Los Angeles Daily Journal
January  25, 2005
Blair Clarkson

ANNUITIES COST ELDERS BILLIONS, LAWSUIT ALLEGES

Annuities Cost Seniors Billions, Suit Says

ABSTRACT

LOS ANGELES - John Migliaccio was retired and 73 when he and his wife, Carmen, paid $43,000 for a deferred annuity from Midland National Life Insurance Co.

What they didn't realize was that the annuity wouldn't pay out until 2045 - when John turned 115.

Migliaccio's attorney, William Shernoff, alleged in an elder-abuse suit filed Monday that Midland and other insurers increasingly have made a practice of selling annuities to senior citizens who won't live to see the benefits. The scheme is costing seniors billions of dollars, Shernoff added.

"It's alarming to me that the maturity date is so far out in the future," said Shernoff of Claremont's Shernoff Bidart & Darras, who filed the suit as a proposed class action. "It's illusory. No one's going to live that long to collect the annuity payments."

Chris Helton, manager of Midland's consumer affairs department, said he could not comment because he hadn't seen the suit.

Shernoff said that not only do the annuities mature well after a normal life expectancy but that seniors can't withdraw their money out early without incurring punishing surrender charges.

"Many times, seniors need to access their money for health care or other emergencies," he said, "but are hampered in doing so by penalties and surrender charges."

Shernoff is seeking return of premiums paid for the annuities. He believes the class with claims against Midland alone could exceed 10,000 seniors.

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