Insurance Policies Are Not Fund Investments
Contract Rates Have Caps And Other Limitations
Penalties On Withdrawals
When you survey fliers and ads for indexed deferred annuities you may get the sense that deferred annuities are really the same as direct investments in market indexes. They aren’t; deferred annuities are insurance policies with sales commissions, fees, mortality expenses and exit penalties similar to life insurance policies. Understanding the differences between deferred annuities and direct mutual fund or index investments is important especially for senior consumers. Our California and San Francisco annuity and financial elder abuse litigators represent consumers over 60 who have suffered a loss due to cancellation, replacement, full or partial surrender, or high fees on any type of deferred annuity. If you fit that profile, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy.
Understanding Deferred Annuities As Insurance Policies
Deferred annuities are contracts where you pay an upfront sum or annual premiums with the idea of receiving back an income stream in the future. The contract is similar in that sense to life insurance, where you pay a premium now for a benefit paid to your beneficiaries at death. Like life insurance, the carrier pays an upfront sales commission to the agent and charges you annual fees to keep the policy in force. Also, just as in life insurance the carrier makes certain actuarial assumptions about how long you will live in order to calculate your premium – and, in the case of deferred annuities – your income benefits. Annuity carriers will also charge you annually with a mortality and expense fee to protect them if you live longer than their actuarial tables assume. The carrier will also cap the rate of return you receive and subject it to other limitations like “participation rates.”
Deferred Annuities Are Not Fund Investments
There are no such comparable charges with a direct index fund investment. Your investment will track the index performance without caps. Your return will not be subject to any participation rate limiting your return to some figure less than the total return on the fund. Mutual funds carry no insurance charges and will not subject any withdrawals to contract penalties the way a deferred annuity will. Dividends paid on the stocks in the fund will be reinvested so that the base of the fund will grow too. In an indexed deferred annuity you do not get the benefit of reinvested dividends since your premiums are not invested in a fund itself but are merely credited (or not) on an annual basis with a portion of the fund’s overall rate of performance. Sound complicated? It is. Unlike direct mutual fund investments, your premium payments on a deferred annuity are not invested directly in the designated fund.
Ingrid M. Evans and the other annuity and financial elder abuse attorneys at Evans Law Firm have years of experience representing California policyholders over 60 who have lost money as the result of an annuity transaction or surrender. Our lawyers will pursue all available remedies against any insurance agent and carrier who have caused your loss. You can reach Ingrid and the other Evans Law Firm attorneys 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>..
Some of the major providers and distributors of fixed, variable and fixed indexed deferred annuities are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong. 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.