Something is going on in Florida which ought to interest anyone with more than a few dollars to set aside.

The state is cracking down on fraudulent annuity sales to seniors, a process which ought to raise two questions: Why just seniors? And why just in Florida? If you have an IRA, federally-insured certificates of deposit or a federally-insured "money market deposit account" (not just a money market account) then you have some protection against an assortment of frauds and losses.

Annuities Offer Less Protection than CDs or Money Market Accounts
In contrast, many folks would like to sell you annuities, a kind of insurance contract. Some annuities are perfectly sensible and reasonable while others vie with credit card offers in terms of consumer benefits and costs. The state of Florida has an elected Chief Financial Officer who runs the state's Department of Financial Services. The idea of an elected state CFO is a very good idea because it means the office-holder needs votes every few years, a requirement which assures at least some level of consumer protection. More states should adopt the concept.

"The number of complaints from Florida seniors about annuities has nearly quadrupled in the last three years," says state CFO Alex Sink. "Better financial protections for our growing population of senior residents and tougher consequences for those who defraud our seniors demand our immediate attention."

Sink says her department has "opened 474 investigations on financial fraud involving seniors, with approximately 70 percent of cases related to annuity and life insurance transactions" and gives this example:

The $300,000 Savings Theft
In 2006, Bonnie Madden, 81, from Port Richey, purchased two annuities from an insurance agent.

"A year later, her agent engaged in a practice known as 'twisting' when he falsely inflated Madden's net worth and converted her annuities into one annuity policy with a different company in order to generate a $52,000 commission for himself. The agent's action would have cost Madden nearly $300,000 of her life savings if the Department of Financial Services had not intervened."

Seniors may consider purchasing an "immediate" annuity, where payments begin right away, or "deferred" annuities, which accumulate savings over a period of time before payments begin.

Sink has now proposed a state law to protect senior consumers. Why seniors should be protected but not other people is a mystery, but what's interesting is that the law sets out some standards you might want to consider when looking at annuity contracts:

New Standards Protect Seniors' Money
If enacted, the law would:

___ Limit the surrender charge period for an annuity sold to a senior consumer to five years and the surrender charge to 5 percent;

___ Extend the "free look" period for the purchase of an annuity by a senior consumer from 14 to 60 days;

___ Authorize the Department to require an agent to make monetary restitution to a senior consumer they've harmed;

___ Prohibit the Department from issuing another license to a former licensee who has had his or her license revoked resulting from the solicitation or sale of an insurance product to a senior consumer.

___ Require an insurer to provide a cover sheet attached to the policy when an annuity is issued informing the purchaser about the free-look period and about how to contact the insurer and the department if they have questions about the annuity.

This is all good stuff but does it go far enough? For instance, what if someone loses a license in another state? Can they then get a license in Florida? What if someone does not speak English? Will the form be in either several language or must the buyer be provided with a translation? Why not a plain form showing all costs, fees, penalties and minimum rates of return? And why not for everyone, even those who are below the age of 65?