Dateline’s Shabby Report on Annuities
Was a Journalistic Hatchet Job
On Sunday, April 13, the NBC show Dateline devoted its entire program to exposing deceptive and confusing sales tactics of insurance agents selling insurance annuities. Specifically Dateline highlighted what is called an “equity indexed annuity.” The only problem is that Dateline used deception and confusing half-facts in an effort to prove their bias.
There is no question that there are “bad agents” selling insurance annuity products. These agents should be discovered and driven from the industry. However, Dateline attempted to give the impression that the few agents they “exposed” by hidden cameras were representative of the thousands of agents selling the products. That is a little like saying that there are bad lawyers out there so all lawyers are bad. (Well, maybe in that case it is true!)
In fact, Dateline failed to do what they accused agents of doing; and that is providing full and complete information to the consumer so they can make informed decisions.
The primary “abuse” Dateline focused on was the failure of the depicted agents to fully disclose the penalties that would be imposed if the policyholder were to surrender the annuity. Dateline talked of penalties as high as 20 percent and extending for up to 16 years. What they conveniently failed to disclose is that these penalties decline rapidly over time and even more important that most of these policies offer flexible options to withdraw funds in an emergency, with no penalty at all.
Dateline constantly compared a bank savings account, which is a short term demand deposit, with annuity products which are long term in nature. Of course, that is the proverbial “apples and oranges” comparison. Dateline harped on the fact that bank savings accounts have no penalty for withdrawing the funds, while all annuities applied “stiff penalties” for such action. The syllogistic conclusion offered by Dateline was that therefore all annuities are bad.
What Dateline failed to do was to delineate the clear differences between a savings account and an annuity. For some reason didn’t point out that in exchange for putting the funds in a long-term annuity the consumer received 300 to 400 percent higher credited interest than available from a bank savings account and that annuities will guarantee an income that can never be outlived, something that a bank savings account can never do.
Dateline deceptively failed to point out that while they are both financial products, savings accounts and annuities are distinctively different in design and objective. Dateline would have served the viewer better if it had compared the surrender charges and withdrawal features of different insurance companies (which do vary by company and product) so that the consumer could intelligently shop for the best product.
Dateline also dragged out our old friend and two-bit political hack Lori Swanson, Attorney General of Minnesota, as the “great protector” and seeker of ethical practices in the sale of annuities. What Dateline conveniently failed to note was that this same Lori Swanson has been under investigation for ethical lapses in her own office. But then again, that would have weakened Dateline‘s bias on the subject of ethics.
There were numerous other inaccuracies in the show, but as deceptive and dishonest as it was, it exposed an even worst sin in the insurance industry.
DATELINE APPROACH NOT THE WORST SIN
As deceptive and dishonest as the Dateline show was, their actions paled by comparison to the gutless and cowardly timidity of insurance company executives. Even though Dateline said they were invited, not one single insurance company executive had the guts to come on the show to defend their products and the thousands of honest agents who sell the products properly. (Issuing a press release the next week just does not cut it!)
Certainly Dateline would have attacked and attempted to distort the words of the executive, just as they did with agents, but at least the point could be made that the products properly sold are good consumer products and that the vast majority of the agents do the right thing in the sales process.
But no, these executives (and their lawyers) showed what they really are as “gutless, good-time Charlies.” The companies and their executives are all for the agent when premiums and profits are pouring in, but let there be one storm cloud on the horizon and the first reaction of the executives is to “duck and cover” while tossing the agents to the sharks.
By not standing up to argue that the products offer real value and the vast majority of agents selling the products are honest, the insurance executives, more than itself could do, creates the impression that the products are indeed rip-offs and the agents are charlatans.
As deceptive and deceitful as the show was, it did have a redeeming value and that was in exposing the insurance industry’s executives as cowards.
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