Variable Annuity Legal News Articles & Interviews

Bellingham, WA For any investor, the best things to hear about an investment like variable annuities is that they are “relatively safe” and “guaranteed income.” Even an unseasoned investor’s ears perk up when they hear those phrases. But just because a variable annuity is marketed as relatively safe with a guaranteed income, does not always mean it is those things. As investors in some variable annuities are learning, such investments are not suitable for everyone.

St. Louis, MO While Variable Annuities might be a worthwhile product for some, they aren’t for everybody. To that end, regardless of the type of annuity purchased, the capital to purchase the annuity through which to derive income is locked in for the life of the product and inaccessible for unexpected needs such as medical bills. Studies have also shown that an elderly individual’s cognitive skills when it comes to finances depletes over time, akin to memory loss and other cognitive deficits.

Kansas City, MO For investors with a lump sum and wanting guaranteed income, variable annuities might seem like the perfect option. But as many investors are learning, money in a variable annuity might not necessarily mean guaranteed income. For some investors, such as elderly investors or those nearing retirement, variable annuities might be entirely unsuitable.

Tallahassee, FL It is a given that investing can be a slippery slope that is made all the more treacherous if a product does not match an individual’s risk tolerance or age, and stage of life. An obvious example of this is when an investment broker or advisor attempts to enroll a senior into a product that is high-risk and requires a period of many years to average out the various highs and lows in order to realize a reasonable return. To that end, a variable annuity is not for everybody.

Dallas, TX In the world of investing, there are people who can tolerate a great deal of risk and those who cannot. When it comes to people purchasing a variable annuity, many people purchase the annuity because they believe the annuity to be a safe, guaranteed investment. As such, people who are close to retirement may be purchasing variable annuities, not realizing the annuities might be entirely unsuitable for them. Or, worse, not knowing that the insurance companies that back the annuities might walk away from them. Because they are so close to retirement, losing that money can have a dramatic effect on their financial stability, which is why they often go with low risk investments.

Washington, DC With the largest single demographic in America slipping into retirement, never has there been a more compelling issue than that of retirement income. And part of that equation for hundreds of thousands of Baby Boomers includes the Variable Annuity. More than a tax-deferred investment account, the product also offers retires a living benefit rider tied to an insurance policy that guaranteed a base income independent of market performance, or even the ultimate survival of the account funds.

Kansas City, MO Some retirees and people nearing retirement who purchased variable annuities for retirement income were very surprised to receive letters informing them that their guaranteed variable annuity payment was not so guaranteed. Diane Nygaard, partner at Kenner Schmitt Nygaard, LLC, says insurance companies have been backing away from promises of lifetime income to people who put their money in variable annuities.

Richmond, VA Bill C says that his money was improperly put into a variable annuity when his financial advisor failed to follow his instructions. By the time she corrected her error, Bill's investment had lost some of its value. Although Bill says he did not lose a lot of money, he would not have lost any money at all if his advisor had acted according to his wishes.

Miami, FL Seniors living in Florida now have some added protection from unscrupulous brokers who sell them unsuitable variable annuities. The state has toughened the suitability requirements that such brokers must meet when they sell variable annuity insurance products to consumers. The state has also strengthened fines against those brokers who use fraudulent sales practices to sell annuities to customers.