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Jun 1, 2021 by |

Los Angeles Financial Elder Abuse Attorney: Misconceptions About Annuities

ATTORNEY NEWSLETTER

Dangers For Seniors

Questionable Sales Tactics And Inadequate Disclosures

Replacement Transactions Can Be Costly

Financial elder abuse includes the sale to seniors of unsuitable insurance products.  These unsuitable insurance products include deferred annuities, complex contracts with high fees and significant penalties, known as surrender charges, if you need to get your money out. Sales of these annuities generate sizeable commissions for agents but may result in serious economic harm for seniors.  Pursuing those big commissions, agent may give consumers a misconception as to how these contracts actually work or use inappropriate sales practices targeting senior consumers especially.  “Free lunch” investment seminars may be on hold right now during the pandemic but other tactics may be used to try and convince a senior consumer they need an annuity urgently or, if they already have one, need urgently to replace it with a new contract.  Also, we recommend that consumers never use the proceeds of a reverse mortgage to purchase an annuity or other form of insurance. Besides being a bad idea economically, California law prohibits lenders and others from cross-selling annuities with reverse mortgages.  California Civil Code Section 1923.2(i).  Never let yourself be rushed into a transaction but take your time to learn about what’s being proposed.  Deferred annuities are very costly to get out of and an exchange or replacement transaction can also be costly and generate a tax.   If you are over 60, live in Los Angeles or elsewhere in California and have experienced an economic loss as a result of the sale of an unsuitable annuity or other investment product, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy. 

What To Consider If Approached With A Deferred Annuity

If you are a senior citizen considering a deferred annuity, here are a few ideas to keep in mind when approached:    

  • Understand the long-term nature of deferred annuities. Once you’re sold a contract, there will be a penalty if you withdraw your money before the expiration of the surrender period. The surrender period can be as long as ten years or more and the withdrawal penalty can be as high as 15%.
  • Compare information for similar contracts from several companies. Comparing products may help you make a better decision.
  • Ask your agent and/or the company for an explanation of anything you don’t understand. Annuities have extremely complex rules regarding how returns are calculated, for example, and the return you actually receive on your money may be significantly lower than the “teaser” rate the agent offered you.
  • Learn what caps and participation rates the policy imposes because caps and limitations will reduce your return from whatever full rate of return the chosen index generates. By comparison, any direct investment you make in an index fund would not have these limitations.
  • Verify that the company and agent are licensed. Watch for red flags: high pressure sales tactics, talk that you have to act fast or will miss an opportunity, and delay in providing credentials.
  • Check the company’s credit rating. Legitimate insurers have their “creditworthiness” rated by independent agencies such as Standard & Poor’s, A.M. Best Co. or Moody’s Investors Services. An “A+++” or “AAA” rating is a sign of a company’s strong financial stability. Annuities are not insured investments like CDs and other bank deposits; the promise to pay is only as good as the company’s word.
  • Keep detailed records. Get all rate quotes and key information in writing. Once you’ve made a purchase, keep a copy of all paperwork you complete and sign, as well as any documents you’ve been given, including illustrations, correspondence, special offers and payment receipts.

Avoiding Manipulation And Financial Elder Abuse

Unscrupulous agents or financial advisors are particularly successful in preying on older investors who do not have someone to discuss business matters with before they make a decision. The results can be disastrous financially.  Some investments may be entirely fraudulent as in Ponzi schemes.  Other investments may be entirely unsuitable for the senior consumer and extremely expensive to get out of as is the case with deferred annuities.  Any of these investments may also result in tax liabilities.  If you are a senior, always get a second opinion on any investment proposal from a professional with nothing to gain from a sale.  Also always consult your tax advisor before making any purchase or exchanging, surrendering or withdrawing from any annuity.  All annuity transactions have tax consequences.

Contact Us

If you are over 60 and live in Los Angeles or elsewhere in California and have lost money on a deferred annuity or indexed universal life insurance contact Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Ingrid will pursue all remedies available to you against all parties responsible.  These remedies include restitution (getting your money back), extra damages (to punish the fraudulent conduct) and awards of attorneys’ fees and costs to the senior forced to bring an action against the wrongdoers.  Ingrid handles 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.

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.

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"We contacted Evans Law Firm when we were unable to collect on a Long-Term Life Insurance policy for an elderly family member. Ingrid responded almost immediately with an offer of a free consultation. I was immediately impressed with her passion for justice!!"
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