Should You Give Your Annuity the AX(A)?
Retirement and Annuities
We’ve probably all seen the TV ads asking how much money we need to save in order to retire. Let’s assume you have a rough idea. The next question is where do you put it? Plenty of insurance salesmen out there will try and convince you that annuities are where you want to be. But what happens after your purchase when you aren’t putting as much money in your pockets as you’d like?
Based on what we have seen, that could be well be the result with a variable annuity purchase.. One big problem comes from the fees you pay. Morningstar reports that the average annual fee hit on variable annuities is 2.5%. Many contracts run higher, and the annual fee does not include withdrawal penalties, liquidation charges, market adjustments and so on. And every rider you add to the policy even if it benefits you, comes with an additional charge. The average death benefit guarantee, for example, adds another 0.4% to the annual cost.
Why You Might Be Getting Ripped Off
The other big problem is the idea of “guaranteed income.” We understand the impulse for certainty when it comes to retirement income. Variable annuities or survivorship universal life insurance, sold by companies such as AXA Equitable, MetLife, and ING, promise investors a guaranteed income for life. The carriers will also offer add-ons such as a guaranteed death benefit, protection against losses, and a promise of a payout of a “minimum income.” Take a very close look at all of an agent’s promises and add-ons. Many of them may be too good to be true and all of them come with a price.
Insurance products are pushed on individuals for a reason: they make insurance companies and agents alike a decent amount of money. We find that, more often than not, individuals are sold very poor products, and this tends to lose them much more money than they gain later in life. And, in many cases, the guaranteed benefits may never be paid out, whether as income, death benefits, or other promises made upon purchasing.
Food for Thought
These products are unbelievably complicated. We have found that sometimes even the agents and insurance companies selling these products are not entirely sure what they are selling. This creates a situation buyers may never fully understand what it is they’re buying. Bottom line is that these transactions can be very detrimental to your well-being later in life. Stay informed, read all you can, and seek the help of professionals who do not stand to gain by whatever economic decision you make.
Some of the major annuity and life insurance providers in California are:
- Aviva/Athene/Accordia Life Insurance Company
- Transamerica Life Insurance Company
- John Hancock Life Insurance Company
- Bankers Life Insurance and Casualty company
- Massachusetts Mutual Life Insurance Company
- Midland Life Insurance Company
- North American Company for Life and Health Insurance
- Pacific Life Insurance Company
- Prudential Life Insurance Company
- Genworth Life Insurance Company
- ING USA Annuity and Life Insurance Company
- Lincoln Benefit Life Company
- Metlife/Metropolitan Life Insurance Company
- Unum Life Insurance Company of America
- Voya/Reliastar Life Insurance Company
Evans Law Firm, Inc. handles annuity fraud and insurance fraud cases and lawsuits in San Francisco, CA and in all other counties in California as well. If you have purchased an annuity policy, or are considering purchasing one, and would like to know whether it is a suitable investment for you, contact Evans Law Firm, Inc. at 415-441-8669 or via email at email@example.com.