ATTORNEY NEWSLETTER
Taking A Closer Look At Deferred Annuities
Avoid High Pressure Sales
Dangers Of Exchanging Or Replacing Policies
Evans Law Firm, Inc. recommend against deferred annuities for older consumers because the commissions and fees are high, returns rarely meet expectations, and the contracts tie up your money for years. This last point – the so-called “illiquidity” of deferred annuities – is especially significant for seniors. Once you’re in an annuity it is very expensive to get out and switch investments or just access your own money you may need for an emergency or because you’re living expenses have increased. Despite these pitfalls, insurance agents pursue senior consumers with long-term deferred annuities because time an agent sells a contract (or gets you to switch an old one for a new one) he or she receives a sales commission. There is considerable investor uncertainty these days about where the economy is headed post-pandemic and where interest rates and inflation are headed. Agents seize on market jitters and promise products that (they say) offer safety and guaranteed income. Don’t buy it until you understand how these contracts really work. If you are over 60, live in Los Angeles or elsewhere in California and have experienced an economic loss as a result of the sale of an unsuitable annuity or other investment product, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy.
Pressure Sales and Consumer Considerations
Beware of agents who “cold call” you, contact you repeatedly by phone, mail you “limited time offers,” maybe even show up without an appointment as we emerge from lockdown. We have even seen cases where agents refuse to meet with seniors and others of their family to discuss products. That is a real red flag! Many of these questionable sales practices violate California law. See, e.g., Cal. Ins Code §§ 785-789. However and whenever you are approached, keep these considerations in mind:
- Understand the long-term nature of deferred annuities. Deferred annuities are not like direct deposits in stock funds where you can withdraw your money without fund penalties. Once you’re sold a deferred annuity contract, there will be a penalty if you withdraw your money before the expiration of the surrender period. The surrender period can be as long as ten years or more and the withdrawal penalty can be as high as 15%.
- Ask your agent and/or the company for an explanation of anything you don’t understand. Annuities have very complex rules regarding how returns are calculated These equations may mean that the return you actually receive on your money is significantly lower than the “teaser” or “contract” rate.
- Indexed annuities invariably subject your return to caps and “participation rates.” These caps and limitations will reduce your return from whatever full rate of return the chosen index generates; a typical participation rate is 80% which means you will under the best of circumstances see only 80% of a fund’s return. By comparison, any direct fund investment would not deprive you of the fund’s full return.
- Watch for red flags: high pressure sales tactics, talk that you have to act fast or will miss an opportunity, and delay in providing credentials. Check your agent’s license with the California Department of Insurance.
- Annuities are not insured investments like CDs and other bank deposits; the promise to pay is only as good as the company’s word. Check the company’s credit rating. Legitimate insurers have their “creditworthiness” rated by independent agencies such as Standard & Poor’s, A.M. Best Co. or Moody’s Investors Services. An “A+++” or “AAA” rating is a sign of a company’s strong financial stability.
- Keep detailed records. Get all rate quotes and key information in writing. Once you’ve made a purchase, keep a copy of all paperwork you complete and sign, as well as any documents you’ve been given, including illustrations, correspondence, special offers and payment receipts.
Protect Yourself From Manipulation And Financial Elder Abuse
If you are a senior, always get a second opinion on any investment proposal from a professional with nothing to gain from a sale. Also always consult your tax advisor before making any purchase or exchanging, surrendering or withdrawing from any annuity. All annuity transactions have tax consequences. Unscrupulous agents or financial advisors are particularly successful in preying on older investors who do not have someone to discuss business matters with before they make a decision. The results can be disastrous financially. Some investments may be entirely fraudulent as in Ponzi schemes. Other investments may be entirely unsuitable for the senior consumer and extremely expensive to get out of as is the case with deferred annuities. Any of these investments may also result in tax liabilities.
Contact Us
If you are over 60 and live in San Francisco or elsewhere in California and have lost money on a deferred annuity or indexed universal life insurance contact Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Ingrid will pursue all remedies available to you against all parties responsible, including restitution (getting your money back), extra damages (to punish the fraudulent conduct) and awards of attorneys’ fees and costs to the senior forced to bring an action against the wrongdoers.
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.
