EGF man: Company misled him on annuity
ST. PAUL - Joseph Grenier doesn't like having to die before he can recoup money he invested five years ago. But that's what the 77-year-old East Grand Forks man and other Minnesotans discovered when they closely read paperwork accompanying invest...
ST. PAUL - Joseph Grenier doesn't like having to die before he can recoup money he invested five years ago.
But that's what the 77-year-old East Grand Forks man and other Minnesotans discovered when they closely read paperwork accompanying investment annuities they bought from a West Des Moines, Iowa, firm.
Minnesota Attorney General Lori Swanson is taking Midland National Life Insurance Co. to court, claiming it never should have sold Grenier and others annuities that held their money without giving them a chance to get it back. She's using a state law that requires appropriate insurance be sold to Minnesotans. It's the third company Swanson sued during her 11 months in office, with one firm already settling with the state. Her office is investigating another dozen companies for similar violation.
"What really hurts is to find out your money is not doing anything for you," Grenier told reporters gathered for Swanson's announcement of the suit. "You have got to die to get it. Now that's not going to do me any good now, is it?"
Swanson's suit alleges that Midland broke a 20-year-old state law requiring an insurance company to sell an annuity suitable to a senior citizen. The suit also claims Midland's agents sold annuities to the elderly for up to 14 years, longer than some could afford to tie up their money. And the elderly face penalties of up to 25 percent if they try to withdraw their money early.
A top Midland official said the suit isn't needed, and the company is a national leader in resolving conflicts with policyholders.
"Before the lawsuit was filed, we asked the attorney general to identify any problems with any annuity and complaints," President Esfand Dinshaw of the Midland National's Annuity Division said. "The attorney general categorically refused. As we told the attorney general, if we had received information about a specific complaint, we would have reviewed the situation and taken appropriate measures."
An annuity is bought from an insurance company either with one lump-sum payment or over a period of time. In return, the company makes periodic payments to the policyholder.
"These policies are extremely complex and extremely confusing," Swanson said.
Swanson sued two other companies after their customers offered complaints similar to those who bought Midland policies. The state and Allianz Life Insurance Co. of North America settled in October. Allianz agreed to give 7,500 elderly Minnesotans a chance to get their money back and the company promised to change its practices.
A suit against another Iowa firm, American Equity Investment Life Insurance Co., remains ongoing.
Frank Taylor, a Midland attorney in Minneapolis, said the company will fight Swanson's suit.
Grenier, who taught mechanics at East Grand Forks and Crookston colleges, said his wife, Carol, did the family banking. But after she died of a stroke in 2002, an insurance agent suggested that he invest $50,000 from her life insurance policy in a Midland annuity. He did that and added another $8,000.
"At the time I was sold the annuity, I believed that I would be able to take money from it when needed without either surrender fees of paying penalties," he wrote in a court document.
Earlier this year, he discovered he would not be able to get his money until 2011. "I got nosy one day," he said, and looked through his policy.
He didn't try to withdraw any money from the policy, but he said bills such as $6,000 to pay for a new roof make his finances rough.
"It is nice to have a little backup," he said.
When he bought the annuity policy, Grenier said, "I didn't want to be tempted" to spend it and did not mind tying up his money.
Davis reports for Forum Communications Co., which owns the Herald.