Deferred annuities can seem like the best option available to retired senior citizens, or people who are about to retire, elder financial fraud attorneys in California note. But these consumers should be wary of these life insurance policies, as some companies offer terms that are not beneficial for anyone over 60, who want to put their hard-earned retirement money into a long-term life insurance policy.
Older Californians can be misinformed by their insurance companies about the deferred annuities they purchase. In most cases, the insurance agency is counting on their clients not to outlive the terms of their policies, in which case the agency does not have to pay out the expected interest, and instead collects on the clients’ premiums.
One way to tweak the terms of the agreement in the insurance company’s favor is to extend the deferment period beyond the client’s original understanding. When a client selects a deferred annuity option, insurance companies, such as Aviva Life and Annuity Company and others, promise to defer the payments made to the insured party on their principal payment. This process maximizes the client’s total return, but only if the client is alive to see the payout. Extending the deferment period can be extremely detrimental for clients age 60 and older, who may have their payments deferred beyond the years they expect to live.
While a deferred annuity is an appealing option for older Californians who stand to benefit from the gamble—outliving the period their insurance company plans for them—the payout plans may not be worth the investment. Consumers have to invest a certain amount from their personal savings or retirement funds in order to see a substantial profit in the interest payments on their policies.
At Aviva Life and Annuity Company, financial advisors advertise fixed indexed annuities, promising consumers the safety of a traditional, fixed annuity plan, along with the potential for growth over a longer term agreement. A fixed indexed annuity has the capability to earn more interest than a traditional fixed annuity, which credits clients at a guaranteed minimum interest rate. With this annuity, Aviva offers consumers the chance to defer taxes until they receive payments from their insurance policies, and can supplement a retirement income. The company recommends this policy for anyone who is afraid of outliving their current retirement funds, or who wants to leave financial support to their loved ones after their death.
These policies can provide senior citizens in California the security of a steady supplemental income, provided the insured parties live long enough to see their investments pay off. But sometimes the terms of a deferred annuity are risky enough that Californians age 60 and older should consider their options—if they are not in the best of health, if the company is asking for a large premium payment, or if the terms of their agreement seem longer than the policyholder’s life expectancy.
At the Evans Law Firm, we recommend that older citizens who have purchased deferred annuities, or are looking into similar policies, with Aviva Life and Annuity Company, contact our elder financial fraud attorneys to determine if the purchase of an Aviva Annuity was an appropriate or suitable annuity sale for you and your loved ones at 415-441-8669.