Agents Incentivized By Large Commissions
You May Be Sold Something That’s Not Right For You
Beware High-Pressure Sales Pitches And “Today-Only” Deals
Insurance Agents and brokers receive a commission for annuity sales, which incentivizes an agent to sell you an annuity. That incentive could lead an agent to sell you an annuity even if it’s not right for you. Evans Law Firm, Inc. recommends against any type of deferred annuity and certain forms of life insurance coverage for older consumers. Such contracts pay high commissions, contain annual fees that reduce any return on your money, and perhaps worst of all, tie up a senior’s paid premiums for years and impose penalties for taking your money back out. Sales of unsuitable insurance contracts may be a form of financial elder abuse and sales practices used by the agent may violate the California Insurance Code in certain situations. Cal. Weld. & Inst. Code § 15610.30 (definition of financial elder abuse); Cal. Ins. § 790 et seq. (Unfair Insurance Practices Act). If you are over 60, live in San Mateo County or elsewhere in California and own a deferred annuity, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy.
Considerations To Keep In Mind
Here are three things you need to know before you let an insurance agent sell you a deferred annuity:
- Annuities Are Complicated. Deferred annuities come in many varieties — variable, fixed, and fixed-indexed contracts. All of the contracts are complex and have special definitions and individualized rules and formulas regarding how your returns are calculated, how your income payments will be made, and what penalties you will pay to withdraw your money. Many of these contracts exceed 100 pages with various endorsements and riders attached.
- Annuities Require A Long-Term Commitment of Funds. With a deferred annuity, you can only access your money as a future income stream and don’t have the flexibility to take withdrawals for many years without a significant penalty, sometimes as high as 15% or more. Also, the annuity’s fixed, future income payout will lose purchasing power through time due to inflation.
- Fees Add Up…And Destroy Returns. The fees charged under deferred annuities are embedded in the contracts, and can be expensive compared with other types of investments. The average fees for deferred annuities without additional features were 2.211 percent in 2019, according to Morningstar. Adding an income rider brings the average annual fees to 3.2 percent. This can be as much as two to three times what a 401(k) plan investor might pay on direct fund investments.
- Annuities Are Not Insured Investments. Annuities are not covered by FDIC insurance like CDs and other bank deposits. Even if an advisor at a bank sells you your annuity, it is still not n insured investment like other deposits at the bank are. The promise to make future income payments to you under an annuity contract is only as good as the carrier’s word – and financial ability – to do so.
If you are over 60 and live in San Mateo County or elsewhere in California and have a deferred annuity or universal life insurance contract, 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:firstname.lastname@example.org”>email@example.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
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.