"I Fell For An Annuity Scam"

Summary

Podcast Summary: "I Fell For An Annuity Scam"

The Ramsey Show Highlights | Ramsey Network
Date: December 20, 2025
Host: Dave Ramsey
Co-Host: Joe
Guest/Caller: Unnamed Client

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Episode Overview

This episode centers around a listener who fell victim to an annuity “scam” after rolling over a significant portion of her husband’s 401(k) into a fixed annuity. She seeks advice from Dave Ramsey after discovering substantial surrender charges and learning that the product was not what she intended to buy. The conversation explores annuities, financial product misrepresentation, surrender penalties, and navigates next steps for those who feel stuck in bad financial products.

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Key Discussion Points & Insights

1. Discovery of the Fixed Annuity "Scam"

• Caller’s Situation:

  • The caller rolled $689,000 from her husband’s 401(k) into a fixed annuity.
  • Received a 5% bonus, raising the account value to $724,000.
  • Discovered the insurance company keeps 22% of the value, and there is a 13% surrender charge in the first year.
  • Realizes the misfit of the product only after the 20-day window for reversal.

• Quote (Dave Ramsey, 01:01):

  "This is the insurance agent that told you this, that sold you this crap?"

2. Immediate Steps & the Role of Trustworthy Advice

• Dave strongly advises the caller to seek information from a reliable source rather than the agent who sold the annuity.

• Suggests consulting a SmartVestor Pro for a second opinion and to explore leeway from the Texas Insurance Commissioner.

• Quote (Dave Ramsey, 01:06):

  "I want more information because I don't believe the person who sold me something that's bad to start with. That's not a good source of information."

• Suggested Action (01:06–01:45):
  Visit ramseysolutions.com, contact a SmartVestor Pro, check with the state insurance commissioner for possible remediation.

3. Exit Strategy: To Take the Hit or Not?

• Caller asks: Should they stay in the annuity until the surrender charges drop or exit now?

• Dave’s Advice: If forced, take the 13% "stupid tax" hit and move funds to a diversified portfolio of mutual funds. Market gains could potentially offset the loss much faster than being stuck in a poor product.

• Quote (Dave Ramsey, 03:08):

  "I would take 13% hit and move it because you may make 13% in Q1. One quarter of the stock market might be 13%... you'll make that back up in good investments rather than being stuck in this thing."

• Emotional Factor (03:40):
  "Every day you wake up and you see the company name, you're pissed again. I don't want to live like that."

4. How Annuities Get Sold: The Tactics

• Caller’s Backstory:

  • She reached out to the agent, trusted them due to a church referral and name-dropping.
  • Realizes after the fact that she placed money with an insurance company, not an investment company.

• Quote (Dave Ramsey, 05:05):

  "You did not place your money with an investment company. You placed your money with an insurance company... you were not planning on doing that."

• Dave explains:

  • Insurance agents are only licensed to sell insurance products—annuities included—not mutual funds.
  • Describes annuities as often "front-loaded" with hefty fees and poor performance.

5. The Problems with Fixed Annuities

• Fixed annuities offer yields similar to high-yield savings (4-5%), much lower than historical stock market returns.

• Dave strongly prefers mutual funds for long-term investment.

• Quote (Dave Ramsey, 05:14):

  "Insurance agents are licensed only to sell insurance products, annuities or insurance products. They cannot sell mutual funds."

6. Industry Critique and Consumer Warnings

• Joe and Dave discuss the outsized penalties (13%) and the problematic business models of insurance companies.

• Quote (Joe, 06:25):

  "That's a crazy amount."

• Colorful metaphors about marketing and branding (06:50-07:19):

  • Joe recounts his daughter's skepticism about insurance ads (“What does that have to do with whatever it is they’re selling?”), highlighting misleading marketing.

• Dave’s Rule of Thumb (07:19):

  "...if the name of the company you're getting ready to do your investment in air quotes with has insurance in the name, you're about to get screwed. That's a good way to remember it."

• Advocates working with licensed securities professionals—not insurance agents—for truly investment-oriented needs.

7. Final Recap & Stress on Learning from Mistakes

• Dave reassures the caller that everyone makes mistakes; the real trap is not learning from them and staying stuck.
• Highlights the need for consumer vigilance and skepticism when approached by aggressive financial product sales.

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Notable Quotes & Memorable Moments

• On Advisor Credentials (07:19):
  Dave: "We go to qualified people who have securities licenses, not insurance licenses to help you do real investing."

