Indexed Annuities Are Complex and Expensive
SEC Issues Bulletin Warning Consumers of Risks
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 are complicated insurance products with a lot of red flags for consumers, like high fees and commissions, confusing rules regarding returns on your money, and penalties on withdrawals. Indexed annuities. sold by agents as a way for investors to realize upside market potential and downside protection, are especially complex. The U.S. Securities and Exchange Commission (SEC) last week released a bulletin explaining some of the risks with indexed annuities.
The San Francisco annuity and financial elder abuse attorneys at Evans Law Firm, Inc. represent consumers, often seniors, who lose money on indexed annuities through high commissions and fees, misleading information, withdrawal charges and tax bills. If you or someone you know is over 60 and lives in San Francisco or elsewhere in California and has lost money on an indexed annuity, call us today at 415-441-8669.
The SEC Bulletin points out that consumers can lose money on indexed annuities in the following ways:
Withdrawals during a time period. If you take your money out of your indexed annuity before the end of a time period, not all of the return from that time period may be applied to your annuity. In addition, you may lose some of the principal invested in certain indexed annuities if you withdraw amounts before the end of a time period, depending on the value of the market index at the time of the withdrawal.
Surrender charge. If you take all or part of your money out during the surrender period, you may have to pay a surrender charge. The surrender period is a set period of time that typically lasts six to ten years, or even longer, after you purchase the annuity. Surrender charges will reduce the value and the return of your investment.
Tax penalty. Under current tax law, if you take all or part of your money from tax-deferred indexed annuities before you reach the age of 59½, you may have to pay a 10 percent federal tax penalty.
Market index drop. You may lose money in some indexed annuities if the market index goes down.
Insurance company failure. Many indexed annuities promise to make payments many years into the future. But remember that all amounts payable are subject to the ability of the insurance company to pay. Circumstances may arise where the insurance company is unable to pay its obligations.
The SEC Bulletin also describes the complexities in how your gain is calculated under an indexed annuity. First, dividends on the stocks in your chosen index are not included in calculating your gain. In a direct mutual fund investment you would receive the benefit of those dividends. Second, caps and participation rates limit your return to only a portion of the gains made in the chosen index. Direct investment in the index would not be subject to these limitations.
The takeaway from the SEC Bulletin is that indexed annuities, like other forms of deferred annuities, present considerable risks to investors. Always consult a professional with nothing to gain from any sale of an indexed annuity to you and always consult your tax advisor before you buy as contributions, exchanges, surrenders and withdrawals all have tax consequences.
If you are over 60 and live in California and have lost money on an indexed annuity or other type of deferred annuity, contact Ingrid M. Evans and the other Evans Law Firm annuity attorneys at (415) 441-8669, or by email at <a href=”mailto:email@example.com”>firstname.lastname@example.org</a>. California law provides injured seniors with restitution (getting your money back), extra damages (to punish the fraudulent conduct) and awards of attorneys’ fees and costs to the senior forced to bring an action against the wrongdoers. If you have suffered a loss from this kind of agent/advisor misconduct, the lawyers at Evans Law Firm will work with you to see that those responsible for your loss pay up. 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
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/Reliastar Life Insurance Company
Wells Fargo Advisors
Western & Southern Financial Group
The Western & Southern Life Insurance Company
World Financial Group Insurance Agency, Inc.