Immediate Annuities? FINRA Cautions Seniors on Immediate Annuity Fraud.

Stockbroker Law - Tuesday, January 17, 2012
Immediate Annuities? FINRA Cautions Seniors on Immediate Annuity Fraud.

Although immediate annuities are oftentimes sold as a simple, straightforward, guaranteed investment, they can be packaged with many different forms and features.  For example, Immediate annuities such as variable annuities are hybrid products, given their dual characteristics of being both insurance products and securities products. 

Immediate annuities and immediate annuity products packaged in a variable annuity format typically include sub-account holdings with investments in the stock market, thereby constituting securities products.  Most importantly, their value can decline with a drop in the stock market, with possibly devastating consequences. 

Seniors and retirees are often sold immediate annuities, to provide income payments immediately after purchase.  This is in contrast to deferred annuities, which generally are structured to provide for payments and/or withdrawals to be made at a later date.   

A number of large insurance companies, such as AXA Equitable, Nationwide, Thrivent, ING Financial, American Family, Prudential, and Jackson Life, market immediate annuity products as a way to turn retirement assets into regular periodic or monthly payments, either for the rest of the investor’s life, or for a specified period of time.  Such retirement account assets may include distributions from defined contribution plans, 401(k)’s or IRA accounts to fund an immediate annuity. 

If you feel you have been victimized by an improper sale or transaction involving an immediate annuity or immediate variable annuity, we offer a free initial consultation to assess the merits of your claim.


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