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Jun 27, 2024 by |

San Francisco Annuity Attorney: Disadvantages Of Deferred Annuities For Senior Citizens

ATTORNEY NEWSLETTER

Poor Liquidity

High Fees

Complex Contracts

Deferred annuities are extremely complicated insurance contracts sometimes running to 50-100 pages of technical language and actuarial tables. Seniors are often targeted by insurance agents with proposals for deferred annuities. Younger investors may be disappointed in the returns on any annuity they’ve been sold by a life insurance agent too.  Evans Law Firm, Inc. generally recommends against certain types of deferred annuities especially for older consumers because these complex, expensive insurance policies may tie up a senior’s money for years and impose significant penalties if you need your money back.  If an agent sells you “enhancements” to the policy, known as “riders,” the contracts will be even longer – and more costly.  Evans Law Firm, Inc. generally recommends against certain types of deferred annuities for older consumers because these complex, expensive insurance policies may tie up the policyholder’s money for years and impose significant penalties if you need your money back.  Sales and recommended surrenders and exchanges of deferred annuities to seniors may constitute financial elder abuse claims under Cal. Welf. & Inst. Code §§ 15610.30 (definition of financial elder abuse) and Cal. Ins. Code §10509 (suitability requirements for annuities). Questionable sales tactics, like unannounced home visits, “pretext” visits or falsified applications, are illegal.  See, e.g., Cal. Ins. Code § 790 et seq. (Unfair Insurance Practices Act).  If you are over 60, and live in San Francisco and would like us to review your annuity contract, call us today at 415-441-8669 (or toll free at 1-888-50EVANS)

Disadvantages of Deferred Annuities

  • Poor Liquidity. Once you sign up for a deferred annuity, it’s costly to get your money back ahead of schedule due to possible surrender charges, and once you start collecting income, the decision is typically irrevocable.
  • Potentially High Fees. A deferred annuity could charge a wide range of fees in exchange for income and investment guarantees. Study up on potential annuities’ contract terms to make sure you fully understand the costs.
  • Complicated Structure. Deferred annuity contracts can be complex, especially with variable and fixed index annuities. Because of the nuances surrounding fees, guarantees and investment terms, you may want to consult with a trusted financial advisor before making an annuity purchase.
  • Early Withdrawal Taxes. As part of deferred annuities’ tax benefits, the IRS wants you to keep money in these accounts until retirement. If you take out a lump sum withdrawal or cancel your contract before you turn 59 ½, you could owe a 10% early withdrawal penalty on top of income taxes on your gains. Withdrawals after age 59 ½ are also taxed. Always consult your tax advisor on any annuity transaction beforehand.

Contact Us

If you are over 60 and live in San Francisco and would like a free review of your policy contact Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669 (or toll free at 1-888-50EVANS), or by email at <ahref=”mailto:info@evanslaw.com”>info@evanslaw.com</a>.

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

Nationwide Mutual 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

Securian Financial

Securian 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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