ATTORNEY NEWSLETTER
A deferred variable annuity may sound like a good idea for elders. A deferred variable annuity supposedly offers tax-deferred treatment of earnings, death benefits, and guaranteed income for life. However, this information can be misleading. Annuities may not be right or even beneficial for elders. Keep in mind the following factors before purchasing any annuity either for yourself, or a loved one:
- Deferred variable annuities are meant to be long-term. Thus, elders run the risk of incurring surrender charges should they withdraw from the annuity within a specific time that can be as long six to eight years.
- Most deferred variable annuities have either a sales charge or a surrender charge that will decline and eventually be eliminated – but only if the holder of the annuity keeps the deferred variable annuity for a long time.
- Additional expenses that can cost up to 2% or more, annually such as:
- Morality and expense risk charges
- Administrative fees
- Other fund expenses
- Extra charges for special features (long-term health insurance, principal protection, etc.)
- Less – or no – tax advantages than a 401(k) or other pre-tax retirement plans
- Bonus credits that come at the cost of even higher mortality and expense charges and longer surrender charge periods
- Insurance companies may not be able to back the guarantees they provide, such as a guaranteed death benefit
- Increased individual retirement account expenses that go towards paying commission and fees for the deferred variable annuity salesperson without providing additional tax savings to you
In addition to the above-listed factors, if you are considering purchasing a deferred variable annuity, ask the following questions:
- Whether there are surrender charges or penalty fees for early withdrawal
- The length of time your money will be tied up
- Whether the seller of the deferred variable annuity will receive a commission or compensation for selling the deferred variable annuity
- Exact cost of the deferred variable annuity
- Risks associated with any decrease in value of your investment
- Specifically all the fees and expenses that will be incurred
Some sellers of annuities are Massachusetts Mutual Life Insurance Company, Principal Life Insurance Company, Jackson National Life, Pacific Life Insurance Company, Aviva Life and Annuity Company, Athene Annuity & Life Assurance Company, Genworth Life Insurance Company, Midland National Life Insurance Company, Bankers Life and Casualty Co, North American Company for L&H Ins, Security Benefit Life Insurance Company, EquiTrust Life Insurance Company, and Guggenheim Life and Annuity.
If you or someone you know has purchased an annuity in California and would like a free and confidential legal evaluation, contact The Evans Law Firm, Inc. at 415-441-8669 or at info@evanslaw.com. The Evans Law Firm, Inc. represents victims of annuity fraud and handles financial and physical elder abuse cases, insurance/banking fraud, consumer class action fraud, as well as qui tam (whistleblower/false claims) litigation.
