GOVERNOR SIGNS PREDATORY ANNUITIES PREVENTION ACT

GOVERNOR SIGNS PREDATORY ANNUITIES PREVENTION ACT 

PRINCETON - Governor Jon S. Corzine today signed legislation to protect vulnerable consumers from predatory annuity sales. The bill, A2252/S1165, is based on three national model regulations that comprehensively address issues regarding the marketing of annuities, particularly to senior citizens.

“We’re here today to put a stop to the deceptive practices that lead a vulnerable population to lose much of their hard-earned savings,” said Governor Corzine. “With nearly $15 trillion dollars invested by people over the age of 50 in this nation, the senior population is very dependent on their investments yet susceptible to disingenuous investment practices. This important bill, spearheaded by our friends at the AARP and embraced by committed legislators, seeks to protect unsuspecting New Jersey seniors from dangerously risky annuities.”

The bill provides certain requirements for marketing, information disclosure and product suitability. It prohibits those who sell annuities from falsely representing their expertise on marketing materials. Under the new law, unsubstantiated claims of expertise could result in loss of license. In addition, annuities salespersons are required to fill out disclosure forms that clearly outline the important facts of the purchase to the buyer, the investment objectives as well as contract terms. The buyer then has a 10-day right to cancel with no financial penalty.

It is estimated that Americans lose about $10 billion dollars each year in fraudulent investments.

 “This bill will prevent unscrupulous insurance brokers from using inaccurate puffed up titles such as ‘elder financial expert’ to describe themselves when selling annuities to seniors.  It will also require a higher level of real disclosure to seniors so that they can be better informed when planning for their futures” said DOBI Commissioner Steven M. Goldman. “The Department of Banking and Insurance worked very closely with the sponsors, AARP, and the responsible participants in the industry to come up with a system that can serve as a national model on this issue.” 

“This new law will help local residents - namely our seniors - protect their hard-earned finances from the deceptive practices of dishonest financial advisors and brokers,” said Senator John H. Adler, (D-Camden).  “‘Get-rich-quick’ schemes have been around since the beginning of time, but this law will send a clear message that we will not allow the much-needed finances of our seniors to be compromised.”

“Residents looking to invest for their retirements deserve every assurance that their hard-earned money is being handled by trained and certified financial experts,” said Assemblywoman Linda R. Greenstein (D-Middlesex/Mercer). “Protecting residents from receiving bad advice from bogus advisors is essential, especially in these times of financial uncertainty.”

Primary sponsors of the legislation include Senators John H. Adler (D-Camden) and Robert W. Singer (R-Burlington/Mercer/Monmouth/Ocean), Assemblywomen Linda R. Greenstein (D-Middlesex/Mercer) and Nilsa Cruz-Perez (D-Camden/Gloucester) and Assemblymen Anthony Chiappone (D-Hudson) and John F. McKeon (D-Essex).

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