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.
