Midland National Life Insurance Company Annuities are a rip off! West Des Moines Iowa

I'm an agent and I've been selling Midland products for over 10 years.  I have over 100 clients with Midland and I've never had a complaint.  I offer fixed annuities and equity index annuities.  It's simple.  The client signs multiple places acknowldeging there is a surrender fee so I'm not sure how they didn't know there was a surrender schedule.  In order for Midland to offer a guanteed product with substantial upside they invest in bonds.  Bonds offer two guarantees. Bonds promise to repay the invested principal WHEN THE TERM IS FINISHED and they promise to pay an interest rate over a predetermined time.  

They DO NOT promise to pay you back what you paid whenever you want your money back, put your money in a checking account at 1/10 % of you want that..  That's the trade off.  You didn't understand what you were buying even though you signed saying you did.  

Sorry to be blunt but it's your fault OR it could be that your agent did not explictly explain there is a surrender schedule. You're pointing your finger in the wrong direction, it has nothing to do with Midland, an A-Rated 110 year old company which is the 78th largest private company in the U.S.  It annoys me because it is agents like these and people like you that make my job more difficult.  Previously Midland had a short suitabilty form to fill out.  Now it's 5x as long and is a royal pain.  If the agents would be forthright and people would take responsiblity for what they sign then my life would be a lot easier.  Sheesh. 

Dear William,

Being a Life & Health Insurance Agent and also working with over 40 different insurance companies, I can clearly see what really happened both with you getting signed up with Midland and also what the new agent (Dave Ramsey of ELP) has probably now informed you of.

1. You should know exactly what you are being signed up for and how an Equity Index Annuity works. You have opportunity to part-take in the Index or you can have your money based on the "fixed interest". I always draw it out for the client, show them the brochures, really make sure they understand everything including any stipulations, surrender penalties and how they can access their funds.  If all of your funds were in the fixed interest bucket of the product then YES you would have made that 3 %. But it sounds like you were put only in the "index" portion of the product. 

2. Midland provides products for people of all ages and that has to do with the years that they are in those products.  Your agent put you in a product that is TOO LONG for your age. I would have never done that based on your current complaints, nor have I ever put a senior citizen in 14 year term product.

3. Midland provides products that are 5-14 years long. Each product allows you to withdraw 10 % penalty after the first anniversary and each year until the surrender schedule has been met and you can lump sum the entire account out.

4. Based on the misinformation that the agent representing Midland (notice representing and is not Midland) gave you or the lack of information, I can only assume that your newer agent was trying to "turn you" in order to get business with him.  The products that ELP provide are based on the stock market, give him at least a 5 % commission on each new contribution into the plan and there are fees attached to his products. Did he tell you this? 

5. All of my clients are very happy with Midland and the sister company North American. I make very sure I am clear on how the product works, draw it out and make sure they sign that they understand each of these points. I would only hope that your agent did the same. And I keep records of this happening in case the person forgets at some point in time. 

I wish you the best in your future retirement endeavors but be sure to read the fine print in each new "investment" conversation you have. Ask the agent what the fees are, what the 12B-1 fees are, what is the commission he's getting by moving your funds and make sure you see the prospectus on those funds, see how it's performed over the past 5-10 years and make sure you get all the information before you too get involved in a huge LOSS of money because he (Dan Ramsey) failed to tell you all the specifics in an effort to get your business.





4. 

IMO obviously the poster complaining about Midland did not know what they had signed up for. Sounds like to me they got a Variable Annuity which invests in what can be risky funds (I.E. The Stock Market). I did many years ago with another company and took a beating during that 2000>2002 massive down turn.

If the poster wanted a sure return of 3, 4, , whatever %, they should have gone with a sure bet, Midland's FIXED annuity. That is what I plan to get here in the next couple of weeks, a ten year FIXED at 4%, better than any CDs I can find, including our local Credit Unions. Now if their ten year fixed drops anytime soon getting closer to what my Credit Union is returning for just a five year CD, I'll keep my funds where they are. But all my CDs come due between June 26th and July 1st. So if Midland stays where they are presently, they will gain another 200K soon enough.

