Brokers Move from Variable to Indexed Annuities
Why the Variable Annuity is in Decline
2016 has been a rough year for many people, not least for sellers of variable annuities. Regulatory oversight, the new Department of Labor fiduciary rule, and market factors have led to a year that seems to be on track for near-record low sales of Variable Annuity policies. Perhaps it’s the name: in a year that has seen a number of market swings and downturns, maybe “Variable” is starting to sound more like “Unreliable.” But whatever the reason might be, it looks like the momentum has shifted to indexed annuities, a product that our Los Angeles indexed annuity attorneys have concerns with.
What are Indexed Annuities?
Indexed annuities are pretty much exactly what they sound like: they’re annuities in which the policyholders returns are linked to a stock index like the S&P 500. Although annuities are supposed to be contracts rather than investments, indexed annuities are often sold by brokers as a way to split the difference. Among the bold claims sometimes made by those who sell indexed annuities is the idea that they constitute a “risk-free” investment. This phrase is something our indexed annuity fraud attorneys know any knowledgeable investor is wary of, and with good reason.
It’s important to remember that insurance companies intend to make a profit off of every policy they sell. If they take on all of the risk and the policyholder gets all of the benefit, that’s contrary to their business model. To counteract this, indexed annuities often have a lower guaranteed return that a traditional annuity policies, and have a cap on how much of a return annuitants can get, allowing them to keep the excess if it’s a good year. Indexed annuities are essentially a work-around to allow insurance companies to put more of their money in the open market, with the hope of returning higher profits for investors.
What Consumers can Do
The annuity industry is notoriously opaque, and it can be hard for someone looking to make an investment to make an informed judgement between a single company’s offerings, let alone between what is sold by multiple brokers or other companies. There are dozens of different varieties, with dozens of different names and marketing strategies, and there seem to be more every day. Our Los Angeles indexed annuity attorneys believe that the best option for someone looking to make an investment is to talk to an independent, fee-based financial advisor, who has no incentive to steer you towards one policy or another.
Some of the major annuity and life insurance providers in California are:
- Aviva/Athene/Accordia Life Insurance Company
- Transamerica Life Insurance Company
- John Hancock Life Insurance Company
- Bankers Life Insurance and Casualty company
- Massachusetts Mutual Life Insurance Company
- Midland Life Insurance Company
- North American Company for Life and Health Insurance
- Pacific Life Insurance Company
- Prudential Life Insurance Company
- Genworth Life Insurance Company
- ING USA Annuity and Life Insurance Company
- Lincoln Benefit Life Company
- Metlife/Metropolitan Life Insurance Company
- Unum Life Insurance Company of America
- Voya/Reliastar Life Insurance Company
If you or a loved one has experienced annuity fraud in California, contact the Evans Law Firm indexed annuity fraud attorneys at (415) 441-8669, or by email at firstname.lastname@example.org. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a 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.