ATTORNEY NEWSLETTER
Deceptive Sales Practices
Fees And Surrender Charges
Understand How Returns Are Calculated
Annuity sales to senior citizens have increased in recent years, but so has a sense of confusion among older consumers who are so often targeted by agents selling complex and expensive annuities. The confusion over these products is due, in large part, to questionable or deceptive sales practices employed by companies and agents looking to take advantage of uninformed consumers. It is extremely important, when considering whether or not to buy an annuity, to take the necessary precautions in order to understand what annuities are and how they work before you are sold one. Once you’re in an annuity it is very expensive to get out. For that reason, Evans Law Firm, Inc. recommends against deferred annuities for older consumers especially. Sales of unsuitable insurance products including annuities to seniors constitute financial elder abuse in California. See Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse). If you or someone you know is over 60 and lives in Napa County or elsewhere in California and has a deferred annuity call us today at 415-441-8669, and we can review your contract for free. Our toll free number is 1-888-50EVANS.
Deceptive Sales Practices
Watch for the following red flags, which serve as warnings of deceptive sales practices:
- High-pressure sales pitch. If a particular group or agent has contacted you repeatedly, offering a “limited-time” deal that makes you uncomfortable or aggravated, trust your instincts and steer clear.
- Quick-change tactics. Skilled scam artists will try to prey on your “time fears.” They may try to convince you to change coverage quickly without giving you the opportunity to do adequate research.
- Unwilling or unable to prove credibility. A licensed agent will be more than willing to show adequate credentials.
- Remember, if it seems too good to be true, it probably is!
Fees And Surrender Charges
Any time you consider an annuity contract, you need to understand all the fees that come with it. First, understand that the agent will receive a sales commission as high as 10% on the transaction. Deferred annuities also have administrative fees, mortality and expense fees, and rider fees for enhancements to policies. There are also subaccount fees charged against your return on whatever index fund you select for investment of your premium dollars.
But the biggest danger for senior buyers is surrender charges. A surrender charge applies when you make more withdrawals than you’re allotted. Your insurance company could limit withdrawals particularly during the early years of your contract. Surrender fees are often as high as 15% and can apply for periods up to ten years or more.
Return Calculations
When you are sold an annuity even if you are given the opportunity to select an index fund for your investment, your policy return will not track the real return on that fund for several reasons. First, your return will be capped at a percentage that may be less than the fund’s real return in any given year. Second, you do not receive the benefit of reinvested dividends on the stocks in the fund as you would with a direct investment in the fund. Third, the insurance company will also limit your gains through something called a “participation rate.” If you have a participation rate of 80%, then your investments will only grow by 80% of the amount that the index fund grew.
Contact Us
If you or a loved one been the victim of annuity fraud in Napa County, or in any California county, contact Ingrid M. Evans at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our toll free number is 1-888-50EVANS.
Some 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.
