An annuity that's not all that
Joe Hewitt of Hewitt and Hewitt Mediators in Dallas has experienced investment losses, but one of his bad financial decisions was investing in an annuity that wound up being a scam.
At the time, he had a $50,000 annuity policy that he had borrowed $7,000 against. "A sweet young lady representing a major insurance company visited my office and told me she could sell me the same policy. It would cost the same per month, and I wouldn't have to pay back the loan because her greater amount of interest would cover it," he remembers.
On the appointed date, Hewitt would be able to collect the $50,000 in cash or roll it over as an annuity and get a monthly lifetime income.
Fast forward 20 years, and the insurance company indicated there would be nothing near $50,000 in value by the maturity date. It was not an annuity at all but a life insurance policy. While a class-action suit had been brought against the company, Hewitt was told he had received notice of it and didn't opt in.
"I learned a $30,000 lesson. Or was it $23,000? Anyway, it hurt. That young lady wasn't really sweet after all," Hewitt says.