Warn Your Grandparents (or Parents)

This story (may require a subscription) in the Wall Street Journal burned my hide. As if seniors don't have enough issues facing them, being tricked into estate planning with insurance companies shouldn't be high on their list of worries.



So here's the scam. A sweet little ol' lady gets a post card in the mail that says - "The government is going to take away your medicare" or "Get Free Estate Planning" or even "Your Estate Will be Wiped Out by Taxes".

"Some cards gush about sweepstakes prizes, and returns may be used by marketers in any number of industries. But state regulators say the most ubiquitous type of card is delivered to seniors on behalf of insurers. Often plastered with American flags, such cards may cite "changes in your Medicare benefits" or
mention "new legislation" passed by Congress that will "affect you and your heirs" -- along with references to research by federal agencies or AARP on how to handle such changes."

Sweet little ol' lady (SLOL) is concerned and fills out and returns the card for her 'free' information, thinking the card is sponsored by a government agency or AARP. Not so much. Said ol' lady then gets a phone call to set up a meeting with an 'estate planner' who then goes on to convince her to transfer her life savings into some mutual fund or insurance policy.

"During their meeting, she recalls, he "asked me what I had in stocks and bonds" and convinced her to move her $170,000 IRA, invested in mutual funds, to an American Investors deferred annuity. She says she only realized later that she was limited to withdrawing 10% a year. Any withdrawals beyond that sum were subject to a penalty as high as 17% in some cases, the state complaint says. "

Most of these policies have huge fees for premature withdrawal and tie up SLOL's funds when she needs them most. The story includes one gentleman who's money was restricted from him until he turned 90!

"Soon after they mailed the reply, a living-trust marketer, and then an insurance agent, showed up at the couple's Morganton, N.C., home, Mr. Williams said in an affidavit filed in state Superior Court in Raleigh. Mr. Williams, an 83-year-old retired factory worker, says the agent talked him into transferring much of the
couple's $179,000 nest egg into annuities that barred them from tapping the bulk of their money, unless they paid high penalties, until Mr. Williams was nearly 90. The commission on such products is typically 9.5%"

My full time job is in the financial world. I'm not a financial planner or anything but even I know that when you're retired - the whole point of your retirement funds is to live! Not to invest your money and then not be able to touch it. That's where I am in life, not where my grandfather is.



These slimey tactics are how companies are currently getting around the "Do Not Call" registries. Be sure to warn your grandparents and parents (well, you too I guess) to not fill out any kind of card that offers "free" assistance and definitely check into who is trying to sell you stuff. Nothing in life is free...my mama taught me that!