Why Do Annuities Have a Bad Reputation?
If you’ve been looking into an annuity, it’s almost certain you’ve come across a lot of sources warning you away. Why is that? On the surface, an annuity can make sense: purchasing an annuity now can save money on taxes, provide certainty in retirement funding, and guarantee a livable income for old age. Unfortunately, there are a few problems with that model. Annuities have features that may not be appropriate for your financial situation, such as high surrender charges, forfeiture charges, and even charges for heirs after your death. Many large insurance companies like Transamerica Life Insurance Company, John Hancock Life Insurance Company, and others are also major sellers of annuity policies that have surrender charges and other penalties.
Before we start, Evans Law Firm would like to make clear that it is in no way endorsing the policies or products that are referenced below. Annuities can be risky purchases, and it is important to observe, read, and discuss and financial product before you spend your money.
What Makes an Annuity Risky?
One of the biggest concerns for annuity owners is their main feature: they take your money up front. What you pay includes a sometimes sizeable commission for the salesman, sometimes as much as 15%. Once your funds are in the hands of a financial company, you may have to jump through hoops to access what’s rightfully yours. Liquidity charges, penalties for withdrawing money from your annuity, and other hidden costs can make getting your money an expensive proposition. In addition, earnings from your annuity can be used to pay you “bonuses,” which are in reality nothing more than money borrowed against your earnings in the next years. The San Francisco securities fraud lawyers at the Evans Law Firm warn that these factors can cause serious disarray to your finances if you haven’t been informed at your time of purchase.
What can you do to Protect Yourself?
The first and best line of defense against any possible fraud is to educate yourself. Annuities, life insurance, anything: it’s your money, your future, and your responsibility to read the fine print. Hit the books, talk to an attorney, speak with family and friends. If someone is trying to hurry you into buying, that’s a red flag: someone who truly has your best interests at heart would want you to take your time and think over your options. Remember that annuities can affect your eligibility for Medicaid, Medi-cal, SSI, and other services.
What to Know about John Hancock
Named for the Governor of the Massachusetts Bay Colony who so flamboyantly signed the Declaration of Independence two and a half centuries ago, John Hancock Life Insurance Company lasted from just before the Civil War to 2004, when it was purchased by Manulife. Today it serves as the U.S. business name for Manulife, and in that role operates as one of the largest insurers in the country, offering Life insurance, Long Term care insurance, retirement planning, and a range of other financial products. The name is meant to stand as a symbol of integrity and commitment.
John Hancock Life Insurance Company was purchased in 2004 for $10.4 Billion, by Manulife, the largest life insurance company in Canada and a massive corporation with annual revenue exceeding $54 billion. They manage over $400 Billion of their customers’ funds and make a profit of $3-$4 Billion per year. John Hancock exists only as a brand, not a company, but still operates out of Boston, less than 2 miles from the grave of its namesake. It once operated out of the tallest building in New England, John Hancock tower, but has since moved to more modest digs after being acquired. Manulife, with John Hancock, sponsored the 2008 Olympics and the Boston Marathon, as well as numerous other large-scale events.
Do I own anything from John Hancock?
Chances are pretty good that if you own whole life insurance, indexed universal life insurance, or an annuity, that you may have purchased in from Manulife through John Hancock. The company has millions of clients with dozens of services, including college savings, retirement planning, and has even published booklets about the founding fathers.
What should I know about the Policies?
Annuity policies are a major investment, and are supposed to provide a stable stream of funds that will last through retirement and old age. However, penalties and charges can sometimes mean that a lot of your money is going to pay commissions and fees you didn’t know existed. Often you are charged for accessing funds in your account, try to surrender or withdraw from a deferred annuity. Many of the penalties can last up to 15 years, and sometimes this duration is not made clear. Our California consumer protection law firm has been investigating annuities for some time. You can read more about annuity fraud elsewhere on our website.
Where Can I Get Help?
The attorneys at the Evans Law Firm specialize in insurance and banking fraud, consumer rights, and IRS and SEC cases, as well as elder law, whistleblower, and class action cases. If you believe that you or a loved one may have purchased an annuity under false pretenses, or one which was improperly administered, call Evans Law Firm at (415) 441-8669, or email email@example.com