ATTORNEY NEWSLETTER
Agents Target Seniors With Retirement Planning Seminars
The Goal Is To Sell Annuities
Resist The Hype And Understand The Disadvantages
Events like “retirement planning seminars” or “retirement consultations” typically devolve into annuity sales pitches by the hosting insurance agent. Whenever an agent approaches you to consider a deferred annuity, if you’re a senior think long and hard about the costs buried in annuities. Below, we analyze costs more closely but largely annuity costs fall in two categories: penalties incurred if you withdraw from or surrender the policy, and annual costs and fees if you leave your money in the policy. Evans Law Firm, Inc. recommends seniors avoid deferred annuities because deferred annuity contracts are expensive and complicated and tie up a senior’s money for years. If you are a retiree or someone about to retire, do not let yourself be pressured into an annuity. High-pressure or deceptive sales tactics and sales of unsuitable annuities violate the law and constitute financial elder abuse when the targeted consumer is a senior. Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse); Cal. Ins. §§ 790 et seq. (Unfair Insurance Practices Act) and 10509 (suitability requirement). In financial elder abuse cases, seniors can recover damages and an award of attorneys’ fees and expenses for bringing a case. Cal. Welf. & Inst. Code § 15657.5. If you are over 60, live in Sonoma, or elsewhere in California and own a deferred annuity (such as 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.
Costs of Annuities
- Sales commissions. Sales of annuities and life insurance generate significant sales commissions for the selling agent. Do not be persuaded that “premium bonuses” or other gimmicks will return the commission dollars to you. Sales commissions come directly out of your money, and “bonuses” are never separate sums you can withdraw; if you surrender your policy, the “bonus” disappears.
- Surrender penalties. Surrender penalties are assessed on any money withdrawn in excess of a pre-specified annual withdrawal allowance. Penalties may be as high as 15% or more on the amount withdrawn. Surrender periods can range up to fourteen years.
- M&E. Mortality and expense risk charges average about 1.12 per year. These fees protect the insurance carrier’s risk of policyholders living longer than the actuarial tables predict – i.e., the “cost” of providing the insurance
- Contract Fees. Contract fees may range from $25 to $40 per year. Ask the agent what the policy’s annual contract fee is.
- Administrative Fees. Administrative fees typically pay for production and mailing of account statements and other customer services. This fee can be around .5%.
- Subaccount Fees. Sub-account fees are fees charged by the managers of the underlying mutual funds in an annuity. These fees are buried in the returns on the subaccounts but average just under 1%.
- Rider Fees. Any special enhancement riders will add additional costs to the policy. An income rider for example normally costs 1-1.5% annually.
- Miscellaneous Fees. There may be other fees imposed, such as a fee for excess transfers between sub-accounts.
Fees can accumulate quickly to erode any promised return on the contract being offered you. Press the agent for details and always get a second opinion from an investment professional with nothing to gain from a sale. Also, remember to consult with your tax advisor before any annuity transaction because all transactions in annuities have tax consequences.
Contact Us
If you are over 60 and live in Sonoma County or elsewhere in the State of California and have a deferred annuity policy, we can review your contract for free. You can reach Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669, or toll free at 1-888-50EVANS or by email at <a href=”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
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.