• On High Surrender Penalties (07:57):
  Joe: "I just can't believe a penalty on anything would be 13% of the total of your portfolio."

• On Short Windows and Refunds (08:02):
  Dave: "And how about this? 20 day or 26 days with a 20 day cutoff? No, ma'am, we can't do that now. What business does that?"

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Timestamps for Key Segments

• 00:09–01:06 — Caller explains the annuity situation and immediate regret
• 01:06–01:45 — Dave's advice on seeking second opinions and SmartVestor Pro
• 02:04–03:08 — Discussion of mutual fund alternatives, age-based investing, and RMDs
• 03:08–04:58 — Dave's argument for exiting, emotional considerations, and annuity explanation
• 05:05–06:10 — Industry tactics, insurance vs. investments, and product licensing
• 06:10–07:57 — Joe and Dave’s critique of surrender fees, insurance company marketing
• 07:57–08:14 — Final commentary on consumer protection and industry policies

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Tone & Style

Throughout the episode, Dave combines empathy for the caller with characteristic bluntness toward predatory financial products and the practices of insurance agents. He peppers his explanations with memorable metaphors, relatable analogies, and humor to keep the conversation both informative and accessible.

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Key Takeaways

• Always double-check the credentials and motivations of anyone giving you investment advice.
• Be skeptical of products with high surrender charges, complex fee structures, or those sold with aggressive bonuses.
• Use specialized, conflict-free investment advisors for retirement account rollovers; don’t mix insurance sales with investment advice.
• If you accidentally purchase a poor product, it may be financially and emotionally smarter to take the penalty and reinvest elsewhere.
• Seek a second opinion—preferably from a fiduciary or trusted professional—if you feel uncertain about a financial decision.

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Transcript

[Dave Ramsey]

Zander shops all the top term insurance companies to save you money. Get [e-mail] I fell for the annuity.

[Caller (Client)]

Scam and didn't know it was a scam until after I did it. And after my 20 day window was over in October, we rolled $689,000 of my husband's 401k into a fixed annuity and they gave us a 5% bonus. So the value today is 724. The problem is the insurance company, as I'm sure you know, keeps 22% of that and the first year surrender charge is 13%. So my question is, do we stay until the surrender charges drop? Especially given, you know, I mean, this.

[Dave Ramsey]

Is 30 days old. This is 30 days old.

[Caller (Client)]

It's, it's over that it was in October.

[Dave Ramsey]

Well, okay. I mean it's 45 days old.

[Caller (Client)]

Yeah, he told me it's too late. He told me I had a 20 day window.

[Dave Ramsey]

This is the insurance agent that told you this, that sold you this crap?

[Caller (Client)]

Correct.

[Dave Ramsey]

Okay, good. All right. I don't know is the answer, but I want more information because I don't believe the person who sold me something that's bad to start with. That's not a good source of information. Fair enough. So go to ramseysolutions.com and click on Smartvestor Pro and get one of our Smartvestor Pros there in your area that you can talk to and tell them what you've got and see if the insurance commissioner in Texas will grant you a little more leeway than that and you get 100 cents on the dollar back.

[Caller (Client)]

Okay.

[Dave Ramsey]

And then get back out of it. So yeah, and then get this into some good investments that aren't so front loaded and crappy in performance.

[Caller (Client)]

Right. So do you recommend an index fund?

[Dave Ramsey]

I recommend a fruit jar before you do this, but an index fund is fine. It was a 401k and so you need to roll it into an IRA. And based on the fact that it's in an IR, I'm probably going to put it in the four types of mutual funds that mine are in, which is a fourth in growth, growth in income, aggressive growth and international with long track records. That's what mine are in. And I'm 65. How old are you?

[Caller (Client)]

I'm 62.

[Dave Ramsey]

Okay.

[Caller (Client)]

My husband is about to be 60.

[Dave Ramsey]

Okay. So yeah, same category. And that's what mine are in because I'm going to leave it alone. And then you've got to start talking about moving some of it out of there before you get to 73 and a half because you're going to have RMDs required minimum distributions on your 401k, you're going to have that in the annuity as well, by the way, because it's probably a qualified plan, too. So, meaning it's.

[Caller (Client)]

What do I do if they won't move it and we're stuck with the 13%?

