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Jun 18, 2019 by |

San Francisco and California Annuities and Financial Elder Abuse Attorney: Many Annuities Are Complex, Bad Deals


Beware The Fine Print

In The Details: Caps, Spreads, Fees and Surrender Charges Devour Your Money

Our litigators often explain in our blogs why we think deferred annuities are not a good investment, particularly for seniors. Deferred annuities come in three forms:  fixed rate, fixed-indexed rate, and variable rate.  All three types of deferred annuities are complex, hold your money hostage to withdrawal penalties, and charge high commissions and fees, among other downsides. The San Francisco annuity and financial elder abuse attorneys at Evans Law Firm, Inc. represent[1] individuals who have lost retirement savings in deferred annuities, indexed universal and whole life insurance, and other unsuitable investments.  Most of the victims we represent are seniors.  If an agent or broker has sold you an inappropriate product such as life insurance or an annuity and you’re over 60 and live in San Francisco or elsewhere in California, call us today at (415441-8669 and we can help.

While fixed and variable annuities are still sold, agents especially push fixed-indexed annuities during volatile markets as investors are experiencing now; the pitch is that these contracts offer “guaranteed” protection (the fixed side) with upside participation in the market (the indexed side). Don’t buy it. Here are a few reasons to avoid the hype about fixed-indexed annuities:

  • The “indexed” part of your premium will not be invested in stocks or an index. Instead, interest credited to your account is based on the performance of the particular stock index you choose. Your interest will not include the advantage of reinvested dividends which you can receive if you make a direct investment in an index fund. You are only credited (subject to caps, participation rates and spreads) with the price change of an index, but not the dividends you would have received if you owned the index in a brokerage account.
  • Any interest will only be credited to your account annually (“annual point-to-point” crediting) so the daily value of your account does not grow during the year and is credited with interest only on the anniversary date. If you withdraw all your money before that date you will not see any interest, even if you withdraw on the 364th day of the annual period.
  • Caps, participation rates and spreads will limit your gains. Caps limit how much money you may earn based on a particular index’s performance; if your cap is 4% and the index grows 10%, you will only be credited with 4% growth. Participation rates hold you to a percentage of any return on your chosen fund, never 100%; if a fund grows 4% and your participation rate is 80% you only get 3.2%. Spreads are a baseline over which interest may be credited. If the spread on your contract is 4%, for example, and the index returns 4%, you will be credited nothing.
  • Access to your money is limited. Some carriers charge surrender penalties on withdrawals for 14 years or more! Market value adjustments levied by the carrier may also decrease your account’s cash value. Withdrawals will be subject to tax at ordinary rates. All deferred annuities are illiquid and this is a real danger particularly for seniors who may need their money.
  • Bonuses are not free. Watch out if an agent promises you an upfront bonus. You will pay for that one way or another, including possibly by surrender charges on withdrawals.

Bottom Line

Our litigation practice has taught us that annuities and life insurance are complicated, expensive, dangerously illiquid, and disappoint consumers once the policies – and annual charges and real rates of return – kick in. Returns on tax-deferred IRAs and 401(k)s directly invested in stock and bond funds historically outpace returns on annuities and are much less complex.  Also working for you is your Social Security benefit which is an inflation-adjusted annuity. In short, there are lots of other ways to benefit from tax deferred savings without paying big sales commissions and tying up your money in a deferred annuity. If you are considering an annuity, always consult your tax advisor and an investment professional with nothing to gain from a sale.

Contact Us

If you are over 60 and live in San Francisco or elsewhere in California and have been sold an inappropriate or unsuitable investment product or suffered loss on an annuity or life insurance surrender or replacement, contact Ingrid M. Evans and the other annuity and financial elder abuse attorneys at the Evans Law Firm for a free review of your policy at (415) 441-8669, or by email at <a href=””></a>. Our attorneys have experience with complex indexed universal and whole life policies and annuity contracts and cases against large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement.  We also handle cases involving physical and financial elder abuse, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.

Annuities and life insurance produce large sales commissions for brokers but are often inappropriate products for consumers, especially seniors. Leading providers and distributors of life insurance and 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.  Rather, 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

Ameriprise Financial/RiverSource Life Insurance Company

Ameriprise Financial/Securities America, Inc.

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

Bankers Life Insurance and Casualty Company

Berkshire Hathaway Group

Berkshire Hathaway Life Insurance Company of Nebraska

Brighthouse Financial, Inc./MetLife

Citigroup Global Markets, Inc.

Crump Life Insurance Services, Inc.

CUNA Mutual Group/CMFG Life Insurance Company

Delaware Life Insurance Company

EquiTrust Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Forethought Life Insurance Company/Global Atlantic Financial Group

Genworth Financial, Inc.

Genworth Life and Annuity Insurance Company

Genworth Life Insurance Company

Global Atlantic Financial Group/Forethought Life Insurance Company

Guardian Life Insurance Company

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

Merrill Lynch Life Agency Inc.

Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.

Minnesota Life Insurance Company

National Life Group

National Life Insurance Company/Equity Services, Inc.

National Western Life Insurance Company

Nationwide Life Insurance Company

New York Life Insurance Company

North American Company for Life and Health Insurance

Northwestern Mutual Investment Services, LLC

Northwestern Mutual Life Insurance Company

Northwestern Mutual Wealth Management Company

Oxford Life Insurance Company

Pacific Life Insurance Company

Principal Financial Group

Prudential Life Insurance Company

Raymond James Insurance Group

Reliance Standard Life Insurance Company/Tokio Marine Group

RiverSource Life Insurance Company/Ameriprise Financial

Securities America, Inc./Ameriprise Financial

Security Benefit Group, Inc.

Security Benefit Life Insurance Company/Guggenheim Partners

Security Investors, LLC

The Standard Life Insurance Company

Symetra Financial Corporation

Symetra Life Insurance Company

Transamerica Life Insurance Company

The United States Life Insurance Company in the City of New York

Unum Life Insurance Company of America

USAA Life Insurance Company

The Variable Annuity Life Insurance Company

Voya/Reliastar Life Insurance Company

Wells Fargo Advisors

Western & Southern Financial Group

The Western & Southern Life Insurance Company

World Financial Group Insurance Agency, Inc.

[1] While we do not provide tax or investment advice at Evans Law Firm, we do represent consumers who have suffered losses from fraud, misrepresentations, inappropriate sales of unsuitable investments, and other misconduct.

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