ATTORNEY NEWSLETTER
The Trouble With Annuity Replacements
Churning Annuities
In shifting economic climates, insurance agents often recommend replacement of old annuity or whole or universal life insurance policies with promises of better, newer products. For most policyholders, especially seniors, replacements are inappropriate because they are expensive, can trigger tax liabilities, and carry new surrender charge schedules tying up policyholder money for even more years. Agents earn commissions on replacements and may fail to explain these disadvantages. The Marin County and California annuity and financial elder abuse attorneys at Evans Law Firm, Inc. represent clients, especially seniors, who have suffered losses and tax liabilities on improper annuity or life insurance replacements by commission-driven brokers. If you or a loved one has been a victim of a costly and inappropriate replacement, securities fraud or other form of financial elder abuse call us at the Evans Law Firm at (415) 441-8669, and we can help.
Replacements and exchanges of variable annuities and whole life insurance policies are examples of brokers “churning” or “twisting” client accounts and contracts. Some replacements qualify as so-called “1035 exchanges” where the IRS does not tax the proceeds of the existing policy as long as that policy is exchanged for a similar one and the policyholder does not withdraw cash from the exchange. A 1035 exchange requires extra paperwork and delays commission payments so brokers may not elect (or inform you of) 1035 treatment. Instead the agent “conceals” the replacement and the application is treated as a new purchase application.
Even in a 1035 exchange the policyholder will pay surrender charges to the prior carrier if the policy is still in the surrender period. Sometimes surrender periods last as long as 10 years or more. Annuities and life insurance are illiquid investments and when you replace a contract with a new one, your surrender period resets under the new policy. It will be all that much longer before you can access your money under the new contract if you need a withdrawal above the minimum penalty-free amount you’re allowed. That can be especially disastrous for seniors faced with an emergency or more money for living expenses. Bottom line is beware of replacements and exchanges.
Contact Us
If you or a loved one live in Marin County or elsewhere in California and are over age 60 and have suffered from an inappropriate replacement of your existing annuity or been a victim of securities fraud or financial elder abuse contact Ingrid M. Evans and the other Marin County and California annuity and financial elder abuse attorneys at the Evans Law Firm today at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our attorneys have experience with complex securities cases and complicated financial contracts and large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We also handle cases involving physical and financial elder abuse, other types of qui tam and whistleblower cases, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.
Leading providers and distributors of life insurance and annuities, including variable and fixed indexed annuities, in California are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong. Rather, 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 National Life Insurance Company
Ameriprise Financial/RiverSource Life Insurance Company
Ameriprise Financial/Securities America, Inc.
Athene Annuity & life Assurance Company
Athene Annuity and Life Company
Athene USA
Aviva Life Insurance Company
AXA Equitable Life Insurance Company/AXA US
Bankers Life Insurance and Casualty Company
Brighthouse Financial, Inc./MetLife
Citigroup Global Markets, Inc.
Crump Life Insurance Services, Inc.
CUNA Mutual Group/CMFG Life Insurance Company
EquiTrust Life Insurance Company
Fidelity & Guaranty Life Insurance Company
Forethought Life Insurance Company/Global Atlantic Financial Group
Genworth Life Insurance Company
Global Atlantic Financial Group/Forethought Life Insurance Company
Guardian Life Insurance Company
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
Massachusetts Mutual Life Insurance Company
Merrill Lynch Life Agency Inc.
Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.
Nationwide Life Insurance Company
New York Life Insurance Company
Northwestern Mutual Life Insurance Company
Pacific Life Insurance Company
Principal Financial Group
Prudential Life Insurance Company
Raymond James Insurance Group
RiverSource Life Insurance Company/Ameriprise Financial
Securities America, Inc./Ameriprise Financial
Security Benefit Life Insurance Company/Guggenheim Partners
Symetra Life Insurance Company
Transamerica Life Insurance Company
Unum Life Insurance Company of America
Voya/Reliastar Life Insurance Company
Wells Fargo Advisors
World Financial Group Insurance Agency, Inc.
