ATTORNEY NEWSLETTER
Annuity Sales to Seniors
Annuities are complex, long-term insurance contracts that insurance agents and carriers promote especially to seniors as vehicles for guaranteed income for life. The Marin County and California financial elder abuse, annuity and securities fraud lawyers at Evans Law Firm, Inc. do not recommend seniors purchase annuity contracts, but if you are considering an agent’s sales pitch at a minimum ask yourself the questions below and get a second opinion from an advisor with nothing to gain from the sale.[1] If an agent has already sold you an annuity and you’re over 60 and live in California, we can review your policy for free. Contact the Marin County and California securities fraud, annuity and financial elder abuse attorneys at Evans Law Firm today at (415)441-8669. A list of the major providers of annuities in California appears below.
As California lawyers, we only handle cases in California. If you’re a senior citizen here in California, an agent’s and carrier’s conduct in selling you an inappropriate or unsuitable contract with surrender charges and other fees may constitute financial elder abuse in certain circumstances. Victims of financial elder abuse in California are entitled to extra damages and attorneys’ fees. The financial elder abuse attorneys at Evans Law Firm pursue all available remedies for California victims of financial elder abuse. You may also be a victim of securities fraud as a result of certain sales and our securities fraud attorneys can represent you in securities litigation as well.
Questions to Ask
One of our State’s leading senior advocacy groups, California Advocates for Nursing Home Reform (CANHR), recently published a list of questions seniors should always ask when considering annuities. We think the CANHR list is a good one and want to share it with you with some of our own notes in bold below. You can download all the CANHR questions at http://www.canhr.org/factsheets/abuse_fs/html/abuse_AnnuityQuestions.htm
Are you married or do you have a domestic partner?
If you answer yes, then consult with your significant other. Can you explain to them why you are purchasing an annuity? Is it important that they agree with your decision?
What is the approximate value of your income?
$ _________
If you purchase an annuity will you have enough to cover your daily necessities or will you fall behind? Be extremely careful in your estimates of future daily necessities; the costs of everything, most especially health care and home/health assistance costs are skyrocketing.
What types of liquid assets do you hold? (If you are married or have a domestic partner, include the combined assets of both parties.)
$ _________ example: Home, retirement accounts, savings, stocks, bonds, etc.
How liquid are those assets? If you needed extra cash and had to sell off those assets, would you meet your needs? Once you purchase an annuity you will not be able to get your money back unless you pay a surrender penalty, sometimes as high as 15%!
What is the cost of the annuity you are considering buying?
$ _________
How will this impact your cash reserves?
Are you being asked to cash in an annuity you currently own in order to purchase a new annuity?
If you answer yes, have you compared their surrender periods? Be very careful with replacements. You may suffer a substantial tax loss and the new contract may not be as favorable to you as your old one.
- If you already have annuities, what is the total amount you will have invested in all annuities if you buy this annuity?
$ _________Annuities are not FDIC insured and cannot be considered as a 100% safe investment. They are only as good as the insurance company’s ability to pay.
- What percentage of your assets will be tied up in annuities if you purchase this annuity?
_________%Are you comfortable locking up this percentage of your liquid assets?
- Do you intend to purchase an annuity with funds obtained from a reverse mortgage?
If you answered yes, are you aware that AARP and other senior advocates warn that it is unsuitable to use a high cost loan (reverse mortgage compounds at from 5 – 8%) to purchase an annuity that will only generate 1.5 to 3% interest? NOTE California law prohibits lenders from requiring a borrower to purchase an annuity as a condition of obtaining a reverse mortgage loan.
- Do you know what your life expectancy is as determined by your health care professional?
Is it likely you will outlive the surrender period of the annuity?
- What are the current and minimum amounts of the interest of the annuity being offered?
% _________Have you compared this to interest given in CDs, treasure bonds or Savings Accounts?
- What is the maximum amount you can withdraw each year from the annuity without having a penalty?
$ _________Certain annuities will allow some “principal” to periodically be drawn off. Others will not.
- What are the surrender penalty terms of the annuity being offered to you?
Have you compared this against the early withdrawals of CDs, treasury bonds or Savings Accounts?
- Did the insurance agent tell you they get paid by the insurance company, not you?
Yes _________ No _________The agent receives a commission on what you purchase. The rule of thumb is the more unsuitable the annuity, the higher the commission for the agent.
- What is the expected annual rate of return on the annuity if it is held to
maturity?
_________%Your agent is required to give you a written illustration that will help you to see exactly how the annuity is to perform over the life of the contract.
- Does the annuity offer a ‘bonus’?
Beware of “bonuses”. Many ‘bonuses’ only get paid if you hold the annuity for a long time and/or annuitize it. Any withdrawals will reduce your “bonus” or eliminate it entirely.
- Were you shown more than one annuity by the agent?
Make sure that you compare at least three (3) Annuities from different companies.
- Is this the only annuity sales agent you have spoken with?
Because this may be the last opportunity to make comparisons before you commit to an annuity purchase, take the time to ask other agents what your best deal would be. Make the agent work as hard for your money as you did. Also, consult an advisor who will NOT gain from any sale.
- Are you completely comfortable with how your finances will be after the purchase of an annuity?
There are no advantages to purchasing right away. In fact, the more you are pressured and the more the agent tells you that there is urgency to your purchase, the more likely it is that you are being railroaded into something you will later regret. A disciplined approach is for you to wait at least thirty (30) days before making the ultimate commitment. Don’t be in a rush to lose control over the money you have worked a lifetime saving.
Please use the CANHR list of questions if you’re a senior considering an annuity. Consult with qualified investment and tax professionals who have nothing to gain by your purchase. Remember that any annuity will tie up your money for all long time.
This is a particularly dangerous situation for seniors who may need their money for emergencies like unexpected healthcare bills. All deferred annuities will charge you a penalty for withdrawals during the policy’s surrender period; in some contracts these surrender periods last for up to 15 years. The surrender charge imposed may run as high as 15% on your withdrawal.
Also remember that surrenders have tax consequences so always consult your tax advisor if you are considering a purchase, surrender, or replacement of an annuity. We can represent you if you have suffered a tax loss on a surrender or inappropriate or unsuitable replacement of your policy.
Contact Us
If you are over 60, live in California, and would like the Evans Law Firm financial elder abuse attorneys to review your policy or if you have paid a surrender charge on a partial or full surrender of an annuity and/or suffered a tax loss as a result of a surrender, contact the Marin County and California financial elder abuse, securities fraud and annuity attorneys at the Evans Law Firm at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our attorneys have experience with annuities, life insurance, and large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We handle 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 of the leading providers of life insurance and 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
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
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
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
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
World Financial Group Insurance Agency, Inc.
[1] We do not offer investment or tax advice. We recommend you get a second opinion from an investment advisor who does not stand to gain from any purchase you make and also that you always consult your tax advisor before making an annuity purchase or before surrender or replacement of an existing policy.
