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Nov 18, 2020 by |

San Francisco and California Annuity Attorneys: Deferred Annuities Are Insurance Policies Not Straight Index Fund Investments


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.

Contact Us

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=””></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

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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