Why do Annuities Have a Bad Reputation?
If you’ve been looking into an annuity, it’s almost certain you’ve come across a lot of sources warning you away. Why is that? On the surface, an annuity can make sense: purchasing an annuity now can save money on taxes, provide certainty in retirement funding, and guarantee a livable income for old age. Unfortunately, there are a few problems with that model. Annuities have features that may not be appropriate for your financial situation, such as high surrender charges, forfeiture charges, and even charges for heirs after your death. Many large insurance companies like Transamerica Life Insurance Company, John Hancock Life Insurance Company, and others are also major sellers of annuity policies that have surrender charges and other penalties.
What Makes an Annuity Risky?
One of the biggest concerns for annuity owners is their main feature: they take your money up front. What you pay includes a sometimes sizeable commission for the salesman, sometimes as much as 15%. Once your funds are in the hands of a financial company, you may have to jump through hoops to access what’s rightfully yours. Liquidity charges, penalties for withdrawing money from your annuity, and other hidden costs can make getting your money an expensive proposition. In addition, earnings from your annuity can be used to pay you “bonuses,” which are in reality nothing more than money borrowed against your earnings in the next years. These factors can cause serious disarray to your finances if you haven’t been informed at your time of purchase.
What can you do to Protect Yourself?
The first and best line of defense against any possible fraud is to educate yourself. Annuities, life insurance, anything: it’s your money, your future, and your responsibility to read the fine print. Hit the books, talk to an attorney, speak with family and friends. If someone is trying to hurry you into buying, that’s a red flag: someone who truly has your best interests at heart would want you to take your time and think over your options. Remember that annuities can affect your eligibility for Medicaid, Medi-cal, SSI, and other services.
What if you’ve already got one?
Whoops. You’ve already purchased an annuity that’s not living up to the promises the salesman made, has wrought havoc on your finances, or has become totally worthless due to the fine print and hidden penalties. What can you do in that situation? Fortunately, there are remedies, and you may be able to find some help from the law. Knowing that annuities can be risky business, many states have special protections for senior citizens and others that require salespeople to take certain measures to protect their clients. How they approach people, how long they wait to contact you, even the design of the documents they give you are regulated, let alone some of the tricky business in the policy itself. If you think that your annuity may have been improperly sold or administered, contact a lawyers as soon as possible, since if you wait too long, you may pass the statute of limitations.
Who Sells Annuities?
Some of the major annuity providers are:
- Transamerica Life Insurance Company
- John Hancock Life Insurance Company
- Prudential Life Insurance Company
- Metlife Investors USA Insurance Company
- Genworth Life Insurance Company
- ING USA Annuity and Life Insurance Company
- Lincoln Benefit Life Company
- Metropolitan Life Insurance Company
- Unum Life Insurance Company of America
- Reliastar Life Insurance Company
They provide a large portion of the annuity products on the market, so if you own one, there is a good chance you purchased it from one of these companies. They say that annuities can provide a reliable income stream for retirement and old age.
Read More about Annuity Fraud
We’ve been investigating annuities for some time, and if you want to learn more, you can head over to our site are read about the policies here.
Evans Law Firm is a plaintiff’s firm specializing in insurance and banking fraud, consumer rights, and IRS and SEC cases, as well as elder law, whistleblower, and class action cases. If you believe that you or a loved one may have purchased an indexed universal life insurance policy under false pretenses, or one which was improperly administered, call Evans Law Firm at (415) 441-8669, or email firstname.lastname@example.org