To Catch a Middle Aged Insurance Agent

Apparently, Chris Hansen of Dateline NBC after, numerous versions of his ‘To Catch a Predator’ series, has run out of child molesters to catch on hidden camera. In his current sting operation entitled ‘Tricks of the Trade’ Mr. Hansen isn’t going after drug pushers, or pimps or even sweat shops. No, instead he’s focused his energy on the most nefarious operators out there, the unsuspecting, middle aged insurance salesmen pushing annuities on the elderly.

Thank God investigative journalism isn’t dead quite yet.

Now, I’m being a little facetious when I bag on Mr. Hansen for going after insurance agents. I will be the first to admit that there are unscrupulous agents out there selling annuities with long surrender periods to elderly clients that almost certainly won’t survive long enough to get out of, simply to earn a commission.

At issue in this particular piece was the sale of Equity Indexed Annuities. The selling point of these annuities is that you get some exposure to the returns of the stock market but you are protected from loss by a guaranteed minimum interest rate.  Sounds simple enough.  The problem is that there are many options in how your interest rate is calculated, the types of guarantees, length of surrender period and any number of other variables to be considered.   In fact, despite the way they’re sold, these types of annuities, by their nature are complex with many moving parts.

If you have an elderly client, friend or relative and they indicate there’s a salesman coming to talk to them, do them a favor and make time in your schedule to be there for the presentation, or be sure your trusted financial professional looks over any presentation before they sign.  You’ll save everybody a tremendous amount of grief.

Equity indexed annuities are not bad in and of themselves.  As I’ve said many times, most financial products aren’t bad, they’re just sold that way.