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Nov 5, 2021 by |

Orange County Financial Elder Abuse Attorney: Deferred Annuities: Unsuitable Investments For Seniors


Seniors Targeted For Annuities

Surrender Penalties And Annual Fees

Return Calculations Favor Carriers Not Policyholders

Beware of insurance agents who continually pressure you to buy an annuity, or exchange a contract you already own.  Sometimes the sales pitch is made at free lunch seminars or receptions.  Take a pass on invitations to such events because they often end in high-pressure sales tactics of a “limited time only deal” or other questionable hook.  Evans Law Firm, Inc. recommends against deferred annuities because we have seen older consumers lose money on deferred annuities due to sales commissions, withdrawal (or surrender) penalties, fees, and returns on invested premiums considerably lower than advertised.  Sales and recommended surrenders and exchanges of deferred annuities to seniors may constitute financial elder abuse claims under Cal. Welf. & Inst. Code § 15610.30. If you are over 60, and live in Orange County or elsewhere 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. 

Understanding Annuities

Annuities are complex contracts and it is easy to misunderstand or be misled about the benefits and risks if you do not carefully evaluate your purchase.   We recommend you have a trusted family member or friend with you at any meeting you have with an insurance agent or any financial advisor.  Keep in mind the following:

  • Ask your producer, or the company for an explanation of anything you do not understand. Make sure that the person you talk to answers your questions to your satisfaction.
  • Ask for a complete listing of fees and commissions before agreeing to buy anything presented as an “investment product”. Understand contract restrictions, such as surrender penalties or administrative fees.
  • Be alert for deceptive sales practices, or a highpressure sales pitch that requires you to make a decision immediately.
  • Avoid repeated or unsolicited contacts from particular groups or producers that make you feel pressured or uncomfortable.
  • Check the rating of the company’s finances through Standard & Poor’s, A.M. Best Co., Moody’s Investors Services, etc. An annuity is only as strong as the insurance company that issues it.
  • Take notes about what the producer tells you and confirm that the information is in the materials promoting the annuity. Keep copies of all documents, correspondence, notices, special offers and payment receipts.

Specific Disadvantages For Seniors

Here are some specific disadvantages for seniors:

  • Surrender Charge/Withdrawal Penalties:  Surrender charges can be as high as 15% of an annuity account value if you leave after one year, and the fees may continue for ten years or more. In addition to the surrender charge, you may face a tax bill on the amount surrendered at ordinary income tax rates. Contributions to an annuity are tax-deferred, but any withdrawals you make will be taxed at your regular income tax rate, not the long-term capital gains tax rate.
  • Participation rate: You will never see the entire gain of your selected index because your return is limited by a “participation rate” that protects the carrier but reduces your return. If your contract has a 80% participation rate, for example, you automatically lose 20% of an index gain that you would have had with a direct investment in the chosen index.
  • Rate cap: In this scenario, let’s assume the S&P 500 grows by 8% over a year, and your contract has a 5% rate cap. The result would be that your contract receives a 5% return, since the rate cap limits how much your contract can earn.
  • Fees: The annual contract fees on annuities also erode the return on your premium dollars. Cumulatively, the annual fees may be as high as 3-5% which on a contract with an advertised 7% return can be half or more of your promised gain.

Contact Us

If you are over 60 and live in Orange County, San Francisco or elsewhere in the Bay Area or throughout 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 toll free at 1-888-50EVANS), or by email at <ahref=””></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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