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Dec 20, 2021 by |

Sonoma County Financial Elder Abuse And Annuity Attorney: Unsuitable Annuities For Seniors

ATTORNEY NEWSLETTER

Unsuitable Insurance For Seniors

Questionable Sales Tactics

Red Flags For Consumers

Insurance companies may offer commissions as high as 10 percent to agents to sell products like long-term deferred annuities to senior citizens. In this environment, consumers should arm themselves with information to protect their interests. 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.  Dubious 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).  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 Sonoma 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. 

Red Flag: High-Pressure Sales Tactics and Seminars

Some unscrupulous sellers use high-pressure sales pitches, seminars, and telemarketing. Beware of agents who “cold call” you (such practices are illegal under California law), contact you repeatedly, offer “limited time offers,” show up without an appointment (again illegal under California law), or won’t meet with you if your family is present. Beware of estate planning “seminars” that are actually designed to sell annuities. Beware of seminars that offer free meals or gifts. In the end, they are rarely free. Beware of agents who give themselves fake titles to enhance their credibility. Be particularly suspicious of agents using any of the following approaches:

  1. “I’m a registered senior specialist” or “I’m a Certified Elder Planning Advisor.” 
  2. “This is a free seminar.”
  3. “You don’t need a lawyer.  They will charge you thousands of dollars for the information I’m giving you for free.”
  4. “The annuity is the safest place to have your money.  No one has ever lost money on an annuity.  This product is guaranteed.”
  5. “You better act fast to get the discounted price.”  
  6. “This is the last day this particular annuity will be available, and I’d hate for you to miss out on this opportunity.”

All of these pitches are real red flags. Annuities are confusing to even the sharpest investor.  Always discuss the purchase with someone you trust, who has nothing to gain from the sale and consult your tax advisor before any purchase – all annuity transactions have tax consequences.

Beware of High Surrender Charges

Perhaps the greatest disadvantage of any deferred annuity, including 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.

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.

Contact Us

If you are over 60 and live in Sonoma 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.

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