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Apr 12, 2018 by |

California and San Mateo County Annuity and Financial Elder Abuse Attorneys: Should I Buy an Annuity?

ATTORNEY NEWSLETTER

Understanding Annuities

If you are over 60 and nearing retirement, the question of whether you should purchase an annuity as part of your retirement savings plan is likely to come up. Insurance agents and advisors, who stand to make a commission on any sale, promote annuities as important retirement savings vehicles.  Or you may have an existing annuity that an agent suggests you replace with a “better” one.  Be cautious whether you’re a first-time buyer or you’re considering replacement of an existing policy.  Ultimately, the decision on whether to buy an annuity is yours alone but make sure you understand how they work and get a second opinion before any purchase or surrender/replacement, including from your tax advisor.

We at Evans Law Firm represent clients, especially seniors, who have lost money on surrenders and replacements of annuities or from high commissions and fees on new or existing contracts.[1] There are significant downsides with these complicated investments especially for seniors and agents and advisors often prey on seniors in marketing annuities.  If you or a loved one has suffered a loss from an unsuitable annuity, surrender and/or replacement of an existing annuity, or other form of financial elder abuse in San Mateo County or elsewhere in California, call Evans Law Firm, Inc. at (415)441-8669 and we can help. 

Tying Up Savings and Hidden Costs

Whenever considering an annuity, remember that you already own one in the form of your Social Security benefit. You can always find out what your benefit is estimated to be by asking the Social Security Administration for a statement of your benefits.  You may also have a pension where you work and that is another annuity you already hold. You can also take advantage of tax-deferred retirement savings by contributing to IRAs and 401(k) plans without sinking your money in an annuity.

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. Commissions are paid out upfront and are substantial on life insurance and annuities. It takes a long time – and a healthy return – to recoup that upfront money.
    • Annual contract fees can run high as well. Make sure you know all the fees you’ll be paying.
    • Investment management fees. In variable and fixed indexed annuities your money will be held in separate mutual fund subaccounts. These subaccounts charge fees too, not always disclosed.
    • Optional rider fees for guaranteed income for life or enhanced death benefits. These fees can accumulate fast and significantly erode any return.
    • Withdrawal or surrender charges. Surrender charges can be as high as 14% and last for up to ten years or more.

With any annuity, your money is tied up for a long time and any early withdrawal is subject to hefty surrender charges. This is especially dangerous for seniors who may need their money before their policy matures. Also, agents will entice seniors to replace an existing annuity with a new one.  As we mentioned above, any replacement (also known as twisting, switching or “churning”) can be costly.  You may incur steep surrender charges when surrendering your existing contract and may incur an unexpected tax liability.  We at Evans Law Firm have seen policyholders hit with big tax bills on replacements.  Always seek the advice of an advisor who does not stand to gain from any purchase and always consult your tax advisor.  There may be significant tax consequences for replacements, rollovers, purchases, and withdrawals. 

Some of the major 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 annuity, annuity replacement, or paid surrender charges on a deferred annuity or any other annuity or has been the victim of financial elder abuse in San Mateo County 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 do not offer investment or tax advice.

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