Skip to Content

PHONE: 415-441-8669 | TOLL FREE: 888-50EVANS

Dec 24, 2021 by |

Santa Cruz County Financial Elder Abuse And Annuity Attorney: Problems With Fixed Indexed Annuities

ATTORNEY NEWSLETTER

Understanding Fixed Indexed Annuities

Fees And Complicated Return Calculations 

Lengthy Surrender Periods 

Agents who sell deferred annuities like fixed indexed annuities to seniors receive a commission as high as 10% on the sale. Fixed indexed annuities are sold during times of volatile markets as offering security against falling equity markets.  The real story with these contracts can be quite different.  Evans Law Firm, Inc. recommends seniors avoid deferred annuities including fixed indexed annuities because these contracts are expensive and complicated and tie up a senior’s money for years.  Sales of unsuitable annuities to seniors violate the law and may constitute financial elder abuse.  Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse); Cal. Ins. §§ 790 et seq. (Unfair Insurance Practices Act) and 10509 (suitability requirement).  Any senior victim may be entitled to damages and an award of attorneys’ fees and expenses for bringing a case.  Cal. Welf. & Inst. Code § 15657.5.  If you are over 60, live in Santa Cruz County or elsewhere in the Bay Area or throughout the State of California and own a deferred annuity (such as a fixed indexed annuity), call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy. 

Fixed Index Annuity Problems

  • Fixed indexed annuities are often sold with premium bonuses. Premium bonuses are really phantom benefits – you can never withdraw this “bonus” and if you surrender your contract the bonus is lost.
  • Caps and participation rates reduce returns. Caps limit annual returns to a set percentage regardless of any greater growth in the selected index.  Participation rates of 75-80%, for example, mean that your return will be less than the 100% you would receive if you had invested directly in an index fund.
  • Fixed indexed annuities are routinely sold with an “income rider” for future income payments. Most lifetime income riders, however, pay a “level” income that never increases to keep up with inflation.  Inflation is on the rise in the American economy and fixed income levels will not keep up with it.
  • Most index strategies are new and complicated. As a result, fewer and fewer traditional indexes (S&P 500, Nasdaq, and Dow Jones) are used. The new strategies do not have any track record of historic performance allowing you the chance to evaluate true performance levels of the past.
  • Fees can reduce the account value. Annual fees accumulate in these contracts and may be 1.5-3% when combined.  There are also subaccount fees that are buried in the performance of the chosen index,

Lengthy Surrender Periods

Perhaps the greatest disadvantage of any deferred annuity, including fixes indexed annuities, is that withdrawals incur an insurance company penalty.  Withdrawals during a policy’s “surrender period” are subject to penalties.  The period can last ten years or more and the charges can be as high as 15% or greater.  For senior consumers this penalty can be particularly harsh.  A senior policyholder may need his or her money back for an emergency or escalating care costs or the like and a stiff penalty that eliminates any gain in the invested money and cuts into principal is a real hardship.  Surrenders are also taxable events such any surrender can result in large tax bills in addition to the carrier’s penalty.

Contact Us

If you are over 60 and live in Santa Cruz 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:info@evanslaw.com”>info@evanslaw.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

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

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

PacLife

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.

Law Dragons 500 badge Million Dollar Advocates Forum SuperLawyers Badge Best Lawyers Badge Avvo Lawyer Badge

Our Passion For Justice

415-441-8669 888-50EVANS

Hear What Our Clients Have To Say

"After a year of frustration working with the insurance company..my husband and I contacted Evans Law Firm. What a relief...within a month we had come to a resolution that was exceptable by all parties...THANK YOU EVANS LAW FIRM!"
Posted By: Linda Dieringer

Read More Reviews