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Dec 16, 2019 by |

San Francisco and California Annuity and Financial Elder Abuse Attorneys: Avoid The Rush To Risky Annuities


Downsides to Variable and Indexed Annuities

Know the Risks Before You Buy

Insurance industry figures show sales of variable and indexed annuities have increased in the past few months. Our litigators recommend against variable and indexed annuities for any consumers, especially seniors. All annuities are complicated and risky, and variable and indexed annuities are particularly complex and full of risk. If you’re over 60 and live in California and have suffered a loss due to cancellation, replacement, full or partial surrender, or high fees on any type of annuity, call our California financial elder abuse and annuity attorneys. today at 415-441-8669 for a free review of your policy.

Both variable and indexed annuities raise red flags for unsuspecting older consumers: sales commissions are high, annual contract fees are high, enhanced benefits are rarely beneficial in practice, “bonuses” are basically just marketing gimmicks that will never benefit you, indexes are complicated and some of very risky, there are complexities in naming beneficiaries, and any money tied up in an annuity can be withdrawn only by paying a hefty penalty in the “surrender” period for the annuity, which can be as long as 15 years. Always consult with a professional with nothing to gain from a sale and always consult your tax advisor before you buy, surrender, replace, or withdraw any funds from an annuity.

Here are a few other issues to weigh when considering a variable or indexed annuity:

  1. Death beneficiary complications. Couples often own an annuity jointly, or name one spouse as the owner and the other as the “annuitant.” (The annuitant is the person whose life expectancy determines how much is paid out if the contract is “annuitized,” or turned into a stream of regular payments.) The couple often assumes any leftover money will be paid to the beneficiaries, typically the children, only after the second spouse dies. While some insurers do just that, most pay the beneficiaries after the first death, disinheriting the surviving spouse. Be sure you understand what happens after the first death and change the beneficiary if necessary to make sure the money goes where they want.
  2. Misunderstanding values. The typical variable annuity has several values: what you get if you cash out (the account or cash-out value), what your heirs get if you die (the death benefit) and what you get if you convert the annuity into a stream of payments. This last amount typically is calculated using the “income base,” which is the most commonly misunderstood value, financial planners say. The income base is a kind of phantom number that grows over time by a guaranteed amount, defined in the contract. But the income base is not available for withdrawal. It is only the base for regular income payments from the contract after annuitization.
  3. Exchanging an older variable annuity. Owners of older policies should be careful not to unwittingly exchange them for newer contracts without understanding the consequences. Since annuities are typically sold on commission, agents have an incentive to advise you to swap your current annuity for a new one, whether it’s in your best interest or not. Because salespeople typically aren’t required to put your best interests always consult someone who is – such as a fiduciary fee-only planner – before buying, exchanging or cashing out a variable annuity. Be sure to consult your tax advisor as exchanges have tax consequences and reset the clock on surrender penalty withdrawal periods.
  4. Income Riders. You will pay an annual extra fee for any income rider, usually around 1.5%. If you surrender or take a lump sum withdrawal, you will not get the incomer rider “pot” but rather the policy’s considerably lower “cash value.” Agents gloss over the details of income riders, but know that they are very complex and play out in ways you may not anticipate.
  5. Pressure sales. Never allow yourself to be pressured into a purchase. Avoid tactics like “free lunch” seminars; the end result can be a sale of an expensive annuity or life insurance policy that you do not need and which can wipe out savings through fees, penalties and low growth.

Contact Us

If you or a loved one has suffered loss on an annuity in California, contact San Francisco and California annuity and financial elder abuse attorney Ingrid M. Evans and the other attorneys at Evans Law Firm at (415) 441-8669, or by email at <a href=””></a>. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement.  We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, 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

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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