Financial Abuse, Seniors and Insurance Products

Originally when the first Reverse loans were available, some of the funds from the loan were used to purchase an annuity.   But, this has not been the case for many years, especially now that the federal government oversees the loan program and regulates it in a manner to protect seniors.

Since I have been in the industry, there have been many occasions when I have been approached by a Financial planner, wondering if I could refer my clients to them for the purchase of annuities or investments.

I would never suggest that funds from a Reverse loan be used this way & honestly, I’m offended by their suggestion.   Money that a senior receives from a Reverse loan are not intended to be used for  investments and certainly not for any annuities.   The only insurance product that I believe has any merit, would be Long Term Care, which I happen to have for myself.

The loan application and the loan documents, cover these issues very thoroughly and purchasing an annuity is not a condition to close on a Reverse loan.   If I am approached by anyone wishing to “team up” with me to sell their products, they get a very polite “no” and I also inform them that HUD will not allow this.

California is in the process of updating protections for the senior community through AB 329, The Reverse Mortgage Elder Protection Act. It was just passed by California’s Senate Committee on Banking, Finance & Insurance on June 16th. and is now on it’s way to the Committee on Judiciary for further consideration.

If this Bills passes, there will be a notice that must be provided by the Reverse loan lender, prior to any application.  Following is that verbiage:

Senior Citizen  advocacy groups advise against using the proceeds of a Reverse mortgage to purchase an annuity or related financial products.   If you are considering using your proceeds for this purpose, you should discuss the financial implications of doing so with your counselor and family members.”

Bill 329 was introduced by Mike Feuer to the California Assembly earlier in the year and is supported by the CA Nursing Home Reform & AARP CA.

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