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Jan 8, 2018 by |

Santa Clara County and California Securities and Financial Elder Abuse Attorney: Surrenders and L Share Variable Annuities


FINRA Concerns With L Share Annuities

L Share Variable Annuities are a type of variable annuity where the surrender charge period under the contract is shortened to three or four years, as opposed to seven to ten years under standard variable annuities. L Share annuities have higher administrative and mortality expense rates.  They are sold as products providing the owner with flexibility to change investment strategies in a shorter period of time.  The Financial Industry Regulatory Authority (FINRA) recently studied these types of short-term contracts and concluded that L Share annuities were unsuitable for certain investors, particularly those with long-term investment horizons.  In several instances, FINRA levied fines against brokers for recommending them.  We at Evans Law Firm, Inc. represent clients, including seniors, who suffer losses, including from high fees, surrender penalties and taxes, on unsuitable annuities. If you or a loved has suffered a surrender penalty or tax loss on an annuity surrender or paid high fees for an unsuitable policy, including on L Share annuities, call the Santa Clara County and California securities and financial elder abuse lawyers today at Evans Law Firm, Inc. (415)441-8669 for a free review of the terms of your annuity including surrender provisions. 

In its study, FINRA identified certain multi-share class and complex products as examples of the failure of brokerage firms to recommend suitable annuities or, under the new fiduciary rule, recommend products in their clients’ best interests. FINRA found that more than 50% of the customers in its study were sold these short-term products despite the customer’s long-term investment horizon. While FINRA did not explicitly name L shares, the report’s description is a match to L Share products. Investors pay more for the liquidity of L-share variable annuities, with their shortened surrender periods. The sampling indicates fees are roughly 0.35% to 0.50% higher than fees under more popular types of variable annuities, which carry longer surrender periods. FINRA questions why investors would pay higher fees for an L-share annuity that carries a guaranteed-income feature, an inherently long-term rather than short-term play because it offers a lifelong income stream. In other words, according to FINRA, the investors were not looking for short-term liquidity but were paying for it anyway.

Each situation is different and we at Evans Law Firm do not provide investment or tax advice when it comes to purchases and surrenders of variable annuities. We do however represent clients who have suffered losses from surrendering an annuity they no longer want and that may very well have been unsuitable in the first place. You may also have incurred high commissions and administrative fees, rider fees, and other charges that add to your economic loss. California law provides additional protections for senior buyers who have suffered these types of losses, including extra damages and mandatory attorneys’ fees in cases of financial elder abuse.

Some of the major annuity and life insurance providers in California are listed below. We do not suggest in any way that any of these carriers have issued unsuitable annuities to any investors.  Several of these carriers have in fact discontinued selling new L Share contracts.  The company list is provided solely for our readers’ reference.

Allianz Life Insurance Company of North America

Allstate Life Insurance Company

American Equity Investment Life Holding Company

American General Life Insurance Company

American National Insurance Company

Athene Annuity and Life Company

AXA Equitable Life Insurance Company

EquiTrust Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Forethought Life Insurance Company

Genworth Life Insurance Company

Guggenheim Partners/ Security Benefit Life Insurance Company

ING USA Annuity and Life Insurance Company

Jackson National Life Insurance Company

John Hancock Life Insurance Company

Life Insurance Company of the SouthWest/National Life Group

Lincoln Financial Group/The Lincoln National Life Insurance Company

MassMutual/Massachusetts Life Insurance Company

MetLife/Metropolitan Life Insurance Company

Midland National Life Insurance Company

Mutual of Omaha

National Life Group/Life Insurance Company of the SouthWest

New York Life Insurance Company

Pacific Life Insurance Company

Principal Life Insurance Company

Prudential Life Insurance Company

Security Benefit Life Insurance Company/Guggenheim Partners

Symetra Life Insurance Company

Transamerica Life Insurance Company

Voya/Reliastar Life Insurance Company


Contact Us

If you or a loved one been sold an unsuitable annuity contact Santa Clara County and California annuity and financial elder abuse attorney Ingrid Evans and other attorneys at the Evans Law Firm at (415) 441-8669 for a free consultation, or by email at <a href=””></a>. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a FINRA arbitration, jury trial or toward an equitable settlement.  We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.

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