ATTORNEY NEWSLETTER
Dangers For Seniors
Questionable Sales Tactics And Inadequate Disclosures
Replacement Transactions Can Be Costly
Financial elder abuse includes the sale to seniors of unsuitable insurance products. These unsuitable insurance products include deferred annuities, complex contracts with high fees and significant penalties, known as surrender charges, if you need to get your money out. Sales of these annuities generate sizeable commissions for agents but may result in serious economic harm for seniors. Pursuing those big commissions, agent may give consumers a misconception as to how these contracts actually work or use inappropriate sales practices targeting senior consumers especially. “Free lunch” investment seminars may be on hold right now during the pandemic but other tactics may be used to try and convince a senior consumer they need an annuity urgently or, if they already have one, need urgently to replace it with a new contract. Also, we recommend that consumers never use the proceeds of a reverse mortgage to purchase an annuity or other form of insurance. Besides being a bad idea economically, California law prohibits lenders and others from cross-selling annuities with reverse mortgages. California Civil Code Section 1923.2(i). Never let yourself be rushed into a transaction but take your time to learn about what’s being proposed. Deferred annuities are very costly to get out of and an exchange or replacement transaction can also be costly and generate a tax. 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.
What To Consider If Approached With A Deferred Annuity
If you are a senior citizen considering a deferred annuity, here are a few ideas to keep in mind when approached:
- Understand the long-term nature of deferred annuities. Once you’re sold a 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%.
- Compare information for similar contracts from several companies. Comparing products may help you make a better decision.
- Ask your agent and/or the company for an explanation of anything you don’t understand. Annuities have extremely complex rules regarding how returns are calculated, for example, and the return you actually receive on your money may be significantly lower than the “teaser” rate the agent offered you.
- Learn what caps and participation rates the policy imposes because caps and limitations will reduce your return from whatever full rate of return the chosen index generates. By comparison, any direct investment you make in an index fund would not have these limitations.
- Verify that the company and agent are licensed. 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 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. Annuities are not insured investments like CDs and other bank deposits; the promise to pay is only as good as the company’s word.
- 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.
Avoiding Manipulation And Financial Elder Abuse
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. 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.
Contact Us
If you are over 60 and live in Los Angeles 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. These remedies include 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. Ingrid handles cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.
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.
