ATTORNEY NEWSLETTER
Disadvantages For Older Consumers
Costly, Complex Contracts
Withdrawals Penalties, Commissions And Fees
Deferred annuities are extremely complicated insurance contracts sometimes running to 50-100 pages of technical language and actuarial tables. Seniors are often targeted by insurance agents with proposals for deferred annuities. Evans Law Firm, Inc. generally recommends against certain types of deferred annuities for older consumers because these complex, expensive insurance policies may tie up a senior’s money for years and impose significant penalties if you need your money back. If an agent sells you “enhancements” to the policy, known as “riders,” the contracts will be even longer – and more costly. Evans Law Firm, Inc. generally recommends against certain types of deferred annuities for older consumers because these complex, expensive insurance policies may tie up a senior’s money for years and impose significant penalties if you need your money back. Sales and recommended surrenders and exchanges of deferred annuities to seniors may constitute financial elder abuse claims under Cal. Welf. & Inst. Code §§ 15610.30 (definition of financial elder abuse) and Cal. Ins. Code §10509 (suitability requirements for annuities). Questionable sales tactics, like unannounced home visits, “pretext” visits or falsified applications, are illegal. See, e.g., Cal. Ins. Code § 790 et seq. (Unfair Insurance Practices Act). If you are over 60, and live in San Mateo County and would like us to review your annuity contract, call us today at 415-441-8669 (or toll free at 1-888-50EVANS).
Disadvantages of Deferred Annuities
Withdrawal Penalties
There is a lack of flexibility and liquidity with deferred annuities which, when broken by a withdrawal (otherwise known as a “surrender”), can incur significant fees. When you put a lump sum into an annuity, you’re surrendering your money to the insurance carrier for the term of your contract. If you’ve invested $100,000 in a deferred annuity that isn’t set to pay out for 10 years, but after five you need $50,000 back for an emergency, that withdrawal can incur a penalty.
Sales Commissions and Fees
Life insurance agents like to sell deferred annuities because they can make upwards of 10% in commission off the principal amount invested. Additional fees are incurred if the annuity is customized with policy “rider” sold as enhancements to the coverage provided by the basic contract. Commissions and fees erode your annual return on the premium dollars you invested.
Not Insured Investments
Finally, annuities are not backed by the federal government deposit insurance programs in the same way that bank deposits are. (Even if a bank representative is offering you the annuity it will not be an insured deposit like CDs or other bank deposits.) There is no FDIC insurance behind an annuity purchase; if the insurance company happens to fold, you risk losing everything you invested.
Contact Us
If you are over 60 and live in San Mateo County and would like a free review of your policy contact Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669 (or toll free at 1-888-50EVANS), or by email at <ahref=”mailto:info@evanslaw.com”>info@evanslaw.com</a>.
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
Nationwide Mutual 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
Securian Financial
Securian Life Insurance Company
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.
