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Apr 29, 2022 by |

San Francisco Financial Elder Abuse And Annuity Attorney: Seeing Through The Sales Hype On Indexed Annuities

ATTORNEY NEWSLETTER

Indexed Annuities Are Complex Insurance Policies

Indexed Annuities Are Not Direct Fund Investments

Surrender Charges, Fees And Return Calculations

Indexed annuities are a particularly complicated variety of deferred annuities.  Despite the tile of this product and the various “funds” or “buckets” you may be offered to allocate your premiums to, let’s be clear about one thing:  indexed annuities are not direct investments in any stock or blended stock and bond funds.  Rather, the return you do (or do not) receive is tied to the return in the chosen fund and subject to further limitation by caps and participations rates.  Any withdrawals are potentially subject to surrender charges or withdrawal penalties. Sound complicated?  It is. Indexed annuity contracts run from 50 to 100 pages or more.  Evans Law Firm, Inc. generally recommends seniors avoid certain types of deferred annuities like indexed annuities because these contracts can be expensive and complicated and tie up a senior’s money for years.  Any deceptive sales practices, and sometimes the contracts themselves, may violate certain consumer protections under the Insurance Code and, when sold to seniors, financial elder abuse protections.  Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse); Cal. Ins. Code §§ 790 et seq. (Unfair Insurance Practices Act) and 10509 (suitability requirement) and 10127 et seq. (disclosure requirements).  Senior victims may be entitled to damages and an award of attorneys’ fees San Francisco, or elsewhere in California and own a deferred annuity (such as 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. 

Lengthy Surrender Periods

Perhaps the primary reason deferred annuities are regarded as unsuitable for older consumers is that withdrawals from these contracts incur an insurance company penalty.  This can be an especially difficult situation for seniors who may need their money back for emergencies or increased care costs or other living or medical expenses.  Withdrawals during a policy’s “surrender period” are subject to penalties.  The period can last ten years or more and the charges can be as high as 15% or greater.  For senior consumers this penalty can be particularly harsh.  A senior policyholder may need his or her money back for an emergency or escalating care costs or the like and a stiff penalty that eliminates any gain in the invested money and cuts into principal is a real hardship.  Surrenders are also taxable events such any surrender can result in large tax bills in addition to the carrier’s penalty.

Contract Limitations On Returns, Commissions, And Fees

As stated above, indexed annuities are not direct investments in index funds such as you could make in a direct ETF or mutual fund investment. Rather the base for your return will be tied to the return of the chosen fund.  You will not de credited with any dividends that the stocks in the chosen fund pay.  In addition, your return will be subject to an annual cap, which may be considerably below the actual return on the stocks in your chosen index and a “participation rate” that will be less than the 100% participation you see when you make a direct fund investment.  There are also administrative fees and subaccount fees.  And, of course, the agent selling you the contract will have received a sales commission at the inception of your policy which comes directly out of your premium.

Contact Us

If you are over 60 and live in San Francisco or elsewhere in the State of California and have an indexed annuity, we can review your contract for free.  You can reach Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669, or toll free at 1-888-50EVANS or by email at <a href=”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

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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