Variable Annuities Are Complex and Expensive
The High Cost of Variable Annuities
Our lawyers recommend you always beware when an insurance agent tries to sell you annuities or life insurance, particularly if you’re a senior. Annuities may be fixed (locked in interest rate), indexed (a blend of locked in rates and variable, or market, rates) or variable (completely variable depending on market performance). Each different type of annuity raises red flags for unsuspecting older consumers: sales commissions are high, annual contract fees are high, enhanced benefits are rarely beneficial in practice, there are complexities in naming beneficiaries, and any money tied up in an annuity can be withdrawn only by paying a hefty penalty in the “surrender” period for the annuity, which can be as long as 15 years.
The Marin annuity and financial elder abuse attorneys at Evans Law Firm, Inc. represent consumers, often seniors, who have lost money through high commissions and fees, withdrawal charges and tax bills as a result of the sales and exchanges of inappropriate annuities and life insurance, including on variable annuities. If you or someone you know is over 60 and lives in San Francisco or elsewhere in California and has lost money on a fixed, indexed or variable annuity, call us today at 415-441-8669.
Here are some of the issues to weigh when considering a variable annuity:
- Death beneficiary complications. Couples often own an annuity jointly, or name one spouse as the owner and the other as the “annuitant.” (The annuitant is the person whose life expectancy determines how much is paid out if the contract is “annuitized,” or turned into a stream of regular payments.) The couple often assumes any leftover money will be paid to the beneficiaries, typically the children, only after the second spouse dies. While some insurers do just that, most pay the beneficiaries after the first death, disinheriting the surviving spouse. Be sure you understand what happens after the first death and change the beneficiary if necessary to make sure the money goes where they want.
- Misunderstanding values. The typical variable annuity has several values: what you get if you cash out (the account or cash-out value), what your heirs get if you die (the death benefit) and what you get if you convert the annuity into a stream of payments. This last amount typically is calculated using the “income base,” which is the most commonly misunderstood value, financial planners say. The income base is a kind of phantom number that grows over time by a guaranteed amount, defined in the contract. But the income base is not available for withdrawal. It is only the base for regular income payments from the contract after annuitization.
- Exchanging an older variable annuity. Owners of older policies should be careful not to unwittingly exchange them for newer contracts without understanding the consequences. Since annuities are typically sold on commission, agents have an incentive to advise you to swap your current annuity for a new one, whether it’s in your best interest or not. Because salespeople typically aren’t required to put your best interests always consult someone who is – such as a fiduciary fee-only planner – before buying, exchanging or cashing out a variable annuity. Be sure to consult your tax advisor as exchanges have tax consequences and reset the clock on surrender penalty withdrawal periods.
- Pressure sales. Never allow yourself to be pressured into a purchase. Avoid tactics like “free lunch” seminars; the end result can be a sale of an expensive annuity or life insurance policy that you do not need and which can wipe out savings through fees, penalties and low growth.
If you or a loved one has lost money on a fixed, indexed or variable annuity in Marin County or elsewhere in California, contact Ingrid M. Evans and the other Evans Law Firm annuity attorneys at (415) 441-8669, or by email at <a href=”mailto:firstname.lastname@example.org”>email@example.com</a>. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.
Annuities and life insurance produce large sales commissions for brokers but are often inappropriate products for consumers, especially seniors. Leading providers and distributors of life insurance and 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. Rather, 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
Ameriprise Financial/RiverSource Life Insurance Company
Ameriprise Financial/Securities America, Inc.
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
Bankers Life Insurance and Casualty Company
Berkshire Hathaway Group
Berkshire Hathaway Life Insurance Company of Nebraska
Brighthouse Financial, Inc./MetLife
Citigroup Global Markets, Inc.
Crump Life Insurance Services, Inc.
CUNA Mutual Group/CMFG Life Insurance Company
Delaware Life Insurance Company
EquiTrust Life Insurance Company
Fidelity & Guaranty Life Insurance Company
Forethought Life Insurance Company/Global Atlantic Financial Group
Genworth Financial, Inc.
Genworth Life and Annuity Insurance Company
Genworth Life Insurance Company
Global Atlantic Financial Group/Forethought Life Insurance Company
Guardian 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
Merrill Lynch Life Agency Inc.
Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.
Minnesota Life Insurance Company
National Life Group
National Life Insurance Company/Equity Services, Inc.
National Western Life Insurance Company
Nationwide Life Insurance Company
New York Life Insurance Company
North American Company for Life and Health Insurance
Northwestern Mutual Investment Services, LLC
Northwestern Mutual Life Insurance Company
Northwestern Mutual Wealth Management Company
Oxford Life Insurance Company
Pacific Life Insurance Company
Principal Financial Group
Prudential Life Insurance Company
Raymond James Insurance Group
Reliance Standard Life Insurance Company/Tokio Marine Group
RiverSource Life Insurance Company/Ameriprise Financial
Securities America, Inc./Ameriprise Financial
Security Benefit Corporation
Security Benefit Group, Inc.
Security Benefit Life Insurance Company/Guggenheim Partners
Security Investors, LLC
Security Life of Denver Insurance Company/Voya
The Standard Life Insurance Company
Symetra Financial Corporation
Symetra Life Insurance Company
Transamerica Life Insurance Company
The United States Life Insurance Company in the City of New York
Unum Life Insurance Company of America
USAA Life Insurance Company
The Variable Annuity Life Insurance Company
Voya Financial Advisors
Voya/Reliastar Life Insurance Company
Wells Fargo Advisors
Western & Southern Financial Group
The Western & Southern Life Insurance Company
World Financial Group Insurance Agency, Inc.