A national life insurer paid more than $17 million to 3,274 senior citizens who purchased annuities to settle a class-action lawsuit against it for targeting senior citizens.
The case, Clark v. National Western Life Insurance Co., alleged that former life insurance agent Ezra Chapman sold a National Western contract to a widow, 83, under the pretense that she would never lose money, according to the California Department of Insurance (CDI).
Chapman allegedly failed to disclose to the woman that National Western would apply surrender penalties if she withdrew money or if she died during the 15-year surrender penalty period, the CDI reported.
She died during that time, and National Western deducted 25% as a penalty, denying her beneficiary the entire amount of the annuity, the department reported.
The CDI said it intervened in the case in 2005.
National Western’s business plan targeted selling annuities to seniors, the CDI said. The suit alleged the company set up an unlawful group annuity policy that was issued through an out-of-state group created by National Western, and that the company sold the annuity to individual senior citizens, rather than to members of any groups.
“The company created the plan to avoid California consumer protection statutes and other state laws that protect, not only the elderly, but all citizens against inappropriate annuity products and sales practices,” Insurance Commissioner Dave Jones said in a statement.
Ezra Chapman’s insurance agent license was revoked and he faces an injunction which would prohibit him from getting it back.
National Western, as part of the settlement, also is subject to an injunction and agreed to change its business practices, officials said.
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- Annuity lawsuit nets seniors $17 million – Fresno Bee « Brokers News Center
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