Annuity insurance and security benefit annuity scams have become fashionable in recent months. The question of the future of public pensions and the ruinous profitability of private pension plans are doing that banks ‘convinces’ tens of thousands of savers to recruit these products as a supplement to your retirement pension. In fact we are facing a complex product and that not we enjoy, for a long period of time, our savings invested… If we survive the expiration date.
When engages annuity insurance saver passes to earn a monthly income throughout their lives. It is, in General, the only appeal of this product, in which there may be several holders. The interests of the product can be fixed or variable. If it is variable it usually referenced to the interest on the public debt, with the uncertainty and instability it entails since profitability does not directly change the ‘risk premium’, but that bond or letter of the treasure that is ‘Kingdom’ our ‘insurance’ is is selling well or poorly in the market.
Problems arise when the insured wants to rescue their savings early. Occasionally there may be problems of liquidity, since rescue them can be very costly. In addition if the product is rescued early tax deductions are lost. Usually banking allows the recovery of the monies deposited, that Yes, with a succulent penalty and exposed to the contribution which currently have assets which will be ‘attached’ to our product (bonds or Treasury bills). They carry out the calculation of the reimbursement formula that can damage our savings in a very important way.
Define an ‘inappropriate’ annuity and identify indicators that may result in financial abuse Let’s first start with answering the question – What is an annuity? An annuity is a contract a person makes with an insurance company in which the insurance company promises to make payments — now or in the future — in exchange for the money invested. A deferred annuity which distributes payments years after the original premium is paid, offers tax benefits but delays payment for a set amount of time. This can be very harmful to the senior who needs liquid assets to pay for day-to-day living or caregiver expenses.
There are numerous types of annuities:
- Single Premium Annuity: The senior only makes one payment to the insurance company with this type of annuity.
- Multiple Premium Annuity: The senior must make multiple payments to the insurance company with a multiple premium annuity.
- Immediate Annuity: An immediate annuity begins to distribute payments no later than one year after the premium is paid.
- Deferred Annuity: A deferred annuity distributes payments years after the original premium is paid.
- Life Annuity — The insurer will pay you an income for as long as you live. However, there are no survivor benefits. This means all
benefits cease upon your death.
- Period Certain Annuity — The insurer will pay your survivor an income for a specified amount of time (5 years, 10 years, 20 years,
etc.) if you die.
- Life Annuity with Period Certain — The insurer will pay you an income for as long as you live, but if you die before the certain period that you have chosen (Period Certain), the income will be paid to a survivor (beneficiary) you designate until the end of that period.4
- Joint and Survivor Annuity — The insurer will pay an income to you during your life, and after your death will pay a percentage of that income (50% or 75%, for example) to a survivor you designate during his or her life.
Indicators that an annuity may be a scam, and therefore a financial ‘trap’ to signers includes:
- The senior is unlikely to live to collect While estimates on average human life spans vary, some annuity scams dupe purchasers of annuities into buying annuities that they will never live to collect from. Victims, lulled into a false sense of security may not read or understand the terms of an inappropriate annuity and may invest their money without realizing they have been victimized.
- The annuity (or multiple annuities) makes up more than 35% of the senior’s assets (not including the value of their home) An annuity is supposed to be a supplemental investment, not the sole investment of someone’s life. By tying up an inappropriately large portion of
someone’s resources, predatory salesmen may take advantage of unsuspecting victims.
- The surrender penalty (the amount that the senior will lose if they cash-in an annuity early) is more than 14% of the principle. This is because the surrender penalty is usually equal to the salesperson’s commission. Some annuities have surrender penalties as high as 25%.While all annuities may have a surrender penalty, annuities sold by annuities scammers or other unethical insurance sales people may have exceptionally high surrender penalties, designed to discourage ‘cashing in’ an annuity, and assuring the seller that they will retain their profit if the purchaser changes their mind.
- The same agent has sold the senior multiple annuities. The purchase of a single annuity may be a considerable investment. It would
be unethical for an insurance salesman to sell more than one annuity to the same person.
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