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Mar 6, 2018 by |

California and San Francisco Annuity and Financial Elder Abuse Attorneys: Immediate Annuities


Understanding Immediate Annuities

An immediate annuity is an insurance contract where the policyholder makes a single lump-sum payment and then begins receiving back almost immediately regular income payments. Imagine, for example, you’re over 60 and sell your home and decide to put some or all of the proceeds into an immediate annuity. You would have an agreed-upon income for a set number of years or for the rest of your life.  But you give up the option of investing or spending your money in any other way.  Once you buy an immediate annuity, your funds are illiquid.  So the decision to buy an immediate annuity is a serious one; if you need your money back for an emergency you cannot get it without a steep penalty.  There are other risks to consider which are covered in more detail below.Some fixed immediate annuity packages are predicated on longevity of the client. The higher the premium that is invested, the longer it will take for payouts to total the amount of the premium, or for the client to “break even.” The amount of time it takes for payouts to match premium is said to be 18 years.[1]If a client purchases life annuity and does not live long enough for the payouts to add up to the premium, that money is lost to the insurance company. Unfortunately, many companies take advantage of this fact to make unethical profits off of life annuities. The types of annuities available that do offer payouts after the client’s death often require much higher premiums.Decreased purchasing power is another risk of fixed immediate annuities. Immediate annuities have no adjustment for cost of living or inflation. Because immediate annuities usually do not accrue much (if any) interest, the money received in payouts devalues over time due to inflation. Thus, the client loses purchasing power over time.

There is a high annuity company failure risk. Unlike other forms of investments, annuities are not guaranteed by any federal government agency.

If you or a loved one has suffered a loss from an unsuitable deferred or immediate annuity, surrender and/or replacement of an existing annuity, or other form of financial elder abuse in San Francisco or elsewhere in California, call the Evans Law Firm at (415)441-8669 and we can help. Below we list several important considerations when deciding on an annuity purchase or replacement.

Risks with Immediate Annuities

Decreased purchasing power is a significant risk with immediate annuities. Your income payments will not be increased for inflation or cost of living increases.  What may seem like an adequate income amount today will not be so in ten or fifteen years from today.  Payouts devalue over time due to inflation. 

Also, remember that annuities are not insured by any government agency; they are only as good as the carrier’s ability to pay. Always examine the financial strength of the carrier you are considering. Be sure and get a second opinion from a professional who does not stand to gain on any purchase you may be considering.  Finally, always consult your tax advisor[1] before any purchase; annuity payouts always have tax consequences.

Protection for Seniors

Under California law seniors who purchase immediate annuities are guaranteed a 30-day free look period giving them time to pull out of the purchase if they decide the product is not right. The “free look” period must appear on the front of the policy jacket or on the coversheet in a specific font and following other statutory requirements for the disclosure.  Failure by the issuer to follow the statutory disclosure rules may be grounds for rescission of the contract and damages.

Remember also that annuities can be expensive in terms of the benefits they provide. Here are just some of the costs:

    • Commissions. Annuities are insurance contracts and, like other forms of insurance, pay commissions to the selling agent.
    • Make sure you know all the fees you’ll be paying.
    • Optional rider fees for guaranteed income for life or death benefits for your heirs. Immediate annuities that provide benefits after the policyholder’s death have a much higher premium.
    • Withdrawal or surrender charges.

Some of the major deferred and immediate annuity and life insurance providers in California are listed below. We are not in any way suggesting these carriers have done anything wrong.  Rather, the list is provided solely for our readers’ reference.

Allianz Life Insurance Company of North America

Allstate Life Insurance Company

American Equity Investment Life Holding Company

American General Life Insurance Company

American National Life Insurance Company

Ameriprise Financial/RiverSource Life Insurance Company

Athene Annuity and Life Company

AXA Equitable Life Insurance Company

Bankers Life Insurance and Casualty Company

EquiTrust Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Forethought Life Insurance Company/Global Atlantic Financial Group

Genworth Life Insurance Company

Global Atlantic Financial Group/Forethought Life Insurance Company

Guardian Life Insurance Company

Guggenheim Partners/Security Benefit Life Insurance Company

ING USA Annuity and Life Insurance Company

Jackson National Life Insurance Company

John Hancock Life Insurance Company

Life Insurance of the SouthWest/National Life Group

Lincoln Financial Group/The Lincoln National Life Insurance Company

MassMutual/Massachusetts Mutual Life Insurance Company

Metlife/Metropolitan Life Insurance Company

Midland National Life Insurance Company

Mutual of Omaha/United of Omaha Life Insurance Company

National Life Group/Life Insurance of the SouthWest

New York Life Insurance Company

Northwestern Mutual Life Insurance Company

Pacific Life Insurance Company

Principal Life Insurance Company

Pruco/Prudential Life Insurance Company

RiverSource Life Insurance Company/Ameriprise Financial

Security Benefit Life Insurance Company/Guggenheim Partners

Symetra Life Insurance Company

Transamerica Life Insurance Company

United of Omaha Life Insurance Company/Mutual of Omaha

Unum Life Insurance Company of America

Voya/Reliastar Life Insurance Company


Contact Us

If you or a loved one is over 60 and lives in California and has suffered loss on an unsuitable immediate or deferred annuity, annuity replacement, or paid surrender charges on an annuity or has been the victim of financial elder abuse in San Francisco or elsewhere in California, contact Ingrid Evans and the other Evans Law Firm annuity attorneys at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a FINRA arbitration, 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.

[1] We at Evans Law Firm, Inc. do not give investment or tax advice.

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