An Undeniable Need For Full Disclosure.

One of my gripes with insurance companies is disclosure.

Take the case of the late Deward Doub, who died at 90 in April 1999. After a series of unsatisfactory exchanges with the Indianapolis Life Insurance Co., his daughter, Dee Davidson of Carmel, Ind., wrote me a letter about her father's annuity with the firm.

In June 1994, at age 85, Doub put $12,260 into a tax-deferred annuity, maturing in five years. In January 1999, Indianapolis Life told Doub that his annuity had come due (even though it was six months before the actual July maturity date).

The letter said that his contract provided about $175 a month for the rest of his life. That included a guarantee that payments would be made for at least 10 years. If he died before 10 years were up, his heir would collect the remaining amount.

The insurer didn't tell Doub that his annuity was worth $16,234 in cash. How could anyone make an intelligent decision without knowing that?

Not surprisingly, Doub chose the 10-year option that the insurer pushed. But Doub was in poor health and died three months later. The insurer paid Davidson $11,807 in death benefits (the value of about five years' worth of monthly payments, received in advance). That's $4,427 less than she would have received if her father had cashed out.

What saved the day for Davidson is that Indianapolis Life had jumped the gun. Doub died in April, three months before his annuity's true maturity date. At that point, his heirs were entitled to its full cash value.

Dick Freije, senior vice president of Indianapolis Life, says the company is changing the way it checks annuity maturity dates. It's also planning to disclose the value of a lump-sum payout in the settlement letter that clients get.

Every story should end so well.