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Jan 23, 2024 by |

Santa Barbara Annuity Attorney: Why Older Investors Should Avoid Deferred Annuities


Complicated And Expensive Contracts

Costly to Exit 

Investments Are Not Insured

Evans Law Firm, Inc. generally recommends against certain types of deferred annuities for older consumers because these complex, expensive insurance policies may tie up a senior’s money for years and impose significant penalties if you need your money back.  Sales and recommended surrenders and exchanges of deferred annuities to seniors may constitute financial elder abuse claims under Cal. Welf. & Inst. Code §§ 15610.30 (definition of financial elder abuse) and Cal. Ins. Code §10509 (suitability requirements for annuities). Questionable sales tactics, like unannounced home visits, “pretext” visits or falsified applications, are illegal.  See, e.g., Cal. Ins. Code § 790 et seq. (Unfair Insurance Practices Act). 

Aggressive tactics by insurance carriers, increasingly owned by private equity firms, have some analysts worried.  As one analyst[1] put it:

Private equity firms have gotten into the business, buying public insurance players or starting new private ones, and now represent 10% of the sector. Both new and old insurance companies are using more leverage and expanding their holdings of exotic assets such as collateralized loan obligations and reinsurance contracts to fund annuities. In addition, insurers are offering greater liquidity to investors, raising the risk of bank-run-type disasters for the companies.

All these changes could lead to a race to the bottom where the most aggressive companies offer the highest annuity rates, win a bigger share of new business, chase the riskiest strategies to fund them and, eventually, collapse first. A big enough collapse could cause systemic problems in the financial system. It’s not clear that state insurance regulators can keep up with the changes.

If you are over 60, and live in Santa Barbara or elsewhere in Southern California and would like us to review your annuity contract, call us today at 415-441-8669 (or toll free at 1-888-50EVANS)

Specific Downsides of Annuities

Surrender Penalties

When you put a lump sum into an annuity, essentially you’re surrendering your money for the term of your contract. If you’ve invested $100,000 in a deferred annuity that isn’t set to pay out for 10 years, but after five you need $50,000 back for an emergency, that withdrawal can incur a penalty. You will also incur a tax liability and annuity withdrawals may be taxed at ordinary income tax rates not the lower capital gains rate.

Commissions and Fees

The upfront sales commission is not the only cost associated with many deferred annuities; there are also annual administrative fees and “rider” fees (for policy enhancements) that can quickly erode your annual return on the premium dollars you invested.

Not Insured Investments

Annuities are not backed by the federal government in the same way that banks are. Because there is no FDIC insurance behind an annuity purchase, if the insurance company happens to fold, you risk losing everything you invested.

Contact Us

If you are over 60 and live in Santa Barbara or elsewhere in Southern California and would like a free review of your policy contact Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669 (or toll free at 1-888-50EVANS), or by email at <ahref=””></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

Nationwide Mutual 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.

[1] “Annuities Are Back in Fashion, But Are They Safe?,” Aaron Brown,, Nov. 27, 2023.

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