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The elderly population in the United States is huge and growing. At the same time, the elderly in the United States own two-thirds of the total personal wealth of the United States.By 2, the number of senior citizens in the United States is expected to be nearly twice as high as in 3.
Because many elderly people already save enough money for retirement, they are often targets of fraud.In the field of retirement insurance, some elderly people will be misled by buying annuity insurance products or financial planning schemes that are not suitable for their actual needs.
In this environment, consumers should arm themselves with information to protect their own interests. Based on the lawsuits handled by the Minnesota State Attorney General, the United States issued the following 7 tips for policyholders to understand before purchasing annuity insurance:
01. Beware of aggressive and high-pressure sales and "lectures"
Some salespeople use very high-pressure or Push marketing methods, "lectures" and "telemarketing" to sell annuity insurance.Beware of those who call you "suddenly", contact you repeatedly, offer "limited time offers", show up without an appointment, or don't meet with you when your family is present.
("Free lectures" are the most common marketing method)
- Beware of estate planning "lectures" that actually aim to sell annuity insurance.
- Beware of "lectures" that offer "free" meals or gifts.
- Beware of salespeople who fake titles to increase credibility, or falsely claim that they are affiliated with reputable organizations.
02. Beware of high surrender fines
The most expensive expense related to annuity insurance, usuallySurrender fee,Also known asSurrender penalty.
The surrender penalty refers to the percentage of fees that a consumer will be charged if he or she withdraws funds in advance.
For example, the Office of the Attorney General once sued an insurance company that charged a retired farmer a surrender fine of $6,800, and the net assets of this annuity insurance were only $24,000.
Another woman in Minnesota was sold an annuity insurance. The surrender penalty period of this insurance lasted 16 years, and it didn’t end until she was 95. The penalty for refunding this insurance was as high as her entire 17% of the investment.
03. Annuities may not protect your investment
Sellers may actively describe annuity insurance, describing it as an investment method that is both "safe" and can delay taxes.This may not be the case.According to the SEC, investors who purchase annuities related to a 401(k) plan or IRA will not receive tax-free withdrawals.
The Securities Regulatory Commission pointed out that people who withdraw money from annuities before the age of 59.5 may face a 10% federal tax.
In addition,The "safety" of retirement investment depends on different types of annuities or different retirement planning schemes. Beware of agencies that actively promote annuities and claim that "annuities are as safe as fixed deposits" or "annuities are better than fixed deposits."
04. Beware of brokers who urge you to switch annuities
The US Securities and Exchange Commission warned consumers that some annuity insurance brokers urged customers to switch from one type of annuity to another. This practice is called "Churning." During this process, financial advisors or brokers may not fully disclose the costs associated with switching annuity investments.Consumers should carefully examine the investment to determine whether the benefits exceed the cost of conversion.
05. Beware of account opening "bonus"
Insurance companies and agents may offer bonuses to attract investors, such as "Deposit 10, give 2" and other slogans.The benefits of this "bonus" are often offset by increased fees and management costs for investors. "Bonus" may just be a marketing gimmick.
(>>>Extended reading:Is the "buy and get" insurance that encourages account opening bonuses really cost-effective? )
06. Don't make investments that you cannot afford
Some brokers or financial personnel encourage consumers to make unrealistic investments that they cannot afford, or purchase long-term deferred annuities, thinking about whether consumers may continue to have a certain amount of working capital for medical treatment or living expenses during this period.Don't be lured into venture capital by such financial advisers.
07. Dealing with reputable brokers
Reputable brokers avoid aggressive marketing, have their own codes of business conduct, and often have a good reputation in the community.
Investors should promote those who claim "opportunity", "investment know-how", "high return, get rich quickly" words, this type of marketers usually contact suddenly.
Other help?
It is not necessarily an annuity insurance broker who sells you annuity insurance, but it may also be an accountant, a lawyer, or even a neighbor.The three departments of the US Securities Regulatory Commission, the Monetary Authority, and the State Insurance Bureau of each state in the United States have the power to supervise the parties that sell investment annuity insurance and all other annuity insurance.You can also contact the state attorney general's office in each state for supervision and complaints.
Contact Directory of the Insurance Bureau of the U.S. States / (click to download）
Securities and Exchange Commission / US Securities Regulatory Commission
Office of Investor Education and Advocacy
100 F Street NE
Washington, DC 20549
(800) 732-0330
www.sec.gov
Financial Industry Regulatory Authority (FINRA) / U.S. Financial Industry Regulatory Authority
1735K Street
Washington DC, 20006
(301) 590-6500
www.finra.org
(The full text is finishedAmerican Life Insurance GuideEdit, organize and publish)
(>>>Recommended reading:Comparison｜Index annuity and fund annuity, which annuity insurance is better? (Version 2022)）
appendix
01. "Annuities: Unsuitable Investments for Seniors", The Office of the Minnesota Attorney General, https://www.ag.state.mn.us/Consumer/Publications/AnnuitiesUnsuitableInvforSeniors.asp
