ATTORNEY NEWSLETTER
Questionable Annuity Sales Tactics Targeting Seniors
Sales Of Unsuitable Annuities To Seniors As Financial Elder Abuse
Economic Loss From Exchange Or Replacement Transactions
Insurance agents sell all insurance products for commissions. Obviously, some forms of insurance, like health insurance and homeowner’s insurance are essential, but unsuitable insurance products exist too and often produce even higher sales commissions. Unsuitable insurance products for senior consumers especially include certain deferred annuities and universal life insurance policies. Selling such unsuitable products to seniors may constitute financial elder abuse, both in the economic injury inherent in the products themselves and the process by which they are sold. We have seen seniors injured by the terms of the deferred annuity or universal life policy sold to them and have also seen the questionable sales tactics agents employ to close these transactions. In fact, Evans Law Firm, Inc. recommends against annuities especially for seniors, because commissions, fees and surrender penalties reduce returns and make it expensive to get your money out if you need it. Resist the pitch that these annuities are tax-deferred; you already have one tax-deferred annuity for retirement which is your Social Security savings, and you can also enjoy the benefit of tax deferral from IRAs, SEP IRAs, or 401(k) plans invested directly in mutual funds. Other investments like bonds may offer the predictable income you seek without the annual fees, sales commissions, and withdrawal penalties. If you’re over 60 and live in Alameda County or elsewhere in California and have suffered a loss due to cancellation, replacement, full or partial surrender, or high fees on any type of annuity, call Evans Law Firm, Inc. today at 415-441-8669 or toll free at 1-888-50EVANS (888-503-8267) for a free review of your policy. A list of major carriers in California appears below.
Economic Loss From Deferred Annuities
Deferred annuities are illiquid, expensive and often perform poorly when it comes to return on your money. The fee provisions and contract terms for calculating return and policy “value” are highly complex and we have seen policyholders see zero return on their premium dollars even where the market overall is thriving. And unlike other investments that allow you to move your funds to more attractive investments over time, deferred annuities lock you in with penalties for withdrawals. In fact, this is the principal reason why deferred annuities are so dangerous and inappropriate for older Americans. Heavy surrender penalties apply if the senior needs his or her money back before the annuitization period begins. If you buy at age 65, you’re generally looking at a 10- to 15-year surrender period, with a penalty as high as 25 percent at the front end. This means that you cannot withdraw your money without penalty until you turn 80! While you wait, the way your return is calculated also works against you. In rising markets, policyholders only share in the growth up to a predetermined cap and that return is further limited by the “participation rate” that allows the annuity holder to reap only a percentage of the market’s total gains. Some “participation rates” are as low as 65% of a fund’s real return. Other provisions buried in the contracts allow the company to further skim off gains.
Questionable Sales Tactics As Financial Elder Abuse
Agents often present an attractive “teaser” interest rate that lasts only for a short time, and the maintenance fees and other creative administrative fees buried in the contracts reduce the amount the annuitant actually receives. Typical sales tactics include ads touting these teaser rates in local papers or seminar invitations for seminars on living trusts or similar estate planning “advice.” Through flyers or online pitches, agents may gather personal information from seniors about their assets, which agents later use for phone contacts, still under the guise of a financial planner. Usually, the “solution” the agent suggests for your financial plan is an annuity.
One of the worst and most pernicious practices is the pitch that you need to exchange an existing annuity for another, newer contract. There are some protections for seniors here. California law forbids insurance agents from recommending an exchange of an existing annuity for a new one if the transaction “requires the insured to pay a surrender charge for the annuity that is being replaced, where purchase of the annuity does not confer a substantial financial benefit over the life of the policy to the consumer, so that a reasonable person would believe the purchase is unnecessary.” Cal. Ins. Code § 10509.914(c)(emphasis added). Our financial elder abuse and annuity litigators have represented senior consumers in many cases where an agent has talked a senior into an exchange or replacement of an existing contract and the senior has suffered serious economic injury as a result of surrender charges on the existing policy and heavy tax liability for the surrender. Never agree to any exchange, replacement or surrender of an annuity without consulting your tax advisor.
Contact Us
Ingrid M. Evans represents seniors who have suffered loss as a result of the sale of an unsuitable deferred annuity or universal life insurance contract or been exploited by questionable sales tactics. If you are over age 60 and have lost money as the result of a deferred annuity transaction or surrender in San Francisco, Contra Costa County or elsewhere in California, call Ingrid today at (415) 441-8669 (or toll free at 1-888-50EVANS) or by email at <ahref=”mailto:info@evanslaw.com”>info@evanslaw.com</a> for a free review of your policy and sales materials.
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.
