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Apr 1, 2022 by |

Sonoma County Financial Elder Abuse And Annuity Attorney: Take A Closer Look At Deferred Annuities Before An Agent Sells You One

ATTORNEY NEWSLETTER

Agents Target Seniors With Retirement Planning Seminars

The Goal Is To Sell Annuities

Resist The Hype And Understand The Disadvantages

Events like “retirement planning seminars” or “retirement consultations” typically devolve into annuity sales pitches by the hosting insurance agent.  Whenever an agent approaches you to consider a deferred annuity, if you’re a senior think long and hard about the costs buried in annuities.  Below, we analyze costs more closely but largely annuity costs fall in two categories:  penalties incurred if you withdraw from or surrender the policy, and annual costs and fees if you leave your money in the policy.  Evans Law Firm, Inc. recommends seniors avoid deferred annuities because deferred annuity contracts are expensive and complicated and tie up a senior’s money for years.  If you are a retiree or someone about to retire, do not let yourself be pressured into an annuity. High-pressure or deceptive sales tactics and sales of unsuitable annuities violate the law and constitute financial elder abuse when the targeted consumer is a senior.  Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse); Cal. Ins. §§ 790 et seq. (Unfair Insurance Practices Act) and 10509 (suitability requirement).  In financial elder abuse cases, seniors can recover 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 Sonoma, or elsewhere in 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. 

Costs of Annuities

  • Sales commissions.  Sales of annuities and life insurance generate significant sales commissions for the selling agent.  Do not be persuaded that “premium bonuses” or other gimmicks will return the commission dollars to you.  Sales commissions come directly out of your money, and “bonuses” are never separate sums you can withdraw; if you surrender your policy, the “bonus” disappears.
  • Surrender penalties.  Surrender penalties are assessed on any money withdrawn in excess of a pre-specified annual withdrawal allowance.  Penalties may be as high as 15% or more on the amount withdrawn.  Surrender periods can range up to fourteen years. 
  • M&E.  Mortality and expense risk charges average about 1.12 per year.  These fees protect the insurance carrier’s risk of policyholders living longer than the actuarial tables predict – i.e., the “cost” of providing the insurance
  • Contract Fees.  Contract fees may range from $25 to $40 per year.  Ask the agent what the policy’s annual contract fee is.
  • Administrative Fees.  Administrative fees typically pay for production and mailing of account statements and other customer services.  This fee can be around .5%.
  • Subaccount Fees.  Sub-account fees are fees charged by the managers of the underlying mutual funds in an annuity.  These fees are buried in the returns on the subaccounts but average just under 1%.
  • Rider Fees.  Any special enhancement riders will add additional costs to the policy. An income rider for example normally costs 1-1.5% annually.
  • Miscellaneous Fees.  There may be other fees imposed, such as a fee for excess transfers between sub-accounts.

Fees can accumulate quickly to erode any promised return on the contract being offered you.  Press the agent for details and always get a second opinion from an investment professional with nothing to gain from a sale.  Also, remember to consult with your tax advisor before any annuity transaction because all transactions in annuities have tax consequences.

Contact Us

If you are over 60 and live in Sonoma County or elsewhere in the State of California and have a deferred annuity policy, 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.

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