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Feb 17, 2021 by |

Orange County and California Annuity and Financial Elder Abuse Attorneys: Deferred Annuities Are Unsuitable Investments For Seniors

ATTORNEY NEWSLETTER

Complicated Deferred Annuities Unsuitable For Seniors

Beware of High-Pressured Sales Tactics Like “Estate Planning Seminars”

“Bonuses” Are Marketing Gimmicks

Insurance companies offer sales commissions as high as 10 percent to insurance agents who sell products like long-term deferred annuities to senior citizens.  In our current economic environment, agents seize on anxiety about the future to push deferred annuities to seniors as “safe” investments for income later in life.  All seniors need to dig a little deeper to understand how deferred annuities operate in real life.  Deferred annuities can be structured as variable, fixed or indexed annuities. Indexed annuities are the most common form sold by agents.  Our annuity and financial elder abuse litigators have seen senior consumers harmed by these complicated, indexed products and want to share some tips to consider before you purchase on of these contracts.   If you already have, we can represent you if you’re over 60 and have suffered a loss due to cancellation, replacement, full or partial surrender, or high fees connected with an indexed annuity herein Orange County or throughout California. Call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy. 

Gathering Information on Indexed Annuities[1]

Never let yourself be pressured into making a quick decision about these complicated products at a seminar or “free lunch.” Always get a second opinion from a professional with nothing to gain from a sale and from your tax advisor.  Whenever an agent or advisor presents you with an indexed annuity keep these tips in mind:

  • Understand the complexity of these products. Indexed annuities are complicated insurance policies, not straight fund investments. Typically, the contracts run to over 50 pages, and may be much longer if the agent sells you endorsements to the policy like income and death benefits both of which come with additional annual charges.
  • Be mindful of surrender penalties, which can last anywhere from 5-15 years and be as high as 15% on money withdrawn. One State Attorney General reports two examples of how seniors are impacted by these high surrender charges: In the first example, a retired farmer on a fixed income paid $6,800 in surrender penalties when he needed access to his $24,000 (most of his net worth) placed in annuities.  In another case, an elderly woman was sold an annuity with surrender charges lasting for 16 years, or until she was 95 years old, with the surrender penalty being 17 percent of her investment.
  • Returns on indexed annuities are capped at a rate lower that may be lower than the true return on your chosen index, and are subject to a further limitation known as a “participation rate” that limits your return to 80-90% of an index return.
  • Administrative and subaccount fees are typically imposed under indexed contract and those annual fees will further erode your return.
  • Indexed annuities expose investors to investment risk. Annuities are insurance products and not bank investments insured by the FDIC – even if it’s a bank selling you the indexed annuities.  They are not insured like CDs.  The carrier’s promise to pay you future income is only as good as its ability to do so.
  • Understand how the return on the proposed indexed annuity is calculated and the extent to which price declines in the index can affect the performance of the indexed annuity.
  • Understand that dividends on the stocks in your chosen fund are excluded so your gains, if any, will not include the benefit of dividends as your return on a direct investment in the selected fund would.
  • Advertised “bonuses” are not genuine. They take years to vest and if you are forced to surrender your contract because you need your money back any supposed bonus will be recaptured by the carrier.

Evans Law Firm Represents Seniors Who Lose Money On These Contracts

Our annuity litigators have experience representing senior policyholders who have lost money on surrenders, cancellations, replacements or exchanges of indexed annuities or as a result of the fees or penalties imposed under the contracts.  We represent seniors here in Orange County and throughout California. We do not provide investment advice or tax advice and urge you always to seek a second opinion from an investment professional and consult your tax advisor before letting an agent sell you any type of deferred annuity, including an indexed contract.  If you have already purchased a policy, are over age 60 and live here in Orange County or elsewhere in  California and experienced a financial loss as a senior that’s where our attorneys may be able to help.

Contact Us

Ingrid M. Evans and the other Orange County annuity and financial elder abuse attorneys at Evans Law Firm represent senior consumers against insurance agents and carriers who have sold unsuitable policies, failed to disclose important information or otherwise caused senior consumers to lose money on deferred annuities.   If you are over age 60 and have lost money as the result of an annuity transaction or surrender here in Orange County or elsewhere in California, you can reach Ingrid and the other Evans Law Firm attorneys at (415) 441-8669 (or toll free at 1-888-50EVANS)  or by email at <ahref=”mailto:info@evanslaw.com”>info@evanslaw.com</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

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.

[1] The U.S. Securities and Exchange Commission (SEC) and the Financial Institutions Regulatory Authority (FINRA) both have good publications on annuities. You can read the SEC Bulletin on indexed annuities here: https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_indexedannuities. FINRA offers information on indexed annuities here: https://www.finra.org/investors/insights/complicated-risks-and-rewards-indexed-annuities.

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