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Aug 1, 2021 by |

Napa Financial Elder Abuse Attorney: Real Economic Injury To Seniors In Deferred Annuities


The Adverse Impact Of Certain Annuities

Fees And Zero Returns In Rising Markets

Penalties On Exiting Policies

Annuities are complicated investments. Some bear complex qualities of both insurance and securities products. Annuities can be structured as deferred or immediate.  Deferred annuities can be variable or fixed, or a hybrid of the two known as fixed indexed contracts.  The details in the contracts are as difficult to understand as the titles. Before investing, always review the terms, ask detailed questions, talk to friends and family, talk to multiple advisors, including your tax advisor.  Although we do not give investment advice, Evans Law Firm, Inc. recommends against deferred annuities, including fixed indexed annuities, for older consumers based on what we have seen in our litigation experience: sales commissions and annual fees on these policies are high; the return on your money rarely meets expectations (we have seen contracts produce zero returns even in strong markets); and, by penalizing you for any withdrawal, deferred annuities effectively tie up your money for years.  Once you’re sold an annuity it is very expensive to get out.  If you want to switch investments or just access your own money when you need it, you will pay a penalty.  Despite these pitfalls, insurance agents puh these complex policies (over, say, direct mutual fund investments) because every sale generates a sizeable sales commission.  In the sales process, agents make guarantees and promises which are often illusory.  If you are over 60, and live in Napa, San Francisco or elsewhere in the Bay Area or anywhere in California and have experienced an economic loss as a result of the sale of an unsuitable annuity or other investment product, including a fixed indexed annuity, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy. 

Surrender Penalties, Fees, And Risks

  • While immediate annuities may begin payments to the investor within the first year, deferred annuities may lock up an investor’s money for years before they can receive payments. Investors who need to access their money before the end of the deferral period typically pay hefty surrender penalties, even if the money is needed for emergency medical treatment or changes in living arrangements. A surrender penalty means that if the person needs access to their money during the surrender period, they lose part of their principal. Surrender penalties may be as much as 15 percent or more of the principal withdrawn. Some deferral periods last as long as 15 years. So if you’re sold an annuity when you are 70, you would not receive any income payments – or be able to withdraw your money without penalty – until you are 85!
  • As the result of complex rules regarding how returns are calculated, the return you actually receive on your money is significantly lower than the “teaser” or “contract” rate. We have seen senior customers sold contracts promising 5-7% rates of return actually see zero returns, even in years when markets performed positively.
  • Any return under your policy will be subject to caps and “participation rates.” Caps put a ceiling on your return; if your chosen index does better than the cap, the cap is what you will earn on your money not the actual return. A typical participation rate for a contract is 80% which means you will under the best of circumstances see only 80% of a fund’s return. Direct fund investments are not subject to caps and participation limitations.
  • High pressure sales tactics are real red flags. Do not be pressured by agents into making a decision quickly. Always get a second opinion and check your agent’s license with the California Department of Insurance. Some unscrupulous sellers use high-pressure sales pitches, seminars, and telemarketing. Beware of agents who “cold call” you, contact you repeatedly, offer “limited time offers,” show up without an appointment, or won’t meet with you if your family is present. Beware of estate planning “seminars” that are actually designed to sell annuities. Beware of seminars that offer free meals or gifts. In the end, they are rarely free. Beware of agents who give themselves fake titles to enhance their credibility.
  • Annuities are not insured investments like CDs even if they are sold by a rep at a bank. Future payments under your annuity are only as good as the carrier’s promise.

Second Opinions And Consultations With Tax Advisor

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.  We have seen seniors forced to pay large tax bills on replacements or surrenders of annuities that have been arranged by agents.  The results can be so disastrous that we repeat the advice – always get your tax advisor’s opinion before buying, surrendering or replacing an annuity.

Contact Us

If you are over 60 and live in Napa, San Francisco 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=””></a>. Ingrid will pursue all remedies available to you against all parties responsible, including 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. 

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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