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Sep 13, 2019 by |

California and San Francisco Annuity and Financial Elder Abuse Attorney: Understanding Indexed Annuities


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.

Contact Us

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=””></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

Athene USA

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.

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