PhotoWarning -- annuities can be hazardous to your financial health, as a fraud case in California illustrates. Palm Desert insurance agent John Slawinski, 60, was sentenced to more than nine years in prison earlier this week and ordered to pay $3.4 million in restitution for an annuities scam that targeted elderly victims.

“It is important that we protect the victims of crime and this case shows how seriously we take the crime of elder abuse, whether that abuse is physical, mental, or financial,” said Riverside County District Attorney Mike Hestrin. “When a victim loses much or all of their life savings later in life, that loss can be devastating.”

Slawinski was sentenced to nine years and four months in prison by Superior Court Judge Helios Hernandez and was ordered to pay restitution of more than $2.8 million to 13 separate victims – all in their 70s or 80s -- as well as an additional $261,667 to the California Department of Insurance and $285,902 to the California Franchise Tax Board.

What to do

Of course, not all annuities are bad. In fact, an annuity can provide a degree of financial security that many other investments can if it is properly structured and suited to an individual consumer's needs.

But unfortunately, seniors are often the target of unscrupulous annuity salesmen. They are prime targets because they generally have more assets than younger people and are frequently afraid of outliving their wealth.

While an appropriate annuity can provide improved financial security later in life, an inappropriate annuity can simply lock up a consumer's money for years or even decades.

Annuities are insurance products but consumers, elderly or otherwise, are generally better off dealing with a Certified Financial Planner (CFP) rather than someone whose primary business is selling insurance.

Certified financial planners are required to pass stringent certification exams and adhere to certain ethical standards and can usually offer a much broader range of annuity products. The Financial Planning Association has a searchable database that will help you find an advisor in your community. Consumer review sites like ConsumerAffairs publish reviews of major annuities underwriters and can also be a good source of information.

Simply choosing a local insurance agent or someone who solicits your business via the phone or Internet is generally not a good idea. Many annuities are not suitable for older consumers and, since all annuities are complex, making the right choice requires a knowledgeable and ethical financial advisor.

Consumers should also seek a third party's advice before purchasing an annuity. A trusted attorney or accountant is the best choice but a knowledgeable relative or friend may also be helpful.


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