Understanding the details of Variable Annuities
Variable annuities, considered by some financial advisors to be among the most complicated and least understood product of its kinds, have come under increased scrutiny in 2016, as FINRA, the Financial Industry Regulatory Authority, has declared its intention to investigate them more fully. They claim that a disproportionate amount of the complaints they get are related to variable annuities, an issue they hope to fix. Variable annuities are intended to provide a lifetime source of income, but to make up for this potential expense, annuity companies have other methods to create revenue from the policies.
Variable annuities, and other such complicated financial products, have a bad reputation among fiduciaries, for a number of reasons. For one, although clients may not realize it, they are paying a sizeable commission to their broker, a cost that is hidden within a bulk charge. In fact, annuity companies often pay the largest commissions for variable annuities, which earn them the most money, and may provide other incentives, such a parties, sports tickets, or trophies to brokers that sells large amounts of variable annuities.
Secondly, since the products are so complex, it is often the case that the broker selling them can’t understand or explain the policy themselves, making it incredibly unlikely that their client will know exactly what they’re spending their money on. This is concerning for any product, but moreso when dealing with financial products that can cost hundreds of thousands of dollars.
In a recent enforcement action against Metlife, FINRA determined that in excess of 70% of variable annuities that were issued as replacements were sold in a misleading way, either by omitting or altering the pacts of the policy. This accounted for over 20,000 policies, and that’s just for one company. Across the entire industry, it’s hard to estimate exactly how many variable annuity policyholders have contracts that aren’t what they think, or which aren’t suited to their financial needs.
Some of the major annuity and life insurance providers are:
- Aviva/Athene/Accordia Life Insurance Company
- Transamerica Life Insurance Company
- John Hancock Life Insurance Company
- Bankers Life Insurance and Casualty company
- Massachusetts Mutual Life Insurance Company
- Midland Life Insurance Company
- North American Company for Life and Health Insurance
- Pacific Life Insurance Company
- Prudential Life Insurance Company
- Genworth Life Insurance Company
- ING USA Annuity and Life Insurance Company
- Lincoln Benefit Life Company
- Metlife/Metropolitan Life Insurance Company
- Unum Life Insurance Company of America
- Voya/Reliastar Life Insurance Company
If you or a loved one is having issues with variable, fixed, or indexed annuities, contact the Evans Law Firm at (415) 441-8669, or by email at firstname.lastname@example.org. Our Alameda annuity fraud attorneys have experience dealing with the policies and procedures of large multinational financial companies, and can help guide our clients through the civil process or toward an equitable settlement. We also handle financial elder abuse, banking and insurance fraud, and qui tam and whistleblower law.