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May 16, 2022 by |

Orange County Financial Elder Abuse And Annuity Attorney: What Seniors Need To Know About Deferred Annuities

ATTORNEY NEWSLETTER

Be Wary Of Certain Kinds Of Sales Presentations 

Understand The Fees And Withdrawal Penalties

Avoid Replacement Transactions

Deferred annuities are complicated insurance policies with characteristics of life insurance and complex securities investments; contracts run from 50 to 100 pages or more and are filled with technical language and actuarial tables. Insurance agents are paid significant sales commissions to sell these complicated products.  There are also annual fees and subaccount fees and penalties for withdrawals. 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.     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 10509 (suitability requirement).. Questionable sales tactics, like unannounced home 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 Orange County 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. 

Questions To Ask

Seniors should consider the following tips before investing in an annuity:

  • Know what kind of annuity the agent is proposing. Is it fixed, variable or deferred?
  • What is the term if you are purchasing a deferred annuity? Deferred annuities can run as long as 15 years. Know the length of the term before you buy otherwise you may pay a surrender fee that may cancel any earned income from your investment.
  • What is the surrender penalty? If the surrender penalty is relatively low and the term is not that long than a deferred annuity may make sense for affluent seniors who can afford to lock away part of their retirement income. On the other hand, for most seniors investing in a deferred term annuity may make no sense if they need ready access to their investment funds.
  • Beware of high-pressure sales tactics and seminars: Beware of “cold calls”, limited offerings, free gifts and free lunches.
  • Don’t invest your money with anyone who will not discuss the investment in front of other family members or your friends. We have seen cases where a salesman, knowing the proposed annuity is unsuitable for an older client, has refused to meet with his or her family members who might see through any false promises or understand why a long-term insurance contract is not appropriate for an older person,
  • Don’t take out a reverse mortgage to finance an annuity: California law prohibits agents from cross-selling annuities and reverse mortgages. See Civil Code § 1923.2. 
  • Get a second opinion: Do not make a significant financial investment without talking to different financial advisors and consulting with friends and family members you trust.
  • Always consult your tax advisor before any transaction. Since all annuity transactions have tax consequences, always consult your tax advisor before entering into any kind of annuity transaction.

Replacements or Exchanges

Replacing an existing annuity for a “better” one at an agent’s suggestion can be a costly mistake.  California law forbids insurance agents from recommending an exchange of an existing annuity for a new one if the transaction “requires the insured to pay a surrender charge for the annuity that is being replaced, where purchase of the annuity does not confer a substantial financial benefit over the life of the policy to the consumer, so that a reasonable person would believe the purchase is unnecessary.” Cal. Ins. Code § 10509.914(c)(emphasis added).  Our financial elder abuse and annuity litigators have represented senior consumers in many cases where an agent has talked a senior into an exchange or replacement of an existing contract and the senior has suffered serious economic injury as a result of surrender charges on the existing policy and tax liability for the surrender.  Never agree to any exchange, replacement or surrender of an annuity without consulting your tax advisor.

Contact Us

If you are over 60 and live in Orange County 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=”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.

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"I contacted Attorney Ingrid Evans for advice about a financial elder abuse case. She was extremely knowledgeable, bright and informative. I highly recommend her. I am an attorney myself, and know when I am talking to a another excellent attorney."
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