Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
June 26--The family of a chronically ill Auburn man who was unscrupulously persuaded into cashing in his life insurance policy will be repaid more than $160,000, the state insurance bureau announced Thursday.
Paul E. Richard, a Lewiston insurance agent who represented American Equity, allegedly advised the man to surrender a $100,000 life insurance policy that the man and his wife had paid premiums on for nearly 20 years, according to a Thursday news release from the bureau. The policy's cash value totaled just 12 percent of its death benefit.
Richard reportedly recommended that the couple use the $11,935 cash value of the policy, along with other assets, to buy several annuities totaling $46,770. Richard then received $4,775 in commissions on those annuities and "engaged in multiple deceptive acts to conceal his policy replacement activities," the investigation found.
The man, a former baker who lived in Auburn, was permanently disabled due to a work-related lung condition, according to the investigation conducted by the bureau's consumer health care division.
After the man died just over a year later, his wife filed a complaint with the bureau. Following a hearing, Richard's insurance producer license was revoked and he was ordered to pay a civil penalty of $12,500 to the state, which represented the maximum amount for each of 10 violations, along with restitution to the consumer equalling the commissions and fees Richard received, plus interest.
"Maine is fortunate to have a large number of insurance agents, agencies and companies that provide important products and services with integrity and concern for their clients," Gov. Paul LePage said in the news release. "In those cases, however, when consumers or business owners are taken advantage of, the Bureau of Insurance is available to provide guidance and to take effective action whenever possible."
Richard denied to investigators that the couple's decision to surrender the policy was the result of his recommendation.
American Equity terminated Richard, following its own investigation, and paid the consumer the lost value of the $100,000 insurance policy, plus interest. The company also refunded the purchase price of all three annuities plus interest, without imposing surrender penalties.
The investigation was closed last month, the news release states.
The bureau encourages consumers with questions about insurance to contact the agency at 1-800-300-5000 or Insurance.PFR@maine.gov.
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