ATTORNEY NEWSLETTER
Deferred Annuities – What to be aware of
There are a number of ways that insurance companies use to convince elders in to purchasing annuities. Sometimes it is a broker-dealer or an insurance agent who contacts you, offering a free-lunch, free financial advices or financial services for a very low price. They claim to be specialists in senior financial planning, but there is no proof of their claims.
While agents often talk about the benefits of deferred annuities, our California financial planning attorneys want to make sure you are also aware of their disadvantages. Deferred annuities are long-term products that tie up your assets and may even take money from you or your heirs if you pass on before the product matures. There are some examples of disadvantages:
– Surrender charges if you surrender or withdraw monies from a deferred annuity
– Forfeiture charges when the annuitant dies earlier than anticipated, thus resulting in the annuity payments subsiding
– Charges at death when the deferred annuities offer a death benefit when you die but it depends on circumstances of death buried deep in the policy.
– Teaser interest rates: you should check if the rate drops to a lower rate the next year.
Moreover, annuities are very costly products. Included in the price there are often commissions for the agent that can be around 15%, bonuses and teaser rates, and also liquidity charges if you take your money out before the surrender charge period expires, even if it is for an emergency.
How to protect yourself
You should ask and get an opinion from an independent financial advisor or a California lawyer who specializes in financial planning or elder abuse. Consult the sources and websites about the products and the agent. Also check to see if there is a pending lawsuit. In addition, most states allow canceling your policy within a certain time period: in California it is 30 days.
H2: Case example: Metropolitan Life Insurance Company
Metropolitan Life Insurance Company, also known as MetLife, is among the largest global providers of life insurance and annuities with 90 million customers in over 60 countries. In 2009, MetLife managed group annuity assets of $60 billion with $34 billion of transferred pension liabilities and provided benefit payments to over 600,000 annuitants per month.
MetLife is dealing with a class action. The group alleges the financial sales representatives violated their fiduciary duty to advise their customers in the best way and failed to disclose to clients certain conflict of interests in thinking first of their own financial interest in maximizing their sales of MetLife’s products.
Moreover, life insurances and annuities companies sometimes are reluctant to pay the annuitants or the heirs. The companies are trying not to pay or to pay less and as late as possible. In this unconventional practice, they are attempting to discourage the beneficiaries to waive their rights to be paid by being passive.
If you experience one of these situations, you should contact a California securities fraud lawyer. Evans Law Firm has experience dealing with this issue, as well as financial and physical elder abuse, qui tam and whistleblower issue, SEC and IRS fraud. We can be reached by phone at (415) 441-8669, or by email at info@evanslaw.com
