Pitfalls For Older Consumers
Complicated, Expensive And Illiquid Contracts
Limits On Returns
Evans Law Firm, Inc. generally recommends against certain types of deferred annuities especially for seniors because these complex insurance policies carry high fees, lack transparency, and are illiquid (meaning it is costly to get your money back). There are other disadvantages as well, as we explain further below. Questionable sales tactics and presentations and the policies themselves may constitute violations of insurance laws and elder protections. Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse); Cal. Ins. § 790 et seq. (Unfair Insurance Practices Act). Relief for injured seniors includes awards of attorneys’ fees and expenses for bringing your case. Cal. Welf. & Inst. Code § 15657.5. If you are over 60, live in San Francisco or elsewhere in Beverly Hills, Los Angeles or elsewhere in Southern California and own a deferred annuity, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy.
Reasons Annuities Might Be a Bad Investment for You
Annuities Can Be Incomprehensible
Annuity contracts often contain complex jargon, various payment options and intricate investment structures and interest crediting rules. Some contracts are over 100 pages long. The sheer, industry jargon, tables, and numbers can make it challenging for individuals to fully understand the annuity’s terms, risks and benefits.
Some annuities can come with much higher fees than other investment vehicles. Annuities can have sales commissions, administrative charges and investment expenses. These fees can erode a significant portion of your potential returns, making other investment options more cost-effective.
Deferred annuities have restrictions on withdrawals. Specifically, annuities typically surrender charges if you take a distribution or cash out the annuity before the agreed-upon age in the contract.
Withdrawing funds from an annuity before a certain age (usually younger than 59½) results in a 10% penalty tax on the withdrawal. Withdrawals, before and after age 59 1/1 are generally taxed at ordinary income tax rates, not capital gains rates.
Indexed annuities offer market-linked returns but limit your earnings if the stock market performs well. This “cap” restricts your annuity’s returns to a specific amount, while most other investment accounts are not capped.
No FDIC Insurance
The Federal Deposit Insurance Corporation (FDIC) does not insure annuities like it does bank accounts, even if a bank officer is selling you the annuity. Lack of FDIC coverage means the contractual promise to pay income to you in the future is only as good as the company’s promise to do so.
If you are over 60 and live in Beverly Hills, Los Angeles or elsewhere in Southern California and have a deferred annuity or universal life insurance contract, we can review your contract for free. You can reach Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669, or toll free at 1-888-50EVANS or by email at <a href=”mailto:firstname.lastname@example.org”>email@example.com</a>.
Some significant issuers and distributors of fixed, variable and fixed indexed deferred annuities in California are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong. The list is provided solely as a reference for our readers.
AIG/American General Life Insurance Company
Allianz Life Insurance Company of North America
American Equity Investment Life Insurance Company
American General Life Insurance Company/AIG
American International Group, Inc. (AIG)
American National Life Insurance Company
Athene Annuity & Life Assurance Company
Athene Annuity and Life Company
Aviva Life Insurance Company
AXA Equitable Financial Services, LLC
AXA Equitable Life Insurance Company/AXA US
AXA Advisors, LLC
Brighthouse Financial, Inc./MetLife
EquiTrust Life Insurance Company
Fidelity & Guaranty Life Insurance Company
Genworth Financial, Inc.
Genworth Life and Annuity Insurance Company
Genworth Life Insurance Company
Guggenheim Partners, LLC
Guggenheim Partners/Security Benefit Life Insurance Company
ING USA Annuity and Life Insurance Company
Jackson National Life Insurance Company
John Hancock Life Insurance Company
Lincoln Benefit Life Company
Lincoln Financial Group
Massachusetts Mutual Life Insurance Company
Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.
Minnesota Life Insurance Company
Nationwide Investor Services Corporation (NISC)
Nationwide Life and Annuity Insurance Company
Nationwide Life Insurance Company
New York Life Insurance Company
Northwestern Mutual Investment Services, LLC
Northwestern Mutual Life Insurance Company
Northwestern Mutual Wealth Management Company
Pacific Life & Annuity Company
Pacific Life Insurance Company
Security Benefit Corporation
Security Benefit Group, Inc.
Security Benefit Life Insurance Company/Guggenheim Partners
Security Investors, LLC
Security of Denver Life Insurance Company/Voya
Transamerica Life Insurance Company
Voya Financial Advisors
Voya/Reliastar Life Insurance Company
World Financial Group Insurance Agency, Inc.