Disadvantages Of Deferred Annuities
Reasons To Avoid Deferred Annuities
Sales of unsuitable annuities, including indexed annuities, to seniors may constitute financial elder abuse and violate the California Insurance Code and Financial Industry Regulatory Authority (FINRA) regulations against the sale of unsuitable investments. Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse); Cal. Ins. §§ 790 et seq. (Unfair Insurance Practices Act) and 10509 (suitability requirement); FINRA Rule 2111(suitability standard for financial advisor recommendations). Evans Law Firm, Inc. recommends against deferred annuities for older consumers because they are expensive and complicated and because these contracts tie up a senior’s money for years. Both statutes allow victims to sue for damages and other relief including awards of attorneys’ fees and expenses for bringing your case. Cal. Welf. & Inst. Code § 15657.5. If you are over 60, live in Santa Clara County or elsewhere in the Bay Area or throughout the State of 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.
Reasons Why Senior Consumers Should Avoid Annuities
- Annuities are long-term contracts with penalties if cashed in early.
- Annuities require you to lose control over your investment. You cannot move your money around if markets change or interest rates move. You are bound to whatever returns the carrier dictates.
- Some annuities earn little to no interest. Contract fees and subaccount fees reduce any contract rate. Teaser rates, used to lure consumers into contracts, expire. Historically, rates on deferred annuities lag returns on direct stock fund investments.
- Guaranteed income cannot keep up with inflation in certain types of annuities.
- The annuity might not provide a death benefit to your beneficiaries.
- Fees can be high in investment-based annuities.
Exchanges And Replacement Transactions
If you’ve already purchased an annuity, be especially wary if an agent recommends exchanging your existing annuity for a new one. Unsuitable contract exchanges violate California law (see, e.g., Cal. Ins. Code §10509.914), but agents still push inappropriate (and costly) exchanges. There are several dangers for consumers in these exchanges: surrender penalties on the surrendered contract, tax on the proceeds from the surrendered contract, and the surrender period resets under the new contract, tying up your money for even more years. Another danger for consumers is where agents “churn” annuities by recommending a succession of surrenders and exchanges. This activity is illegal.
If you are over 60 and live in Santa Clara County 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: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.