ATTORNEY NEWSLETTER
Be Wary Of Sales Presentations
Seminars And Other Questionable Sales Tactics
Understand How Annuities Work
Every time an insurance agent or broker sells an annuity (or talks a consumer into exchanging one he or she already has), the agent receives a significant sales commission. Most commissions on annuities range from 6-8%, so the sales representative who can convince a senior to move $100,000 from a CD or an IRA into an annuity stands to earn $6,000 – $8,000 just on that single transaction. Evans Law Firm, Inc. recommends against deferred annuities for seniors because consumers lose money due to such high sales commissions, potentially lose more money on withdrawal (or surrender) penalties and annual fees, and may see low returns on invested premiums. Sales and recommended surrenders and exchanges of deferred annuities to seniors may constitute financial elder abuse claims under Cal. Welf. & Inst. Code § 15610.30. Questionable sales tactics, like unannounced home visits or falsified applications, are illegal. See, e.g., Cal. Ins. Code § 790 et seq. (Unfair Insurance Practices Act). If you are over 60, and live in Sonoma County or elsewhere in California and would like us to review your annuity contract, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy.
Questions To Ask
Seniors should consider the following tips before investing in an annuity:
- Know what kind of annuity the agent is proposing. Is it fixed, variable or deferred?
- What is the term if you are purchasing a deferred annuity? Deferred annuities can run as long as 15 years. Know the length of the term before you buy otherwise you may pay a surrender fee that may cancel any earned income from your investment.
- What is the surrender penalty? If the surrender penalty is relatively low and the term is not that long than a deferred annuity may make sense for affluent seniors who can afford to lock away part of their retirement income. On the other hand, for most seniors investing in a deferred term annuity may make no sense if they need ready access to their investment funds.
- Beware of high-pressure sales tactics and seminars: Beware of “cold calls”, limited offerings, free gifts and free lunches.
- Don’t invest your money with anyone who will not discuss the investment in front of other family members or your friends. We have seen cases where a salesman, knowing the proposed annuity is unsuitable for an older client, has refused to meet with his or her family members who might see through any false promises or understand why a long-term insurance contract is not appropriate for an older person,
- Don’t take out a reverse mortgage to finance an annuity: California law prohibits agents from cross-selling annuities and reverse mortgages. See Civil Code § 1923.2.
- Don’t purchase an annuity based on the representation that it will protect your assets under Medi-Cal nursing home rules: Seniors are understandably fearful of ending up in a nursing home and losing the assets they have built up over a lifetime. Med-Cal pays the bills for hospital and skilled nursing home treatment for seniors. Medi-Cal will only seek reimbursement from funds that are considered non-exempt. Examples of exempt funds include: the equity in you house, retirement income and all your personal property. For the vast majority of California seniors, paying back Medi-Cal for long-term care will not be an issue.
- Beware of scare tactics that appeal to your emotions: Annuity salespeople are trained to exploit your fears. To quote an instructor at a annuity training conference, “They thrive on fear, anger and greed … Show them their finances are all screwed up so that they think, ‘Oh no, I have done it all wrong.’ This will make you money.”
- Get a second opinion: Do not make a significant financial investment without talking to different financial advisors and consulting with friends and family members you trust.
- Always consult your tax advisor before any transaction. Since all annuity transactions have tax consequences, always consult your tax advisor before entering into any kind of annuity transaction.
Contact Us
If you are over 60 and live in Sonoma or elsewhere in California and would like a free review of your policy contact Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669 (or toll free at 1-888-50EVANS), or by email at <ahref=”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.
