Lois Klofanda was 85 years old when she sunk almost half her life savings into a deferred annuity from Allianz Life Insurance Co. of North America -- not realizing she wouldn't be able to get at the money again for a dozen years.

Now 88, Klofanda still doesn't have her $55,000 back. She sat quietly next to her daughter at the Capitol on Tuesday as Attorney General Lori Swanson accused Allianz Life of victimizing seniors.

Swanson sued the Golden Valley-based insurer in Hennepin County District Court for allegedly breaking state consumer fraud and insurance laws. She said Minnesotans over age 70 have bought $259 million worth of deferred annuities from Allianz Life, locking up their money until they might be dead or forfeiting big chunks of their savings in penalties.

"It is simply wrong for an insurance company to tie up a senior's life savings in this way," Swanson said.

Allianz Life -- a subsidiary of German insurer Allianz SE -- strongly disputed Swanson's allegations. The company said in a prepared statement that it's confident it has followed state laws, and that the DFL attorney general turned down requests for a meeting to head off the lawsuit.

Allianz Life also said fewer than 1 percent of its annuity customers have complained.

Still, Swanson said her office has heard from dozens of seniors who've had problems. Legal documents from her office were peppered with stories of elderly Minnesotans who didn't understand the annuities and ended up paying thousands of dollars to get their money back.

Swanson's lawsuit aims to recover that money plus civil penalties and stop Allianz Life from selling such policies to seniors. She said she's also looking at other insurers who sell similar products.

Mark Kulda, a spokesman for Insurance Federation of Minnesota, urged consumers not to go through with transactions until they fully understand what they're getting into. He said state laws don't allow insurance agents to sell policies that aren't suitable for their customers, but some agents can be overly aggressive.

Leo Stulen's experience with an agent who sold him an Allianz Life policy left him shaking his head. Stulen, 78, put his and his wife's life savings of $46,000 into the deferred annuity. When he needed money to cover medical bills, Stulen said the agent never called back.

Stulen ended up paying almost $6,000 to cash out the annuity.

"I feel they really took advantage of us at our age and we couldn't get our money back without being penalized," said Stulen, a retired salesman from Hutchinson.

Klofanda, too, faces a $7,000 penalty to cash out her annuity early, Swanson said.

Klofanda's daughter, Sandra Kann, said there's no way her mother or many other seniors could understand the complicated rules of deferred annuities. She said companies that sell them to seniors should be put out of business.

"That money was just not available to her," said Kann, who lives near Klofanda in Wyoming, Minn. "It's just really sad. When they need it, they haven't got it."

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