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Mar 23, 2020 by |

San Francisco Annuity Attorneys: Annuities Unsuitable For Retirement Savings


Understanding The Details

Costs, Complexities, and Withdrawal Penalties

Our annuity and financial elder abuse attorneys recommend against annuities for seniors in particular, because commissions, fees and surrender penalties reduce returns and make it expensive to get your money out if you need it.  Salespeople push annuities for the commissions they earn, and they’re the only winners in annuity sales.  Consumers, on the other hand, may see their retirement savings dwindle by high fees, hidden costs, low returns, steep withdrawal penalties, and taxes when an agent puts them in an annuity.  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 or toll free at 1-888-50EVANS (888-503-8267) for a free review of your policy. A list of major carriers in California appears below.

Here are some of the primary reasons annuities are not suitable retirement investments:

  • The commissions are high. You already have one annuity in the form of Social Security which pays no commissions and is indexed for inflation. Sales commissions on annuities are high and it takes a long time to recoup that money. IRAs and 401k plans may have administrative fees, but they are typically far lower than insurance sales commissions.
  • Withdrawal charges/surrender fees lock you in for six to seven years, and maybe even longer. This can hit older policyholders especially hard if they need to withdraw money for a medical emergency or other unexpected expense. Some contracts impose withdrawal fees as high as 15% in the early years of a policy and some surrender charge periods last ten years or more.
  • Fees, caps and participation rates make the introductory teaser rates on annuities an illusion. Actual returns are often 2% or even less. Right now, bank interest rates are low too, but that will not last forever. Locking yourself into fixed rates would be frustrating on its own, but could be disastrous if inflation starts to rise too. Even though your payout is guaranteed, its purchasing power could fall. If you eventually want out of the annuity, contract terms and the insurer’s surrender fee structure can effectively lock you in for years.
  • Early mortality is also a big risk. If you die much sooner than your life expectancy, your heirs cannot recoup your contributions into the annuity. You can add certain riders that may allow for some amount to pass to your heirs but adding a death benefit rider will make your policy even more expensive. In the end, insurers are businesses, and their goal is to not lose money when they sell annuities.

Whatever you do, get second opinions from a professional investment advisor with nothing to gain from a sale or the addition of an annuity to your retirement plan. Whether it’s a banker, insurance agent, or financial advisor recommending an annuity to you, also always consult your tax advisor before any purchase or surrender. Gains on annuities are taxed as ordinary income, rather than at the lower long-term capital gains rate, so you need to understand the tax consequences of any annuity transaction. 

Contact Us

If you or a loved one has suffered loss on an 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 toll free at 1-888-50EVANS (888-503-8267) or by email at <a href=””></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

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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