Insurance companies issue many different kinds of annuities: fixed, immediate, variable, deferred, or equity-indexed. Each type of annuity has a different purpose, rate of return and element of risk. Annuities often generate high agent commissions which can lead to intense, aggressive marketing and in some cases outright fraud.

It is essential that anyone considering the purchase of any kind of annuity familiarize themselves with the features of the product. This is particularly important for seniors with liquidity needs and a low tolerance for market risk. Indeed, the deceptive sale of deferred annuity policies to seniors is a growing problem nationwide. Long-term deferred annuities are generally unsuitable for the elderly because of their long maturity date and stiff penalties if the policyholder needs to make early withdrawals. Deferred annuities, however, impose substantial surrender charges upon the withdrawal of any portion of the initial investment or interest within the first 10 to 15 years, which limits annuitants’ access to their funds. This makes deferred annuities particularly unsuitable for seniors who may need immediate access to their retirement funds.

If you are an older investor and have been solicited to purchase deferred annuity policies, you may be a victim of an annuity scam. Please contact Consumer Fraud Online to discuss your options.