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Jul 23, 2021 by |

San Francisco And Santa Clara County Financial Elder Abuse Attorney: Senior Consumers And Fixed Indexed Annuities

ATTORNEY NEWSLETTER

Looking Through The Sales Hype

Fixed Indexed Annuities Are Costly And Complex

Replacing Existing Policies Can Be A Big Mistake

Agents sell fixed indexed annuities as a “safe” investment in times of market volatility.  Evans Law Firm, Inc. recommends against deferred annuities, including fixed indexed annuities, for older consumers for three important reasons:

  • sales commissions and annual fees are high;
  • the return on your money rarely meets expectations (we have seen contracts produce zero returns even in strong markets); and,
  • these contracts tie up your money for years.

This last point is especially significant for seniors.  Once you’re sold an annuity it is very expensive to get out.  If you want to switch investments or just access your own money when you need it, you will pay a penalty.  Despite these pitfalls, insurance agents pursue senior consumers with long-term deferred annuities because they receive a sizeable sales commission.  Agents seize on concerns seniors have about how much income they will have in their later years and promise products that (they say) offer safety and guaranteed income.  These guarantees and promises are often illusory.  If you are over 60, live in Santa Clara County, San Francisco or elsewhere in the Bay Area or anywhere in California and have experienced an economic loss as a result of the sale of an unsuitable annuity or other investment product, including a fixed indexed annuity, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy. 

Important Considerations For Senior Consumers

  • Understand the long-term nature of any kind of deferred annuity including fixed indexed annuities. These are contractual arrangements and are not like direct deposits in stock funds. Once you’re sold a deferred annuity contract, there will be a penalty if you withdraw your money before the expiration of the surrender period. The surrender period can be as long as ten years or more and the withdrawal penalty can be as high as 15%.
  • Annuities have very complex rules regarding how returns are calculated These equations may mean that the return you actually receive on your money is significantly lower than the “teaser” or “contract” rate. We have seen senior customers sold contracts promising 5-7% rates of return actually see zero returns, even in years when markets performed positively.
  • Any return under your policy will be subject to caps and “participation rates.” Caps put a ceiling on your return; if your chosen index does better than the cap, the cap is what you will earn on your money not the actual return. A typical participation rate for a contract is 80% which means you will under the best of circumstances see only 80% of a fund’s return. Direct fund investments are not subject to caps and participation limitations.
  • High pressure sales tactics are real red flags. Do not be pressured by agents into making a decision quickly. Always get a second opinion and check your agent’s license with the California Department of Insurance.
  • Annuities are not insured investments like CDs even if they are sold by a rep at a bank. Future payments under your annuity are only as good as the carrier’s promise.
  • Keep detailed records. Get all rate quotes and key information in writing. Once you’ve made a purchase, keep a copy of all paperwork you complete and sign, as well as any documents you’ve been given, including illustrations, correspondence, special offers and payment receipts.

Protect Yourself From Manipulation And Financial Elder Abuse

If you are a senior, always get a second opinion on any investment proposal from a professional with nothing to gain from a sale.  Also always consult your tax advisor before making any purchase or exchanging, surrendering or withdrawing from any annuity.  All annuity transactions have tax consequences.  Unscrupulous agents or financial advisors are particularly successful in preying on older investors who do not have someone to discuss business matters with before they make a decision. The results can be disastrous financially. 

Contact Us

If you are over 60 and live in Santa Clara County, San Francisco or elsewhere in California and have lost money on a deferred annuity or indexed universal life insurance contact Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Ingrid will pursue all remedies available to you against all parties responsible, including restitution (getting your money back), extra damages (to punish the fraudulent conduct) and awards of attorneys’ fees and costs to the senior forced to bring an action against the wrongdoers. 

Some significant issuers and distributors of 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.  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

PacLife

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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