ATTORNEY NEWSLETTER
Problems with Annuities as Savings Vehicles
Are Fixed or Variable Annuities Right for You?
Insurance salesmen pitch fixed and variable annuities as savings mechanisms for retirement or other long-term goals such as college education savings. Retirement savings or a child’s college account are the last places customers want to take big risks in the stock market. In our low interest rate environment, many people search for a competitive yield on CD’s, bonds, and money market accounts. Naturally, when a salesman touts an attractive interest rate on a tax-deferred fixed or variable annuity, people listen. Before you purchase an annuity, though, consider all the downsides to these products. The San Francisco County and California annuity attorneys at Evans Law Firm, Inc. represent clients who have lost money from surrender penalties or high fees and commissions on fixed and variable annuities.[1] If you or someone you love has lost money on an annuity surrender or by paying high commissions and fees call the Evans Law Firm today at (415)441-8669 for a free review of your contract, including surrender provisions, fee schedules, and any income or other riders on the contract.
Agents will stress the tax deferral benefits of annuities for long-term savings plans. But IRAs and 401(k) plans also offer tax deferred retirement savings. Similarly, Section 529 College Savings Plans are a tax-deferred way to save for education expenses. When distributions are made from the account for qualified educational expenses there is not even any tax on growth of the original investment. (If distributions are not considered qualified, then Federal income tax will be due on the growth of the distributed investments, and can incur a 10 percent penalty.) The bottom line is that you can achieve the benefits of tax deferred savings without resorting to annuities.
Perhaps the biggest drawback to annuities comes in the form of the surrender penalties and fees these products carry. Fixed and variable annuities are insurance products and, like other forms of insurance, involve sales commissions and fees that make these investments more costly than direct investments in CDs, money market funds, or stock and bond index funds. paid someone now to pay you back a larger sum in the future. Annuities are also highly illiquid. Withdrawing any of your money before maturity will trigger surrender penalties. And even if you don’t need an early withdrawal, the fees start to increase as the contract matures and your return on the invested funds decreases.
Proceed with Caution
Be wary of complex fixed or variable annuities. Resist high-pressured sales pitches. Avoid quick decisions. Consult an independent financial consultant or counsel who is not compensated by sales commissions. Take your time and get professional help.
Contact Us
If you or a loved one suffered a loss from surrender penalties, rider fees or other charges and fees under an annuity, contact San Francisco County and California annuities attorney Ingrid Evans and the other attorneys at 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 complex financial contracts, annuities, 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 major annuity and life insurance providers in California are:
Allianz Life Insurance Company of North America
Allstate Life Insurance Company
American Equity Investment Life Holding Company
American General Life Insurance Company
American National Insurance Company
Athene Annuity and Life Company
AXA Equitable Life Insurance Company
EquiTrust Life Insurance Company
Fidelity & Guaranty Life Insurance Company
Forethought Life Insurance Company
Genworth 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
Life Insurance Company of the SouthWest/National Life Group
Lincoln Financial Group/The Lincoln National Life Insurance Company
MassMutual/Massachusetts Life Insurance Company
MetLife/Metropolitan Life Insurance Company
Midland National Life Insurance Company
Mutual of Omaha
National Life Group/Life Insurance Company of the SouthWest
New York Life Insurance Company
Pacific Life Insurance Company
Principal Life Insurance Company
Prudential Life Insurance Company
Security Benefit Life Insurance Company/Guggenheim Partners
Symetra Life Insurance Company
Transamerica Life Insurance Company
Voya/Reliastar Life Insurance Company
[1] We do not, however, provide investment or tax advice.
