John Hancock Life Insurance Company, along with its subsidiary broker-dealer, has agreed to refund senior citizens in Massachusetts more than $550,000, Massachusetts Attorney General Martha Coakley’s office announced.
John Hancock’s refund is part of an agreement to settle allegations that the company failed to supervise one if its representatives, James E. Moniz, which permitted him to sell unsuitable variable life insurance policies, variable annuities, and other insurance and financial products, according to the announcement on Sept. 26.
The assurance of discontinuance, filed in Suffolk Superior Court, also requires John Hancock to make 145 additional refund and penalty waiver offers to consumers, mostly seniors, who bought certain variable annuities and variable life insurance policies from Moniz. John Hancock will also make a payment of $165,000 to the state.
According to the settlement, Moniz developed an association with a mortgage broker from a separate company to induce senior clients to take out reverse mortgages and invest the proceeds in unsuitable variable annuities.
As a result of the attorney general’s investigation, it is alleged that John Hancock unfairly failed to effectively supervise the representative’s marketing and sales practices. In October 2013, John Hancock terminated Moniz for conduct uncovered during the investigation.
The attorney general’s office said 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, the attorney general’s office said.
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, the attorney general’s office advised.
John Hancock cooperated with the attorney general’s office throughout this investigation, the announcement said. Consumers seeking more information about this settlement can contact the attorney general’s insurance and financial services division at 1-888-830-6277.
As part of the settlement, John Hancock will issue letters to consumers affected by Moniz’s marketing and sales practices with refund and penalty waiver offers. John Hancock will also provide personnel with additional training designed to prevent and detect this type of misconduct, the announcement said.
Source: Massachusetts Attorney General Martha Coakley’s office
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