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Apr 12, 2023 by |

Napa County Financial Elder Abuse And Annuity Attorney: Why Deferred Annuities Are Poor Choices For Older Consumers


Costly Withdrawal Charges And Contract Fees

Interest Crediting Rules Favor Carrier

Risk of Loss Of Principal

Deferred annuities are contracts where the policy holder makes an upfront premium payment in exchange from an income stream in years to come.  The principle sounds simple enough but in fact deferred annuities, like fixed indexed annuities are extremely complicated insurance contracts sometimes running to 50-100 pages of technical language and actuarial tables.  Evans Law Firm, Inc. generally recommends against certain types of deferred annuities for older consumers because these complex, expensive insurance policies may tie up a senior’s money for years and impose significant penalties if you need your money back.  Also, the promise of the carrier to pay future income amounts is only as good as the carrier’s word; annuities are not insured deposits (like bank deposits) even if a banker sells you one. Sales and recommended surrenders and exchanges of deferred annuities to seniors may constitute financial elder abuse claims under Cal. Welf. & Inst. Code §§ 15610.30 (definition of financial elder abuse) and Cal. Ins. Code §10509 (suitability requirements for annuities). Questionable sales tactics, like unannounced home visits, “pretext” visits or falsified applications, are illegal.  See, e.g., Cal. Ins. Code § 790 et seq. (Unfair Insurance Practices Act).  If you are over 60, and live in Napa or elsewhere in California and would like us to review your annuity contract, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy. 

Downsides of Annuities

Surrender Penalties

When you put a lump sum into an annuity, essentially you’re surrendering your money for the term of your contract. If you want to back out of the annuity and change how your money is invested or if you have an emergency and need your money back, you will pay a withdrawal penalty, known as a surrender charge. Sometimes the charge can be as high as 15% and the period over which the charges apply last for several years. You will also incur a tax liability and annuity withdrawals may be taxed at ordinary income tax rates not the lower capital gains rate.

Fees and Commissions

Broker fees (or sales commissions) and service fees can be high on certain forms of annuities.  The reason brokers favor annuities is that they can make upwards of 10% in commission off the principal, which can mean a $10,000 payday on a $100,000 annuity sale, with fees increasing the more the annuity is amended and customized through policy “enhancements” known as “riders.”.

Not Insured Investments

One final sticking point with annuities is that they’re primarily bought through insurance companies, which are not backed by the federal government in the same way that banks are. (Even if a bank rep is offering you the annuity it will not be an insured deposit like CDs or other bank deposits.)  Because there is no FDIC insurance behind an annuity purchase, if the insurance company happens to fold, you risk losing everything you invested.

Contact Us

If you are over 60 and live in Napa or elsewhere in California and would like a free review of your policy contact Ingrid M. Evans at Evans Law Firm, Inc. 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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