Equity – Indexed Securities – Not Safe for Most Senior Investors: Investment/Securities Law Update

Equity-Indexed Annuities are complex financial
instruments that have characteristics of both fixed and variable annuities.  The return earned by investors on equity-indexed
annuities can fluctuate –  returns are not fixed or
guaranteed and thusly carry more risk than a fixed annuity. 
Many investors are not clearly made aware of this fact at time of purchase.


equity-indexed annuities usually offer a minimum guaranteed interest rate, any such purported
guarantee returns are only as good as the insurance company backing it.  Additionally, if you cash out of (surrender) and
equity-indexed annuity before its maturity date, significant surrender charges, as well as a 10% tax
penalty, could substantially diminish any return an investor might otherwise have expected on an
equity-indexed annuity. 


Interest rates and rates of return on equity-indexed
annuities can be calculated by any number of ways, including participation rates (percentage
participation in appreciation of a particular index), spread/margin/asset fee (calculated by
reducing the performance of the underlying index by spread/margin/asset fees and costs) and interest
rate caps (annuity contract caps can limit of your return, generally stated as a percentage) being
the maximum rate of return an investor might possibly earn.


various methods of calculating the return associated with an equity-indexed annuity are complicated
and require considerable assessment before investing.


Equity-indexed annuities are generally designed to be
long term investments.  Unfortunately, some unscrupulous
brokers and sales persons have sold equity-indexed annuities to investors clearly in need of cash
flow in a short term.


investors should understand that it is possible to lose money in equity-indexed annuities.  For example, if the indexed linked to your annuity
declines or if you surrender your equity-indexed annuity before maturity.


If you
feel you have been victimized by the improper sale of an equity-indexed annuity, we offer a free
initial consultation.


The Law Offices of Timothy J. O’Connor is one of the only
law firms practicing securities law in the Tri-City Capital District of Albany, Schenectady and
Troy.  We also represent victimized investors throughout the
rest of New York State, including Buffalo, Binghamton, Syracuse, Watertown, Utica, Kingston, New York
City/Manhattan, Long Island, and everywhere in between, as well as in the surrounding states of
Massachusetts, Vermont, New Hampshire, Connecticut, and New Jersey.


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