ATTORNEY NEWSLETTER

Be Wary of Annuities in Any Form

What are Deferred Annuities?

Tax deferral is the key to successful retirement savings. Annuity salesmen advise consumers to invest in deferred annuities to maximize tax deferral. We at Evans Law Firm counsel caution, especially for senior consumers. Our attorneys have years of experience with annuities and, while each situation is different and we do not give legal advice in this column or anywhere on our website, we do recommend a close look at annuities, especially for IRA and SEP-IRA accounts. If you or a loved one have been sold an unsuitable deferred annuity, call the experienced financial elder abuse and annuities lawyers today at Evans Law Firm, Inc. (415)441-8669 and we may be able to help. We accept annuity cases in Alameda County and throughout the State of California

With a deferred annuity, you pay a single premium or series of premiums and in return receive an income stream from the carrier commencing at some future date. Usually, the income payments do not begin for 10-15 years, making such products almost by definition unsuitable for seniors, especially those over age 70. Any withdrawals by the policyholder prior to maturity is subject to stiff surrender penalties running as high as 15%. These are highly illiquid investments, another reason for caution. For any IRAs, the IRS may also penalize you for an early withdrawal from an IRA (before age 59 ½), but you may be eligible for hardship exceptions when you’re faced with an “immediate and heavy” financial need such as college tuition for a child, necessary home repairs, medical expenses and the like. Conversely, annuities always charge surrender penalties for early withdrawals and there are most likely no hardship exceptions.

Yet another reason to look closely at deferred annuities is that annual fees may run as high as 3%. In addition, in Year One you will pay a hefty sales commission to the producing agent or broker; it takes a long time to recoup that upfront payment. Your agent may try to convince you that in the long run the promised higher returns on the annuity will pay off, but be careful. Returns are never guaranteed and commissions and fees may eat up even the best of returns. Long term if you’re looking for tax deferral you’re probably better off investing your IRA in the market. You could in fact be much, much better off by avoiding annuities entirely when tax deferral is your goal.

Some of the major annuity and life insurance providers in California are:

• Transamerica Life Insurance Company
• John Hancock Life Insurance Company
• Bankers Life Insurance and Casualty company
• Massachusetts Mutual Life Insurance Company
• Pacific Life Insurance Company
• Genworth Life Insurance Company
• ING USA Annuity and Life Insurance Company
• Lincoln Benefit Life Company
• Metlife/Metropolitan Life Insurance Company
• Unum Life Insurance Company of America
• Voya/Reliastar Life Insurance Company
• Fidelity & Guaranty Life Insurance Company
• Lincoln Benefit Life Company
• AXA Equitable Life Insurance

Contact Us

If you or a loved one been sold an unsuitable annuity please contact the Evans Law Firm financial elder abuse and annuity and life insurance attorneys at (415) 441-8669, or by email at info@evanslaw.com. Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a FINRA arbitration, jury trial or toward an equitable settlement. We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.