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Jun 4, 2018 by |

Marin County and California Financial Elder Abuse and Annuity Attorneys: How Investors Get Into Trouble With Annuities


Beware The Hype

Annuities Are Complex And Dangerous To Your Pocketbook

Annuities are complex, long-term insurance contracts, especially deferred annuities. Agents and carriers often sell inappropriate or unsuitable annuity contracts to consumers, especially seniors. Agents and companies pitch the annuities as sound retirement investments offering income security late in life. The annuity lawyers at Evans Law Firm, Inc. recommend caution.[1]  Our attorneys have years of experience with annuities and have seen senior policyholders lose their hard-earned savings under these policies over time. If you’re over 60 and live in California, we can review your policy for free.  A list of the major providers of annuities in California appears below.

If you have already purchased an annuity and suffered a loss, including a tax loss, on a surrender (or withdrawal) or replacement of the contract, we can help. Contact the Marin County and California annuity and financial elder abuse lawyers today at Evans Law Firm at (415)441-8669.  As California lawyers, we only handle cases in California.  If you’re a senior citizen here in California, an agent’s and carrier’s conduct in selling you an inappropriate or unsuitable contract may constitute financial elder abuse in certain circumstances entitling you to extra damages and attorney’s fees under California law.

What Are The Problems?

Two major drawbacks to annuities are these: the policies are expensive and they tie up your money for a long time. Annuity sales generate large sales commissions and often carry continuing annual fees and charges that eat into your return.  Commissions run as high as 10% or more and it takes a long time to recoup that money.  Annual fees can be 1-3% or even more depending on what “enhanced” benefits an agent may sell you as endorsement (or “riders”) to your policy.  Big annual fees will erode your return even if the policy produces a gross return that looks impressive on paper.

But perhaps the biggest drawback is that your money will be tied up for a long time. This is a particularly dangerous situation for seniors who may need their money for emergencies like unexpected healthcare bills.  All deferred annuities will charge you a penalty for withdrawals during the policy’s surrender period; in some contracts these surrender periods last for up to 15 years.  The surrender charge imposed may run as high as 15% on your withdrawal.  Partial or full surrenders may also reduce any “enhanced” benefits you were sold.  The bottom line is that once your money is in an annuity it is very costly to get it back if and when you need it.  Direct investments in mutual funds or the market do not carry penalties like that.

Potential Tax Problems Too

If you do make a partial or full surrender, or an agent convinces you to replace your policy with another one, you may also incur a tax loss. Always review the tax consequences of an annuity with your accountant or tax preparer before you buy or replace an annuity. Withdrawals will be taxed at ordinary income tax rates and your tax bill on a surrender or replacement can wipe out the benefit of any tax deferral your agent promised when you were sold the policy.

In fact, be wary of annuities as deferred investments for retirement; they are complex and dangerous, often unsuitable, and the tax consequences can be disastrous. Remember that you already have an annuity in the form of Social Security, IRAs, 401(k) plans, and your employer’s pension plan.  Don’t jeopardize important tax deferral benefits by tying your money up in annuities; your withdrawals may be subject to tax prematurely (on top of the surrender charges you will pay).  Resist high-pressured sales pitches or agents who gloss over details.  Refuse quick decisions.  Consult an independent financial consultant or counsel who is not compensated by sales commissions.  Talk to your accountant or tax preparer.  Take your time and get professional help.

Contact Us

If you or a loved one paid a surrender charge on a partial or full surrender of an annuity and/or suffered a tax loss on an annuity surrender or replacement in Marin County or elsewhere in California, contact the annuity attorneys at the Evans Law Firm at (415) 441-8669, or by email at <a href=””></a>. Our attorneys have experience with annuities, life insurance, 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.

Some of the leading providers of life insurance and annuities in California are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong.  Rather, 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 National Life Insurance Company

Ameriprise Financial/RiverSource Life Insurance Company

Athene Annuity & life Assurance Company

Athene Annuity and Life Company

Athene USA

Aviva Life Insurance Company

AXA Equitable Life Insurance Company/AXA US

Bankers Life Insurance and Casualty Company

Brighthouse Financial, Inc./MetLife

Crump Life Insurance Services, Inc.

CUNA Mutual Group/CMFG Life Insurance 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

Lincoln Benefit Life Company

Massachusetts Mutual Life Insurance Company

Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.

Nationwide Life Insurance Company

New York Life Insurance Company

Northwestern Mutual Life Insurance Company

Pacific Life Insurance Company

Principal Financial Group

Prudential Life Insurance Company

Raymond James Insurance Group

RiverSource Life Insurance Company/Ameriprise Financial

Security Benefit Life Insurance Company/Guggenheim Partners

Symetra Life Insurance Company

Transamerica Life Insurance Company

Unum Life Insurance Company of America

Voya/Reliastar Life Insurance Company

World Financial Group Insurance Agency, Inc.

[1] We do not provide tax or investment advice.

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