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Before you consider investing any money in the Old Mutual Financial Network (OMFN), their life insurance products, annuities or any of their other offerings, please read the following:

Old Mutual practices a legalized form of Financial Elder Abuse designed to bilk vulnerable people and their beneficiaries out of large portions of their life savings and inheritance, respectively. The targets of OMFN's scam are the elderly, the cognitively impaired, the financially unsophisticated and anyone who may place their trust in an Old Mutual Insurance sales agent.

Financial Elder Abuse: How The Scam Works

Many potential clients are experiencing the onset of old age and are on a fixed income. As they continue to age, they need more and more assistance with the activities of daily living such as eating and bathing. Some require assisted living and even 24 hour a day care. This type of care is expensive and the fear of running out of money to pay for it becomes a huge concern.

This person may be able to qualify for government benefits if they can show that they own few assets and have very little wealth. So Old Mutual has created an annuity designed to shelter income, allowing an infirm person to qualify for badly needed government benefits. This annuity is one of the only legal ways to shift money so that an elderly person can qualify to get the financial assistance they need. The annuity is shrewdly crafted by Old Mutual to take advantage of elderly people who may be experiencing cognitive impairment and a reduction in clear thinking that often accompanies old age. And the OMFN sales agent is instructed to insist to the elderly client that this annuity is the only way out of their dilemma.

How OMFN Takes Advantage

The Old Mutual Annuity Insurance Policy is vaguely worded and does not explain or define many critical points. There is no information on what the expected return on investment (ROI) is, or what the "commuted" value of the policy is. Simply put, commuted value is the value of the policy upon the death of the annuitant (policy holder). In a standard 17 page OMFN contract, the words "commuted value" are mentioned ONCE but never explained. One insurance advocate looked over this policy and declared it one of the most badly worded policies he'd ever seen.

Why Commuted Value Is Important

The commuted value can be substantially LESS than the initial investment- a lot less! In fact, there is no law governing how much money Old Mutual may keep and how little they may offer the surviving beneficiaries as a lump sum. OM can keep 30, 40, 50% or more. Old Mutual refrains from disclosing what their formula is for calculating commuted value. It is not in the contract and the sales agent isn't likely to know or even bring it up. Call Old Mutual and ask them what the commuted value is and you'll be transferred to voicemail. Messages left requesting a commuted value explanation have not been returned.

Return On Investment?

Without a documented ROI illustration, OM can pay next to nothing on the investment while racking up huge gains for themselves. They may pay a fraction of a percent to the policyholder yet their own yield on this investment is unlimited.

Sample Case

In one case, an Old Mutual agent sold a ten year annuity to an 81 year old man who needed expensive nursing home care. The man was experiencing mental and physical decline and was under the duress of not wanting to be a financial burden on his family. After being convinced by an OMFN Insurance Agent, he invested the majority of his life savings, $55,000.00, so that he could qualify for government benefits.

The man passed away shortly after and of the remaining $49,790.32 in the annuity, OM offered to keep $13,893.38 and pay only $35,896.94 as a lump sum to the beneficiaries. That's a whopping 28% instant profit for the OMFN! The annuitant was never informed by Old Mutual that his estate would be considerably reduced before passing it on to his heirs if they chose to accept a lump sum payout. This offer was made by Old Mutual when the family of the deceased were at their most vulnerable- grieving from losing a loved one and with expensive end of life care and funeral arrangements to pay for.

Old Mutual thrives on this type of lucrative transaction. What Old Mutual is doing may not be technically illegal but it is immoral and unethical. It is legalized elder abuse and substantially reduces the amount of money the annuitant intends their family to receive upon passing. Since insurance laws are so lax in this area, there may currently be no legal recourse. And the fees to hire an attorney to fight a case like this are prohibitive. Surviving beneficiaries have no choice but to accept these tactics and along with losing a loved one, also may lose out on their rightful inheritance. This is how Old Mutual takes advantage of the unsuspecting to gain massive profits.

Old Mutual Agents And Ethics

It is a moral and ethical imperative for investment salespeople and insurance agents to give full disclosure to their clients but not a legal one. An Old Mutual Sales Agent can tell you anything but if it's not specifically in the policy, it is meaningless. And the Agent doesn't get a commission unless they make the sale so they may conveniently leave out important details. Return on investment (ROI), commuted value explanations and the fact that inheritance from annuities are fully taxable may never be addressed.

There is growing concern by regulators that insurance companies like Old Mutual use independent sales agents because they hope to escape responsibility for the unscrupulous tactics they know are used. Insurance companies, "...just close their eyes or say it’s not their fault when a supposedly rogue sales agent misbehaves,” says Jim Nelson, an assistant secretary of state in Mississippi.

The New York Times reports- "The insurers are happy to turn a blind eye to what salesmen are doing, as long as they make a sale," said Minnesota's attorney general, Lori Swanson, who is suing several companies, contending their products are inappropriate.

Advocates of the elderly complain that scam artists, many using dubious credentials, often give financial advice they are not qualified to offer. The North American Securities Administrators Association, an association of state regulators, reports that over one-third of all cases of financial exploitation of the elderly involve annuities.

According to The California Department Of Insurance, many elderly individuals have been taken advantage of by insurance agents who have manipulated them into purchasing an unsuitable annuity or replacing existing or established annuities with a new one simply for the agent's financial gain.

Old Mutual Complaints

The California Dept. Of Insurance Complaint Page ranks Old Mutual as the second worst (49 out of 50) in the category of having complaints lodged against them. Old Mutual has been documented as being slow to respond to complaints filed with the Department Of Insurance. Claims are difficult to enforce as current laws allow insurance companies to get away with lack of disclosure and unethical practices.

How To Protect Yourself

To avoid Financial Elder Abuse, make sure you are dealing with a reputable company. Check with The Dept. Of Insurance for complaints. Be skeptical of any and all claims made by Old Mutual Financial Network, any other company, or their representatives. Annuities may be "irrevocable", meaning you cannot cancel them and your money is effectively locked up under the terms of the contract. Get an independent tax attorney to review all documents and thoroughly explain them before signing.

Read more about Elder Abuse Here

Read more about Insurance Company Scams Here

Read more about Annuity Traps Here


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