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Mar 17, 2021 by |

Contra Costa County and California Annuity and Financial Elder Abuse Attorneys: Study The Disadvantages Of Annuities Before You Buy


Deferred Annuities Are Expensive, Complicated Insurance Policies

Hidden Dangers For Seniors Especially

Penalties For Getting Out Of An Annuity

Deferred annuities are contracts between you and an insurance company. You pay for the annuity through a lump sum or payments over time, and at some future date the insurance company will make regular payments to you.  Insurance agents and financial advisors, often through banks, sell these deferred annuities often as retirement income vehicles for seniors.  The annuity and financial elder abuse attorneys at Evans Law Firm, Inc. urge seniors to avoid these expensive, complicated insurance policies.  We have seen too many seniors financially harmed by them through a combination of high fees, low returns and surrender penalties when the policyholders needed their money back. In real life, deferred annuities are simply unsuitable for senior consumers.  We can represent you if you’re over 60 and have suffered a loss due to cancellation, replacement, full or partial surrender, or high fees connected with a deferred annuity or other unsuitable insurance product here in Contra Costa County or throughout California. Call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy. 

Understanding Fees And Surrender Charges

Any time you consider an annuity contract, you need to understand all the fees that come with it.  First, understand that the agent will receive a sales commission as high as 10% on the transaction.  The agent may try and convince you that a “premium bonus” under the contract will essentially reimburse you but don’t buy it.  Bonuses are gimmicks and you may never withdraw or receive the promised “bonus” back.  Deferred annuities also have administrative fees, mortality and expense fees, and rider fees for enhancements to policies.  There are also subaccount fees charged against your return on whatever index fund you select for investment of your premium dollars. Combined these fees can run as high as 2-3% and will erode or wipe out any return you may expect on your money.

But the biggest danger for senior buyers is surrender charges. A surrender charge applies when you make more withdrawals than you’re allotted. Your insurance company could limit withdrawals particularly during the early years of your contract. Surrender fees are often as high as 15% and can apply for periods up to ten years or more.

Understanding How Your Return Is Calculated

One very basic rule for you to remember is that the performance of your annuity will not reflect the performance of the index fund you select.  When you are sold an annuity even if you are given the opportunity to select an index fund for your investment, your policy return will not track the real return on that fund for several reasons.  First, your return will be capped at a percentage that may be less than the fund’s real return in any given year.  Second, you do not receive the benefit of reinvested dividends on the stocks in the fund as you would with a direct investment in the fund.  Third, the insurance company will also limit your gains through something called a “participation rate.” If you have a participation rate of 80%, then your investments will only grow by 80% of the amount that the index fund grew. If your goal is to invest in the stock market, then you should consider investing in an index fund on your own. Direct mutual fund investments do not carry these caps and limitations, and if you make your mutual fund investment through an IRA or other tax-deferred vehicle, you will also reap the benefits of tax deferral.  Annuity investments on the other hand, ALWAYS have tax consequences so never buy or surrender or replace an existing annuity without first consulting your tax advisor.

Contact Us

If you are over age 60 and have lost money as the result of a deferred annuity transaction or surrender in Contra Costa County or elsewhere in California, call Ingrid M. Evans and the other Evans Law Firm attorneys at (415) 441-8669 (or toll free at 1-888-50EVANS)  or by email at <ahref=””></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


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.

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