[Dave Ramsey]

Get the. I would take 13% hit and move it because you may make 13% in Q1. One quarter of the stock market might be 13%. It's certainly going to. You're going to make your money back quick enough. But I'm not going to accept Joe Bob's answer. Okay. I want somebody that knows the laws and the tolerance for this with the Texas Insurance Commission to put their hands on this. It may be. But if I'm you and it's going to cost me 13% in stupid tax to get this moved, you'll make that back up in good investments rather than being stuck in this thing. And the other thing is, every day you wake up and you see the company name, you're pissed again. I don't want to live like that. Now, let's recap. No, it's okay. Everybody makes mistakes. You were hoodwinked. So let me tell people what happened to you, and you tell me if I'm right. A person contacted you in your 60s about helping you create a very stable, predictable investment that would grow without taxes. And they are an investment advisor. They're a financial advisor. And the company name is an insurance company name, not an investment company name. But. But they posed as. And sell themselves as an investment advisor. Is that what happened?

[Caller (Client)]

Close. I actually reached out to them because they were promoted by a person in the church that's well known, that I trust and follow.

[Dave Ramsey]

Yeah.

[Caller (Client)]

And then they drop some big names of people that they've helped and whose money they manage. And so that's what got me.

[Dave Ramsey]

Yeah, but it's. You did not place your money with an investment company. You place your money with an insurance company.

[Caller (Client)]

Correct.

[Dave Ramsey]

And going in, you were not planning on doing that. That's not what you signed up for. You signed up for. To do some investing.

[Caller (Client)]

Correct.

[Dave Ramsey]

And then they. But they. Insurance agents are licensed only to sell insurance products, annuities or insurance products. They cannot sell mutual funds. And so this is. What they sell is this crap. And they put people in and they. They can even sell a decent product, which is a variable annuity. But I wouldn't even put you in that because you're getting double feed. So it's just a. Yeah, man, it's awful. I'm sorry you're having that. But if you only lose 13%, I would be in good investments versus a fixed annuity. Fixed annuity is like a high yield savings account rate. It's going to pay you 4 or 5%. If you make 12 or 14 on something in two years, you made your money back if that's all you make. And you ought to make more than that if you watch what you're doing and get some real help. So as a possibility anyway, depending on what the markets are doing. So yeah, I'm, I'm out of there. Wow, that infuriates me, John. That's.

[Joe (Co-host or Guest)]

Well, it's somebody else getting preyed on in their 60s. Right. We talked about earlier.

[Dave Ramsey]

Yeah.

[Joe (Co-host or Guest)]

Tell me this. So when she says 13%, is that of the growth since this thing was moved or is that over the like 13% of the entire portfolio?

[Dave Ramsey]

Entire portfolio.

[Joe (Co-host or Guest)]

Good gosh.

[Dave Ramsey]

Yeah. Yeah. Because they're going to get their blankety blank commission no matter what.

[Joe (Co-host or Guest)]

That's a crazy amount.

[Dave Ramsey]

Yeah, well, the insurance business is all front loaded. It's all. They all get their money on the front end of everything. And so these are frustrated life insurance agents is what they are. They're not real good. And so sometimes I see these things, okay, the whales jumping on the. Sure. Pacific life.

[Joe (Co-host or Guest)]

Yeah.

[Dave Ramsey]

And we'll help you. And you got people walking and they're holding hands in a rose garden and they're retiring and all this bull crap. It's, it's stupid butt life insurance stuff.

[Joe (Co-host or Guest)]

My daughter, you're not gonna believe me. My daughter, yesterday, her and I, I wouldn't watch one of, one of Bluey or whatever she wanted to watch. I wanted to watch football games. So she curled up on the couch next to me and they had, they had a commercial. And she said, what does that have to do with whatever it is they're selling? She's nine. And I was like, not a lot, Josephine. Not a lot.

[Dave Ramsey]

It's called branding. It's called branding. Yeah. Yeah. And so if the, if the name of the company you're getting ready to do your investment in air quotes with has insurance in the name, you're about to get screwed. That's a good way to remember it. Okay, done. So I mean, if you don't do, you don't get your muffler fixed at the transmission store, you don't do investments with insurance. Okay. It's that simple. We go, you know, we go to qualified people who have securities licenses, not insurance licenses to help you do real investing.

[Joe (Co-host or Guest)]

I just can't believe a penalty on anything would be 13% of the total of your portfolio.

[Dave Ramsey]

And how about this? 20 day or 26 days with a 20 day cutoff? No, ma', am, we can't do that now. What business does that?

[Joe (Co-host or Guest)]

Yes, someone who is Home Depot will.

[Dave Ramsey]

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