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Jan 6, 2017 by |

San Mateo Insurance Fraud Attorney: Annuities


Annuities Gone Wrong

Annuities Are A Problem

Are you someone who has bought an annuity? Have you tried to take out your money and been charged a steep surrender penalty fee? Has your annuity investment lost you money? Sadly, you are not alone; annuity companies and their agents often fail to explain adequately the risks and downside of many of their products. An uptick in annuity sales suggests the problem may be growing. To be sure, not every annuity sale is tainted. But the advice that often leads to a sale comes from a party who will profit from the sale. That conflict of interest just invites nondisclosure, poor counseling, and, worse, fraud.


Lots of it, even in our backyards of San Mateo. And the stakes, moreover, are high: annuities typically carry premiums in the tens to hundreds of thousands of dollars. Buyers truly do need to beware. The advertised returns are tempting, particularly with bank rates still hovering at next to nothing. And there’s always risk in any investment that pays a respectable return. But the risks to the uniformed in the world of annuity products is even higher. Here are a few examples of the serious problems that can occur:

Investors or insurance companies buy and sell policyholder annuities without the knowledge of the policyholder. Over the term of the annuity, the actual carrier may change several times. This process is called “churning,” and if it sounds familiar, it is. It’s the same kind of shell game that went on during the country’s mortgage crisis. When it’s time to receive a benefit – or even to ask a question – you may not know who to ask.

The flipside to issuer churning is that brokers, investment advisors, and companies often encourage clients to “churn” annuities as well. That is, to surrender existing contracts in order to purchase new ones. The sales pitch focuses on the supposed benefits to be gained by the “switch” without dwelling on the new commissions or the surrender and liquidation charges incurred by walking away from the existing contract. Worst of all, the supposed “switch” can be a taxable event for the policyholder and all the advantages of deferred income recognition (often the whole point of the contract) wiped out in an instant.

A common denominator in any sound annuity or securities purchase is an honest, qualified, professional advisor. Select an advisor who doesn’t have skin the game; he or she can give you candid, disinterested opinions on the products you. Avoid the advisor who becomes overly familiar or takes too great of an interest in your or your loved ones’ personal lives. This can be a real warning sign with older clients especially. And watch out for the advisor who hesitates to provide you immediately with a copy of your full contract or copies of what you’ve signed. Read every word carefully before you sign. The devil really is in the details on these kinds of investments.

How To Help Yourself

Annuities may be appropriate investment for a part of your portfolio. However, it is essential to be proactive about your investment choices (and your choice of advisors) and know how to protect yourself. Annuities are complicated. Understand what you are investing in. Get a second or third opinion from someone who does not stand to make money on your purchase. If you do make the purchase, keep track of any change made to your policy. And keep track of any changes in who the carrier is over the term of the policy!

Some of the major annuity and life insurance providers in California are:

The Financial Industry Regulatory Authority is the largest independent regulator for all securities firms doing business in the United States, and aims to protect investors by making sure the United States securities industry operates fairly and honestly. FINRA operates the largest arbitration forum in the United States.

Contact Us

Evans Law Firm, Inc. handles annuity fraud and insurance fraud cases and lawsuits in San Mateo, 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

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