NASHVILLE, Tenn. -- Stocks are falling and people's portfolios are diminishing, which is why indexed annuities are so popular.

Related: Video: Index Annuities Catch Some Seniors

But there's a catch, and some seniors are finding it too late and losing thousands of dollars.

Donie Sutton, 86, said an independent insurance agent made an index annuity sound pretty good. She put her entire life savings in an index annuity.

But afterwards, she said, her family learned a little detail about the annuity: In order to get her money back in full without penalty, she'll have to live to be 95 years old.

"I don't expect to live that long," said Sutton.

With an annuity, your money is tied to the stock market but insured not to lose a dime. It's a long-term investment, usually at least 10 years.

Insurance agents across the country have been criticized for selling these annuities to seniors well into their 70s and 80s.

Warnings have gone out about it -- Minnesota's attorney general even sued insurance companies, claiming deceptive sales practices while selling annuities to seniors.

"I think someone ought to be taken out and horse-whipped for it," said John Sutton, Donie's son.

Fearing she may need her money in a pinch, Donie Sutton ultimately pulled out of her annuity and lost more than $10,000 in penalties.

"I would hope that the agent would look at the suitability of that product," said Rebecca Kelly, of AARP. "And in this case, clearly, it was not a suitable product."

But the agent in Donie Sutton's case won't be held accountable by the state.

Investigators looked into the matter, and the state found no wrongdoing, partially because Sutton signed a statement saying she understood everything.

Her family now wants lawmakers to forbid agents from selling these investments to Tennessee's older citizens.

"I don't think they should be able to sell it to anyone older than 65, at the most," John Sutton said.

The salesman who sold Donie Sutton the annuity would not talk on the record and never responded to requests for an interview. He indicated he did nothing wrong, and that he made everything clear about the possible penalties involved.