New Jersey Predatory Annuities Prevention Act Received National Attention

By: State: New Jersey |

Governor Corzine signed the Predatory Annuities Prevention Act into law, and effectively helped put an end to the dishonest sales practices used by some unscrupulous annuity salespeople.

The Predatory Annuities Prevention Act (S1165/A2252) was unanimously passed by the New Jersey Legislature, and will help protect consumers through three major provisions. First, annuity salespeople will not be able to claim false titles of senior financial expertise on their marketing materials. Secondly, annuity salespeople will be required to fill out disclosure and suitability forms to clearly lay out the terms and agreements of a customer's investment. Finally, the Act provides consumers with a 10-day right to cancel period, during which an annuity can be cancelled free of financial charges.

Marilyn Askin, AARP New Jersey Chief Legislative Advocate, said these three provisions will help put consumers back in control of the annuities market.

"While annuities can be a responsible investment and most annuity salespeople are honest, the market is ripe for fraud," said Askin. "This bill will protect potential victims from unscrupulous salespeople who are forcefully peddling inappropriate annuities to New Jersey residents."

An annuity is an insurance contract in which a customer invests money on a tax-deferred basis, to be distributed regularly after a period of several years. Many annuities' terms are 10-20 years, making them unsuitable financial vehicles for those in their seventies and eighties who often face unplanned expenses and need their savings to be more accessible. Excessive early withdrawal fees can cause harsh financial consequences.

Senator John H. Adler (D-6), Senator Robert W. Singer (R-30), and Assemblywoman Linda R. Greenstein (D-14) were the lead co-sponsors of the Predatory Annuities Prevention Act.

The Predatory Annuities Prevention Act stems from various media reports highlighting sometimes tragic effects of unscrupulous annuity sales practices including an April 13 episode of Dateline NBC titled "Tricks of the Trade" exposed the predatory practices of some annuity salespeople.

Reporters from Dateline NBC attended the bill signing ceremony, and published a follow-up piece available on their Web site.

"AARP thanks Governor Corzine, Senators Adler and Singer, Assemblywoman Greenstein, and the entire New Jersey State Legislature for all their work on this important law," said Sy Larson, AARP New Jersey State President. "This law should empower consumers to put an end to the deceitful tactics used by annuity salespeople once and for all."

Other Resources

Tricks of the Trade web feature created by Dateline NBC