ATTORNEY NEWSLETTER
Beware High-Pressure Sales Tactics
Beware High Surrender Charges
Beware Agents Urging You To Switch Annuities
Sales of unsuitable insurance products to seniors by insurance carriers and agents may constitute financial elder abuse under Cal. Welf. & Inst. Code § 15610.30 and violations of the California Insurance Code. See, e.g., Cal. Ins. Code §§ 785-789.10. Chief among unsuitable insurance products sold to seniors are deferred annuities because sales of deferred annuities generate substantial commissions for selling agents. Evans Law Firm, Inc. recommends that seniors avoid deferred annuities, based on years of representing older consumers who have lost money as the result of those high sales commissions, and also contract fees, rider fees; low returns; and, withdrawal or surrender penalties. We do not provide tax advice at Evans Law Firm, but we have seen older consumers faced with large tax bills upon a surrender of a contract in addition to the surrender penalties imposed by the carrier. If you are over 60, and live in Santa Clara County or elsewhere in California and have experienced an economic loss as a result of the sale of an unsuitable annuity or other investment product, including a fixed indexed annuity, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy.
If an insurance agent or financial advisor proposes a deferred annuity to you or recommends that you replace your existing annuity, keep these important cautions in mind:
Beware High-Pressure Sales Tactics and Seminars
Some unscrupulous sellers use high-pressure sales pitches, seminars, and telemarketing. Beware of agents who “cold call” you, contact you repeatedly, offer “limited time offers,” show up without an appointment, or won’t meet with you if your family is present. California prohibits many of these kind of questionable approaches. See, e.g., Cal. Ins. Code § 789.10 (rules for home visits by agents). Beware of estate planning “seminars” that are actually designed to sell annuities. Beware of seminars that offer free meals or gifts. In the end, they are rarely free. Beware of agents who give themselves fake titles to enhance their credibility.
Beware of High Surrender Charges
The most significant fee associated with annuities is often the surrender charge ore withdrawal penalty. This is the percentage that a consumer is charged if he or she withdraws funds early. For instance, in one reported case[1] a carrier charged a retired farmer on a fixed income $6,800 in surrender penalties when he needed access to his $24,000 (most of his net worth) placed in annuities. In another reported case, a woman was sold an annuity with surrender charges lasting for 16 years, or until she was 95 years old, with the surrender penalty being 17 percent of her investment.
Beware of Agents Urging You to Switch Annuities
Some agents urge customers to switch to another annuity, a practice called “churning.” Unfortunately, agents may not adequately disclose fees associated with switching investments, such as new surrender fees (which typically start over from the date the product is switched), or significantly altered benefits. Consumers should scrutinize the investment to find out whether the benefits outweigh the costs of switching their investment. California has specific rules an agent must follow when recommending a switch (Cal. Ins. Code § 10509.10 et seq.), and violation of those rules may also constitute financial elder abuse.
Be on Guard Against “Bonuses”
Agents and insurance companies may offer bonuses (sometimes called “premium bonuses”) to entice investors, such as additional interest points on their return. The benefits of such “bonuses” are often outweighed by increased fees and administrative costs to the investor. “Bonuses” may be simply marketing gimmicks. The bonus is never an amount of money you can actually withdraw and if you surrender your policy the so-called bonus completely disappears.
Contact Us
If you are over 60 and live in Santa Clara County, San Francisco or elsewhere in the Bay Area or throughout California and have lost money on a deferred annuity 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>. Ingrid will pursue all remedies available to you against all parties responsible, including restitution (getting your money back), extra damages (to punish the fraudulent conduct) and awards of attorneys’ fees and costs to the senior forced to bring an action against the wrongdoers.
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
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
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.
[1] Evans Law Firm, Inc. was not involved in either of the reported cases described here but has represented older consumers who have lost money due to substantial surrender penalties.
