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The Takeaway: Insurance Agent Jailed for Selling Annuity to 83-Year-Old With Dementia

Should Insurance Agents Recognize Dementia Signs? In California, independent insurance agent Glenn Neasham was sentenced to 90 days in jail for selling a complicated annuity plan to an 83-year-old woman who shows signs of dementia, according to the Wall Street Journal. It's a case that has elder abuse advocates cheering, but which, the journal notes, sends "shivers down the spines" of American insurance agents.

It's very scary," said Peter Langelier, an agent in Maine. "There is nothing in insurance-licensing that prepares you as a nonmedical person to diagnose dementia."

Neasham, 52, said the woman in question, Fran Schuber, appeared to be functioning fine when he sold her an indexed annuity plan in 2008. Her boyfriend Louis Jochim had bought an indexed annuity from Neasham several years earlier, and recommended the plan to Schuber.

It was a bank manager who notified California's adult protective services, saying Schuber seemed confused and influenced by Jochim when the couple came in to withdraw $175,000 from her savings for the purchase. In a court filing, District Attorney Rachel Abelson said there was "sufficient evidence presented [at trial] to show that Fran Schuber was not capable of consenting to the transaction in question and evidence showed that [Mr. Neasham] knew that at the time."

Interest in indexed annuities, which pay interest tied to stock- and bond-market indexes, has soared in recent years, with sales quadrupling in the past decade. Savers are drawn by low-interest rates and a guarantee that they won't lose any of their principle. But in return they face steep penalties for early withdraws. And commissions for insurance agents can be 12 percent or more.

Neasham's 8 percent commission on his annuity sale to Schuber would have netted him $14,000. If Schuber had decided to pull out money within the first year of ownership, she'd have had to pay a penalty equal to 12.5 percent of the principal.

Monday Quick Hits: 

  • In 2011, Medicare recipients saved $2.16 billion collectively through prescription medicine discounts put in place by the 2010 health care law. The law set up a 50 percent discount on drugs in the "doughnut hole," the gap between traditional and catastrophic coverage in the Medicare Part D drug benefit.
  • Barry Bluestone, a professor at Boston's Northeastern University in Boston, says we're going to see "a whole lot of new types of jobs developed, especially for people who are delaying retirement or going into encore careers.
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