The company has also pledged to train its representatives to avoid further instances of misconduct
Massachusetts Attorney General Martha Coakley’s Office has announced that the John Hancock Life Insurance Company has agreed to pay more than $550,000 dollars to Massachusetts senior citizens who were duped into buying unsuitable variable life insurance policies, variable annuities and other insurance and financial products from one of the insurer’s representatives.
According to allegations put forth by the Attorney General’s office, James E. Moniz illicitly induced his senior citizen clients to take our reverse mortgages in order to use that money to invest in unsuitable variable annuities and life insurance products. A very risky and dangerous thing for senior citizens to do, says the AG’s Office.
Consumers should be aware that using funds from a reverse mortgage to invest in financial products like annuities is always risky. Variable life insurance policies and variable annuities may not be appropriate investments for older individuals because of steep surrender and withdrawal penalties. Before purchasing any financial product, consumers should always ask questions and make sure that they understand the investment risks, read any forms that they sign, and never sign blank forms.
Upon investigating Mr. Moniz’s actions as a representative of John Hancock, it was learned that while convincing his clients to enter into reverse mortgages, Mr. Moniz had separately developed an outside business relationship with a mortgage broker from a separate non-affiliated John Hancock company. It was through that relationship that Mr. Moniz proceeded to recommend that his senior citizen clients to take out reverse mortgages.
As a result of the Attorney General’s investigation into this matter, it was determined that John Hancock had failed to properly monitor and restrict Mr. Moniz’s risky and aggressive marketing and sales tactics towards his senior citizen clients. In October 2013, Mr. Moniz was terminated by John Hancock for his conduct and actions as a representative of the life insurer in this matter.
In addition to the $550,000 to be payed to its customers, the terms of the assurance of discontinuance, filed in Suffolk Superior Court will require John Hancock to pledge an 145 additional refund and penalty waive offers to consumers, the vast majority being senior citizens, who had purchased these variable life insurance products and annuities from Moniz. The life insurance company will also pay the Commonwealth $165,000 in penalties and investigation costs. In the coming weeks, the company will be issuing letters to certain customers affected by Moniz’s marketing and sales practices and will provide additional company training for its personnel to prevent further instances involving this type of misconduct.