issued by Genworth Life and AXA Equitable.
“The consumer, who acted on her investment adviser’s recommendation, later stated she did not understand what a variable annuity was or how much she had invested in the products,” according to the settlement agreement.