Insurance commissioner announces settlement with National Western
April 25, 2011 by N/A
Sacramento Business Journal
Date: Friday, April 22, 2011, 2:59pm PDT
California Insurance Commissioner Dave Jones announced in a statement Friday that more than $17 million was to be distributed to 3,274 who purchased annuities from National Western Life Insurance Co.
The Department of Insurance got involved in 2005, alleging that a former life insurance agent, Ezra Chapman, sold an annuity to a 83-year-old widow, telling her she would never lose money under the contract, according to the statement.
Instead, the lawsuit alleged, the agent didn’t disclose that National Western would apply surrender penalties if she withdrew money or died within a 15-year period. Because she died during that time, 25 percent was deducted from her annuity, depriving her beneficiary of that amount.
“This case demonstrates why I have taken steps to issue regulations aimed at stopping the sale of unsuitable annuities to unsuspecting seniors,” Jones said in statement.
The insurance agent, Chapman, had his insurance agent revoked. As part of the settlement, Austin, Texas-based National Western has agreed to change its business practices, according to the Department of Insurance.