ATTORNEY NEWSLETTER
Disadvantages of Deferred Annuities
Use The Free Look Period To Reconsider
Other Contract Disadvantages
Evans Law Firm, Inc. generally recommends against certain types of deferred annuities especially for seniors because these complex insurance policies carry high fees, lack transparency and are illiquid. The contracts are illiquid because during the so-called “surrender period” (with can last 10 years or more) withdrawals are subject to a penalty. You are locked in and if market changes during the surrender period drive you to move your money out of the annuity, you will have to pay a surrender charge and may face tax liabilities. Further, annuities may be sold based on incomplete information about these withdrawal consequences or other contract pitfalls. Questionable or incomplete sales tactics and presentations and the policies themselves may constitute violations of insurance laws and elder protections. Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse); Cal. Ins. § 790 et seq. (Unfair Insurance Practices Act). Relief for injured seniors includes awards of attorneys’ fees and expenses for bringing your case. Cal. Welf. & Inst. Code § 15657.5. If you are over 60, live in the San Francisco Bay Area and own a deferred annuity, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy.
Free Look Period
Under Cal. Ins. Code § 10127.10, issuers of individual deferred annuities and life insurance policies must give policyholders a 30-day period to return the policy for a full refund of all premiums paid. This is known as the “free look” period. If you have ben sold an annuity or life insurance contract, we encourage you to use this free look period to reconsider the sale. Important things to consider are:
• Rate of return: Look for an explanation of the initial interest rate, including any bonuses or introductory periods, as well as the duration of the rate and how it might change in the future.
• Payouts: How often will you receive regular payments from the insurance company?
• Death benefit: Understand if your contract provides a death benefit to your heirs and how the benefit is calculated.
• Withdrawal provisions: Familiarize yourself with the rules on withdrawals, including surrender charges. Find out how much you can withdraw from the account each year without penalty. Review how the value of your annuity will change if you make withdrawals.
• Fees and expenses: Be aware of all the fees associated with the annuity, including management fees, mortality and expense risk charges, and surrender charges. You should find a list of specific dollar amounts or percentages for each fee along with clear explanations of how they apply.
• Investment options: If you’re purchasing a variable annuity, research the available investment options and their performance history.
• Taxes: Look for a summary of the federal, state and local tax implications of your annuity.
Even after a thorough review, seek advice from a professional financial advisor and your tax professional.
Other Contract Disadvantages
Annuities are extremely complex and not for everybody. Endorsements and riders are even more complex. Fees and commissions destroy returns. Annuities are illiquid investments and tie up your money for years and withdrawals for emergencies may incur steep surrender penalties; you should be positive you will not need whatever funds you commit by way of premium contributions. We understand all these drawbacks because we’ve represented senior policyholders who have lost money on these contracts.
Contact Us
If you are over 60 and live in California and have a deferred annuity or universal life insurance contract, 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.
