Prudential Insurance Company
The Prudential Insurance Company of America’s Annuity Sales
Some investors are savvier than others with respect to their understanding of annuity products. However, annuities are complex investment products typically known for having high surrender or withdrawal charges, as well as costly penalties in order to pay huge commissions to the insurance agents who make the sale. Annuity fraud lawyers in California encourage those with annuities to have a tax advisor, independent agent or attorney evaluate the policies to ensure their suitability.
Prudential Life Insurance Company is a nationwide provider of life insurance and annuity options for consumers. A division of Prudential Financial, Inc., the company boasts nearly 140 years of service in the field of insurance and financial planning.
A deferred annuity is one that delays payments to the investor until such time that he or she chooses to begin receiving them. The payments can either be made in installments or as one lump sum to the investor. A deferred annuity, which can be variable, fixed or indexed (tied to the stock market), is a two-stage process: in stage one, the investor pays into the annuity like a savings account, banking away investments and savings to be handled by the providing agency. In stage two, the plan is converted to an annuity and the investor receives payments as the contract specifies.
Deferred annuities have tax benefits and earnings are taxed only when they are taken out. The investor also receives a death benefit so that the beneficiary will receive the principal amount and any investment earnings, should the investor pass away.
For some consumers, a deferred annuity is a great choice, but for others, the risks outweigh the benefits, and the investor could lose much more than he or she hopes to gain. A good financial advisor can help potential clients determine whether a deferred annuity is a solid choice or not, but sometimes, the draw of a consumer and the potential for income for the firm is foremost in the advisor’s mind, rather than what’s best for the investor.
Typically, brokers receive higher commissions for deferred annuities, which can make them more attractive sales pitches even if they don’t necessarily fit the client’s needs or financial stability. Annuities have specific timeframes in which the client cannot access any of the money without paying high penalties, and these timeframes may be unsuitable, especially for an older investor.
In the past, the National Association of Securities Dealers (NASD) fined Prudential $2 million for failing to properly process annuity sales in accordance with the annuity contract regulations. Following this violation and investigation, Prudential agreed to properly train employee and monitor business practices going forward. The company also made restitution to all affected clients.
California annuity fraud attorneys are investigating potential claims against Prudential for the unsuitable sales of deferred annuities. Insurance agencies have a duty to their consumers to provide smart investment and savings options based on each client’s profile, including life expectancy and financial requirements. When this duty is breached, your financial security could be at risk.
If you feel that your advisor has recommended an unsuitable investment or insurance plan such as a deferred annuity to you, or you have been talked into a plan that will not benefit you, call the Evans Law Firm, Inc. today. Our annuity fraud lawyers in San Francisco, and offices in Los Angeles, and Sonoma County help clients file lawsuits and regain their financial peace of mind. We are available by phone at 415.441.8669, toll free at 888.503.8267, or by email at firstname.lastname@example.org.