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What Is Variable Annuity Fraud?

Variable annuity fraud can impact many investors, particularly those planning their retirements. In anticipation of their retirement, many people look for investments that will keep the money flowing in long after they’ve stopped working. Variable annuities can be an assortment of tax-deferred investments. Depending on how these investments perform, a variable annuity has the potential to bring in an increasing amount of income, as opposed to a fixed annuity, which offers a guaranteed, minimal payout.

If you believe your financial advisor 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.

Benefits of Variable Annuities

Individuals looking for investment opportunities are drawn to variable annuities for their three main benefits. They include:

  • Periodic payments. These payments can be made for the duration of the investor’s life or the life of their beneficiary.
  • Death benefit. If you die before the insurer has started making payments, your beneficiary is guaranteed to receive at least the amount of your purchase payments.
  • Tax-deferment. The taxes on this investment are deferred until the money is withdrawn.

In addition, investors are allured by the possibility of receiving an increasing amount of income from variable annuities to be used as cash flow for retirement. However, the value of the investment is determined by the market’s performance.

Disadvantages of Variable Annuities

As with any investment option, there are risks involved. Variable annuities are affected by the ebb and flow of the current market; thus, if the market is doing well, so is the investment, and vice versa.

Additionally, variable annuities are illiquid, meaning that neither the investor or their beneficiary can touch the funds before all payments are made. If for any reason they were to do so before the policy’s term limit, they will have to pay a 15-20% “surrender charge.

Variable Annuity Fraud Defined

A variable annuity is a contract between you and an insurance company. It serves as an investment account that may grow on a tax-deferred basis and includes certain insurance features, such as the ability to turn your account into a stream of periodic payments.

The practice of selling an unsuitable or inappropriate variable annuity qualifies as variable annuity fraud.

Variable annuities offer a range of investment options. The value of your contract will vary depending on the performance of the investment options you choose. Variable annuities are extremely complicated investment products, which frequently lead to misrepresentations by financial advisors.

They are suitable for a client with short-term goals as there are typically large surrender charges if the client wants to gain access to the money invested. The commissions and fees paid to financial advisors are typically large when compared to other investment products, which leads to abusive sales practices.

How is Variable Annuity Fraud Committed?

When a broker or selling agent misrepresents the facts or does not disclose important information about an annuity, this is considered fraud. In addition, there may also be other facets of variable annuity fraud, including:

  • Churning:  Also referred to as excessive trading, churning occurs when a broker sells new variable annuities or unnecessary replacements just for the sake of creating extra commissions for him or herself and the brokerage firm.
  • Unsuitability – Brokers are obligated to understand their clients and do what is best for their financial situation. Because they are high-risk, variable annuities are not always suitable for a client, but a broker may push them anyway.
  • Switching – Before a firm or advisor recommends that a client switches their variable annuity contract, they are required to look at numerous factors, including financial situation, age, investment experience, existing assets, and risk tolerance.

When a broker or firm has been found liable for variable annuity fraud or related securities industry violations, often the damages recovered by investors are substantial. If you suspect your broker or financial advisor misled you about a variable annuity or otherwise acted dishonestly, Colling Gilbert Wright can determine if you have the possibility to recover lost money.

How a Variable Annuity Fraud Attorney Can Help

Before a broker makes any changes to your investment strategy, they are required to look at numerous factors in your portfolio: financial situation, age, investment experience, existing assets, and risk tolerance. However, in many cases, brokers and their firms fail to do so in order to increase their earnings.

If you have a variable annuity and your broker isn’t giving you sufficient answers about the details of the account, an investment fraud lawyer can help. The attorneys at Colling Gilbert Wright understand the stressful situation you face when you put your faith (and investment) in someone who set up high expectations on your return, only to find that they may have taken advantage of it.

As variable annuities themselves are complex, so too can the case be against the broker and their firm. It’s crucial to have a lawyer with experience in variable annuity fraud representing you. They know the facts and present the evidence, so you don’t have to.

Contact Our Variable Annuity Fraud Lawyers Today

If you’ve been the victim of investment fraud, you deserve justice. Colling Gilbert Wright has helped many investors recover their financial losses. Our experienced variable annuity fraud lawyers have the knowledge, skill, and resources necessary to help you recover your losses.

Call (800) 766-1000 today for a FREE consultation. We serve clients throughout the state of Florida and Nationwide.