ATTORNEY NEWSLETTER
The Avlue and Drawbacks of Indexed Annuities
As the Department of Labor’s more stringent annuity rules go into effect, major sellers of both fixed and variable annuities are having to compensate and adjust both their sales tactics and the contents of their policies. While a number of sellers are focusing their efforts on challenging the Department of Labor’s rules, some, like Voya, are preparing for comply, by creating new policies with lower surrender penalties and altered surrender durations.
The rules require that financial advisors who sell financial products under $50 million to act as fiduciaries to their clients, essentially meaning that they are legally obliged to act in their client’s best interest. While it may come as a shock to many investors that that isn’t already the case, many insurance companies and brokers are opposed to this, claiming that it will hamper them in providing services to their client. Either way, the new rules are requiring significant adjustments on the part of the industry, and providers are trying to comply with the regulations.
In 2015, over $54 Billion dollars worth of fixed indexed annuities were sold, making up a sizable portion of the market for financial products. Indexed annuities are often sold as being more growth oriented than traditional annuities, as their returns are pegged to financial indices such as the S&P 500. By changing the rules for such a broad swathe of financial products, the new rules are going to require a reexamination of previously sold products, which may contain serious deficiencies compared to the newly crafter policies.
Also, since it’s unlikely that insurance and annuity companies are willing to take a loss on indexed annuities, it’s important to make sure that they’re not trying to make up the revenue from surrender penalties by increasing other fees in their policies or by shifting their focus to other profitable products. There are a number of insurance and annuity products that allow the provider to have greater control over the investment, and consequently further opportunities for them to make a profit.
Some of the major annuity and life insurance providers are:
- Aviva/Athene/Accordia Life Insurance Company
- Transamerica Life Insurance Company
- John Hancock Life Insurance Company
- Bankers Life Insurance and Casualty company
- Massachusetts Mutual Life Insurance Company
- Midland Life Insurance Company
- North American Company for Life and Health Insurance
- Pacific Life Insurance Company
- Prudential Life Insurance Company
- Genworth Life Insurance Company
- ING USA Annuity and Life Insurance Company
- Lincoln Benefit Life Company
- Metlife/Metropolitan Life Insurance Company
- Unum Life Insurance Company of America
- Voya/Reliastar Life Insurance Company
If you or a loved one is having issues with annuity products, life insurance, or other financial products, please contact the Evans Law Firm at (415) 441-8669, or by email at info@evanslaw.com. Our San Francisco annuity fraud attorneys can help navigate the system surrounding these complicated policies, and help guide our clients toward a civil judgement or an equitable settlement.
