Last Updated: May 9, 2016
Questionable Financial Deals
The Office of the Commissioner of Insurance (OCI) has received a number of disturbing inquiries concerning questionable financial transactions proposed to senior citizens by insurance agents and others. These transactions usually have very little, if anything, to do with insurance. Rather, they are investment proposals outside of what would be called traditional investments. In some instances, senior citizens who participated in these transactions and paid a lot of money to these salespeople lost their entire investment.
Here are some suggestions, should you ever be approached to invest your hard-earned money in a questionable financial deal:
- Always be suspicious of unsolicited calls or someone coming to your home unsolicited to "make you rich" or that you have won a prize and must send in money in order to claim that prize. If you're not sure about the person, don't do business with them.
- If the promises made are too good to be true, they usually are so don't let them talk you into something you would not normally do and don't be afraid to hang up the phone or tell them to leave. If this is such a good deal, why must they come to you to sell it?
- Never provide a stranger who calls you or comes to your home unsolicited with any personal financial information such as checking account balances, monthly income, and investment account information.
- Don't do business with someone until you've checked them out and received advice from a trusted professional or family member. Don't be afraid to ask questions. Ask for references and whether they are licensed to sell the type of product they are offering. Don't just take their word for it, check with the state licensing authority. If they say they don't need to be licensed to sell the investment, this should be a red flag to not participate in the deal.
- Ask if the investment is registered with state authorities. Again, don't just take the salesman's word if the answer is that they are or that they do not need to be registered. Check with the Wisconsin Department of Financial Institutions. If the investment is not registered with the state, this should be a warning sign to be careful.
- Under most circumstances do not make personal loans to your insurance agent or invest in a business transaction with an agent that does not involve an insurance company product. If your insurance agent has a securities license, all financial transactions must be through that agent's broker (such as Dean Witter or Merrill Lynch). Do not write checks directly to or give cash or power over your assets to an agent in order to purchase an insurance product or make an investment.
- Do not be pressured into doing anything. Don't be afraid to say "no" or that you want to wait and talk to your relatives or friends about the deal before you commit to anything.
- If you feel you've been ripped off, don't be afraid to contact the authorities such as OCI, the Department of Financial Institutions , the Department of Agriculture, Trade and Consumer Protection , your local police, or your county benefit specialist.
You can never be too careful in protecting your hard-earned nest egg. Get rich quick schemes or investments with unusually high returns usually result in tragedy rather than success. Be a smart consumer, don't be fooled and know your rights, and use common sense.