Understanding How Fixed Annuities Work
Insurance Policies Not Investments
Fixed annuities are sold by agents as “safe” products with “guaranteed” returns. Don’t buy it, because that is not the entire story. Our lawyers recommend avoiding annuities of any kind, including fixed annuities, especially for seniors, because sales commissions are high, the policies are complicated, and the contracts tie up your money for many years. Fixed index annuities, like all annuities, are life insurance products, not securities. The policies have complicated rules for calculating value and crediting interest. Every fixed annuity has a surrender period during which penalties (possibly 10% or more) will be imposed on any withdrawals over a certain minimum amount. These surrender periods can last many years and can put any policyholder, particularly a senior, in a bind if they need their money. 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 the annuity attorneys at Evans Law Firm, Inc. today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy. A list of major carriers in California appears below.
Most fixed annuities are sold with a “Market Value Adjustment” (MVA) term in the contract. The MVA is designed to protect the issuer (not you) from market fluctuations occurring after you are sold your policy. If interest rates have gone up since you were sold your policy, there will be an additional fee on the amount you withdraw above the stipulated surrender rate which will lower the amount that you’d receive from the withdrawal. The additional charge essentially erases any potential benefit of higher interest rates a policy owner would be able to find elsewhere. In other words, once you are in an annuity, you cannot switch out to get a higher rate without paying a surrender charge increased by an MVA.
Commissions, Fees and Penalties Erode Returns
Even if you leave all your money in, the returns may not ever come close to what you were promised based on how long you live. Large upfront commissions and administrative fees will erode any real return. If the agent sells you an “income rider” guaranteeing (theoretically) a future rate of income, the annual fee for that rider will further erode your return. You may never live to recoup anywhere near the annual costs. Finally, keep in mind that annuities are not insured investments like bank accounts and the insurance carrier’s promise to pay benefits is only as good as the carrier’s financial ability to do so.
If you or a loved one has suffered loss on a fixed annuity or any other 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 toll free at 1-888-50EVANS) or by email at <ahref=”mailto:firstname.lastname@example.org”>email@example.com</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
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.