The investment explanation is about eight paragraphs of misdirection.  The issue is whether Midland National Life is systematically ripping off senior citizens.  The facts are clear.

Midland National has a colorful history of civil and regulatory legal problems.  The Minnesota Attorney General's Office filed suit against Midland National Life Insurance Company, Sioux Falls, South Dakota in November, 2007 alleging the company was making inappropriate long-term annuity sales to seniors.  That action, involving Midland Nationals insurance sales practices, is similar to class action lawsuits filed against them in California, Hawaii, and Rhode Island; and has also been raised in a law suit filed in South Dakota by a former leading life insurance general agent for the company. 

A class action lawsuit has been filed in Iowa against Midland National Life Insurance Company alleging violations of RICO (Racketeer Influenced and Corrupt Organizations Act), conspiracy and unjust enrichment in that they knowingly used licensed agents that engaged in unfair, improper, and unlawful sales practices in connection with the solicitation, offering, and sale of deferred annuity products to senior citizens. Bendzak v. Midland Natl Life Ins. Co., 240 F.R.D. 449, 450 (S.D. Iowa 2007).

RICO is a very serious charge because it implies intentional and ongoing criminal activity in the way Midland is doing business.

The Texas Department of Insurance (TDI) has an open enforcement case against Midland National Life Insurance Company based on their annuity sales and marketing, and TDI officials have confirmed this with The Associated Press.

An enforcement case is similar to other law enforcement investigations in that its focus is to determine whether Midland has committed any criminal or administrative violations of Texas law.

Midland has also been fined by Arizona twice in the last twenty years for their sales practices.

The Minnesota suit was settled in December, 2008; with Midland agreeing to policy holder refunds in the millions of dollars.

You can learn more about these lawsuits at www.midland-national-life-review.com.

It is unknown whether these legal issues involving their sales practices contributed to Standard & Poor's reduction in December, 2008 of their outlook on Midland to negative from stable.

Midland National is part of the Sammons Financial Group and is affiliated with the North American Company for Life and Health and Midland Annuity.

This isn't a few "misunderstandings".  It's a well planned campaign to make money the same way they do on Wall Street: by screwing the little guy.

You can do better than Midland National Life.

Midland annuity provides products that are designed for a specific purpose.

Your agent may not have disclosed all of the provisions of your contract, and you should file a report with the California insurance commission because of this. Insurance companies do not make promises via word of mouth, agents do. However, it looks like you left out some facts:

The 14 year midland product provides an 11% bonus with 10% withdrawals permitted each year after the first year. You may link your premium to the market or choose the fixed investment (that is the 3% you mentioned).

If you invested in the S&P 500 in November of 2007 (1 year before your report), your one-year return would have been minus 34.6% (-34.6%).

Your return was 0% as you cannot lose in these investments when the market falls (unless we count the premium bonus on 11% in which case you made 11% for that year).

-34.6% vs. 11%

Had your advisor told you the market was crashing, you should have put the account into the fixed investment which would have led you to a 3% return:

-34.6% vs. 13% (11% + 3%)

That is a 47.9% difference. Where would all of us be if we never lost money in the market? a much better place - that is for sure.

A recently published report using six PhD economists confirmed these products have averaged 8.6% per year over the last 14 years. Now, these products may not be appropriate for your entire portfolio, but 8.6% over the last 14 years beats the markets, Vanguard's S&P 500 fund, and every CD and money market available during that period, and it is tax deferred.

While I have clients in many investments (including the market), I can sanction these products for their purpose: no fees or charges, guaranteed growth, no chance of loss within the contract parameters, high rate of return. It is something everyone should have a portion of their portfolio invested in.

John Baptiste, California

U.S.A.