Morning Coffee Mar 20 2012

How Not to Sell Annuities

By damian ghigliotty

There's no doubt that annuities are one of the most complex insurance products to sell. With their various returns and permutations, it can take months for an insurance agent to pitch one properly to a client. Buyers may need at least three or four in-person meetings each lasting two hours before they feel comfortable investing.

Which is why Glenn Neasham's experience is such a cautionary tale.

Neasham, a 52-year-old independent insurance agent from California, was convicted of theft as a felony charge for selling one of his annuity life insurance products to an 83-year-old woman who prosecutors say was in the early stages of dementia. As a result, he quickly went from earning $500,000 a year to seeking donations for legal fees, The Wall Street Journal reported.

Neasham has said in his defense that the client he sold to appeared fine and showed no signs of confusion at the time of the transaction, which was in 2008. But his story is stirring up fears among others in the field. Arthur Rudnick, an agent living in White Plains, N.Y., told the Journal that Neasham's case will remain in the back of his my mind when dealing with elderly clients.

With so many baby boomers seeking annuities as a way to hedge against declining returns from their retirement nest eggs, now, more than ever, Rudnick said, he's willing to walk away from a potential sale. A lesson that other agents may do well to heed.

Related: The Art of Selling an Annuity

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