Public school teachers have filed a class action lawsuit against The Variable Annuity Life Insurance Co., known as VALIC, according to a recent article in InvestmentNews by Darla Mercado. The teachers are suing on behalf of all individuals who bought a VALIC deferred annuity after Jan. 1, 1974, in order to fund a qualified retirement plan.
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Financial advisors’ unenthusiastic reception of recently-offered lower-cost variable annuities confirms what most observers took for granted – that variable annuity sales are driven primarily by commissions. See “Slimmer variable annuities attract thin following,” InvestmentNews, Jan. 10, 2010, by Darla Mercado.
Continue reading "Why Do They Sell Variable Annuities? - It's the Commissions Silly" »
The increasing number of senior citizens has resulted in an increase in the number of corrupt financial advisors looking to make a commission by persuading trusting seniors to buy unsuitable financial products, such as variable annuities, and engage in other inappropriate financial strategies, according to a July 2009 article in Trial magazine by Ingrid M. Evans and David L. Cheng, called “Protecting seniors from financial abuse.”
A four-year class action lawsuit brought on behalf of hundreds of thousands of American consumers against insurance giant Allianz Life Insurance Company of North America has come to a confusing and contradictory end, reported the Minnesota StarTribune in its October 14, 2009 article entitled, “A split decision in Allianz Life annuity lawsuit.” Or has it?
A Minnesota jury found earlier this week, on Monday, October 12th, that Allianz Life Insurance Company used a misrepresentation or deceptive practice in the course of selling its two-tiered annuities by falsely promising in its pre-sale marketing materials that consumers would receive a 10% “upfront” bonus when they purchased those annuities. In reality, the class action complaint alleged, the bonus was not “upfront” and was not available to policyholders for 15 years, if ever.
Last year, the Securities and Exchange Commission issued a rule that brought Equity Index Annuities within its regulatory jurisdiction and provided greater investor protection. Previously, those insurance products were not considered to be securities subject to SEC regulation. The SEC rule was challenged in court by a group of insurance companies. A federal court of appeals ruled that the SEC does have the authority to regulate Equity Index Annuities, but it ordered the SEC to reconsider the rule’s effect on the economy, reported Sara Hansard in her July 26 article in InvestmentNews entitled “SEC’s EIA rule may resurface.” While it is not under a deadline to do so, some observers expect that the SEC will complete is assessment and reissue the rule pretty quickly, rather than asking the court of appeals to reconsider its ruling.
Continue reading "Insurance Companies Try to Thwart SEC Oversight of Equity Indexed Annuities" »
Investors who purchased variable rate annuities with guaranteed minimum returns may be surprised to learn that the guarantee is not necessarily guaranteed. Under some contracts, it is possible for the insurer who wrote the annuity to cancel the guarantee or significantly reduce its payout.
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With the decline in the major stock market indexes, many life insurance agents are now urging their customers to buy Equity Indexed Universal Life Policies, or EIUL's. These policies have a life insurance component that pays a benefit when you die plus an investment component which usually earns a portion of the gains of a particular index or, if the index declines, a minimal guaranteed return of approximately two percent.
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