ATTORNEY NEWSLETTER
What are deferred annuities?
Deferred annuities are contracts where the policy holder makes an upfront premium payment in exchange for an income stream in years to come. The concept sounds simple enough but in fact deferred annuities, like fixed indexed annuities, are extremely complicated life insurance contracts sometimes running to 50-100 pages of technical language and actuarial tables. Agents and carriers often sell inappropriate or unsuitable annuity contracts to consumers, especially seniors. Agents and companies pitch the annuities as sound retirement investments offering income security late in life.
What are the disadvantages of deferred annuities?
Evans Law Firm, Inc. generally recommends against most types of deferred annuities for older consumers because these complex, expensive insurance policies may tie up a senior’s money for years and impose significant penalties if you need your money back. Deferred annuities are designed in a manner to keep you sticking with the insurance company and encourage you to do so. Deferred annuities contain surrender charges which maybe 10 percent or more of the value of the contract in some cases. There is a surrender period which can vary in length and sometimes be as long as 15 years. With such a contract, if you are sold a policy at age 70 you will be 85 before you can withdraw your money without a surrender charge. If your financial situation, medical emergency, or rising care costs force you to withdraw your money you may suffer a significant loss.
How do annuities compare to mutual funds?
Annuities are structured in a manner that does not include stock dividends which play a significant part in stock market gain. A mutual fund investment with reinvested dividends results in returns far exceeding those on deferred annuitie4s as a rule. In addition, carriers will typically impose a “participation rate” set below 100% so if the index you chose increases you will not get a 100% of that return, but a lower percentage. In addition, gains may be capped by the insurance company so that policyholders do not realize the full gain of those chosen stock index. All of the rules governing indexed annuities are complicated and are skewed in favor of the issuer. Evans Law Firm, Inc. generally recommends that consumers, especially older consumers, avoid deferred annuities. If you are over 60, live in the San Francisco Bay Area 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.
Are there marketing gimmicks for these deferred annuities?
Yes. Life insurance companies often sell annuities with marketing gimmicks like supposed upfront “bonuses.” These so-called “bonuses” are amounts added to the policy’s account value only for the basis of calculating returns. The bonus is not an amount you can withdraw. If you surrender your policy during the surrender period, you will be charged a surrender penalty and you will not receive any part of the “bonus.” If you surrender your policy after the surrender period, you may not be penalized, but you still will not receive your so-called bonus.
Contact Us
If you are over 60 and live in the San Francisco Bay Area 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:info@evanslaw.com”>info@evanslaw.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
Athene USA
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
PacLife
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.
