Variable annuities are contracts between an investor and an insurance company that provide for lifetime payments on the behalf of you or your beneficiary. When you invest in a variable annuity, the issuing insurance company invests your funds in your choice of asset types. This might include stocks, bonds, and money market instruments. This annuity contract allows you to defer taxes on your investments, and receive a variable payout guaranteed for the life of you and other beneficiaries as named in the agreement.
Most annuities are deferred contracts-that is, payments do not begin until some time after your initial payment on the annuity. In a non-deferred, or immediate annuity, payments begin immediately following your initial investment.
Annuities have two primary components: they act both as an investment product and as a life insurance policy. While you are alive, you are guaranteed to receive payments on your annuity, and in most cases, your surviving beneficiaries are entitled to receive a guaranteed payout upon your death.
The growing popularity of variable annuities attests to the fact that many consider these to be a safe, low risk investment option. Over $100 billion of variable annuities are sold by brokers in the US every year. However, it is important to understand that these annuities are all different and may vary significantly in terms of potential returns and risk factors.
And while variable annuities are a popular choice for retirees and those planning their retirement, many have expressed the opinion that they are a poor investment choice. The AARP, for example, has claimed that variable annuities are unsuitable for many investors.
One significant factor in the popularity of variable annuities is that brokers receive an unusually large commission-usually from four to six percent of the investment-on each sale. Such significant profits for such a simple transaction are a likely motivation for unscrupulous brokers to recommend variable annuities against their clients’ best interests.
If you believe your stockbroker inappropriately recommended investing in variable annuities, you owe it to yourself and your family to call our variable annuities fraud claims attorneys today to determine whether you are a victim of variable annuity fraud. Our attorneys provide a free initial consultation to review your claim with you and, if you do have claim, we’ll fight to get your money back.