Agent Hype Covers Up Downsides
Know What’s In The Fine Print
Annuities pay big sales commissions to agents. Carriers in turn design new products so agents have more inventory to pitch. Fixed indexed annuities are currently the hottest and most over promoted product in the annuity world. Agents claim the contracts offer the upside of market increases (the “indexed” part) with downside protection (the “fixed” part) but gloss over withdrawal penalties, caps on returns, fees, risks, and other downsides and how these insurance contracts actually work. When you consider how fixed indexed annuities work you realize the no downside with market upside narrative is a sales pitch, not the whole story.
Our lawyers recommend avoiding annuities of any kind, including fixed indexed annuities, especially for seniors. 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 California financial elder abuse and annuity attorneys at Evans Law Firm, Inc. today at 415-441-8669 for a free review of your policy. A list of major carriers in California appears below.
Here are a few reasons to avoid the hype about 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. 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. Participation rates hold you to a percentage of any return on your chosen fund, never 100%; so 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.
These complicated contracts put to another problem the industry doesn’t want to talk about agent qualifications. In most states, you can take a cram course, pass the life insurance state exam, and be selling indexed annuities in a matter of weeks or less. It takes a person a lifetime of work to put away money for retirement, and it takes a week for a person to qualify to sell an indexed annuity. Consider how bizarre that correlation is, and the fact that the annuity industry seems OK with it. Always consult a professional with nothing to gain from a proposed sale and always consult your tax advisor before an agent sells you anything.
If you or a loved one has suffered loss on a fixed indexed 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 by email at <a href=”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
Ameriprise Financial/RiverSource Life Insurance Company
Ameriprise Financial/Securities America, Inc.
Athene Annuity & Life Assurance Company
Athene Annuity and Life Company
Aviva Life Insurance Company
AXA Equitable Life Insurance Company/AXA US
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.
 The attorneys at Evans Law Firm do not provide investment or tax advice but our litigators represent senior policyholders who lose money through cancellations, surrenders or fees on these contracts or as the result of insufficient disclosures by insurance agents and carriers.