Allianz Facing Annuity Fraud Lawsuits Over Deceptive Practices

Allianz Life Insurance Company of North America (Allianz) has been targeted in a growing number of annuity lawsuits after allegedly applying secret “haircuts” to annuity payments and employing harsh surrender penalties.

Allianz developed and sold an annuity product called “two-tier” deferred annuity, which it said would offer purchasers higher returns and greater value. The two-tier deferred annuity required that the purchaser defer “annuitization” – taking out account money – for at least the first five years. After these five years, purchasers would then take deferred annuity payments over a period of at least 10 years, and up to life.

While Allianz promised that the two-tier deferred annuity product would offer a greater value to its purchasers, Allianz annuity lawsuits allege that the company broke this promise by cutting the amount of each annuity payment after the initial five-year deferral period. According to Allianz annuity lawsuits, Allianz applied a six percent haircut to account funds of purchasers.

For those purchasers who failed to meet annuitization requirements (a five year deferral and taking payments out in a period of ten years or more), Allianz allegedly had extremely harsh surrender penalties. According to Allianz annuity lawsuits, these penalties allow Allianz to strip a huge percentage of the deposited premiums and can increase over time, never going away. Penalties under this system can allegedly reach or even exceed 50 percent.

An Allianz annuity class action lawsuit investigation is looking into allegations that Allianz knew that many of its policyholders could not comply with its requirements, and therefore set up the two-tier structure primarily to make money and cheat purchasers out of their funds. The Allianz annuity class action lawsuit investigation is also examining claims investigating that Allianz failed to adequately disclose its surrender penalties to its consumers.

What is an Annuity Fraud Lawsuit?

Annuity fraud lawsuits often involve the elderly who have been targets of financial scams. These scams take advantage of older people in an effort to cheat them out of their life savings, and ultimately do not live up to the benefits initially offered or promised.

Signs that indicate involvement in an annuities scam include:

• If a person is unlikely to live long enough to collect payments, deferred due to company requirements.
• If the annuity makes up more than 35 percent of the person’s assets
• If the Surrender Fee (the amount a person is required to pay if they cash-in early on their annuity payments) is more than 14 percent of the principal
• If the same agent sold the person multiple annuities

Though it is statistically true that the elderly are often targets, even financially savvy consumers can be affected by financial fraud with useless life insurance or phony annuity products that purposefully and maliciously charge excessive fees or hold purchasers to difficult requirements.

Many injured parties targeted by Allianz and other companies accused of fraudulent financial practices have started filing annuity lawsuits.

If you were sold an Allianz annuity that failed to live up to expectations, you may be able to receive financial compensation. You may be able to file an individual Allianz annuity lawsuit, or you can join an Allianz annuity class action lawsuit.