Was Your Equity Indexed Annuity Subject to Deceptive Sales Practices?

If your equity indexed annuity was marketed to you through deceptive sales practices, you may be eligible to take legal action.

What Is an Indexed Annuity?

An index annuity is a type of contract which generates interest according to the performance of a stock market index such as the S&P 500. Unlike a fixed annuity, which generates interest at a pre-determined rate, an indexed annuity’s interest rate will rise and fall according to the market index. However, these annuities are not investments.

Exact performance of an indexed annuity depends on several factors detailed in the policy’s terms.

Most policies have a “participation rate” or the limits on the potential gain of a policy’s interest rate. This can be as high as 100% or as low as 25% depending on the policy. This dictates how much of an index’s growth is credited to an account.

Policies also have caps to the yield which can be credited to the account. This is the upper limit of how high an interest rate can go and may range from 4% to 15%. These caps could even be subject to change.

Both the participation rate and yield caps impact how an indexed annuity will perform. For example, a policy with an 80% participation rate could be credited with a 12% yield if the stock index linked to the account grows by 15%. However, if the policy includes a rate cap of 7%, the account would only be credited with 7% interest.

Most policies also have a minimum rate guaranteed to policyholders – ranging from 0% to 3%. This means that some policies will continuously grow or will, at the very least, not lose value in years where the stock market index performs poorly or declines.

Was Your Equity Indexed Annuity Subject to Deceptive Sales Practices?

Although indexed annuities can be a smart financial decision in some situations, it is important that consumers understand exactly how their policy will work. Without understanding the participation rate and any caps on the policy, consumers cannot make an informed decision.

Unfortunately, some companies may be taking advantage of consumer misinformation by using deceptive sales practices. Through these actions, consumers may be misled into thinking that their indexed annuity will perform significant better than what is actually expected.

Are Deceptive Sales Practices Illegal?

Although the term “deceptive sales practices” can include countless scenarios and actions, many deceptive practices by insurance companies and others are illegal under federal and state laws.

Generally, a sales practice is considered to be deceptive if it misleads consumers. The representations are often considered reasonable by consumers despite being fraudulent.

Insurance companies, including those who issue indexed annuities, are barred from deceptive practices by the National Association of Insurance Commissioners (NAIC). The NAIC considers the following to be unfair sales practices:

• Misrepresenting a policy’s benefits, advantages, conditions, terms, and/or dividends and shares of the surplus received;
• Using a false or misleading statement regarding the dividends and shares of a policy’s surplus;
• Misrepresenting the nature or financial condition of the insurer;
• Intentionally misquoting the premium rate of a policy in hopes of convincing an insured person to purchase, lapse, exchange, or surrender a policy;
• Misrepresenting a policy as being shares of a stock;
• And more.

According to the NAIC, deceptive sales practices include any of the above actions where the action consciously disregards the guidelines above and is committed with frequency.

Can I File an Indexed Annuity Lawsuit?

If your indexed annuity policy was marketed with deceptive sales practices, you may be eligible to take legal action against your insurer. Several insurance companies have already faced class action lawsuits surrounding this issue.

For example, ING was hit with an annuities class action lawsuit from a customer who claims that he was mislead by the company’s representations that their indexed annuities could help him build up retirement savings while minimizing the risks of investment. Instead of padding his retirement savings, the California plaintiff allegedly lost up to 20% of his savings “on the first day” due to misinformation.

If you experienced similar issues, you may be eligible to speak to a qualified attorney and take legal action against your insurer. Attorneys are looking into several companies for potential wrongdoing, including:

• Nationwide
• Athene
• Minnesota Life
• North American
• American General/AIG

The ING Annuity Class Action Lawsuit is Ernest O. Abbit, et al. v. ING USA Annuity and Life Insurance Company, Case No. 13-cv-2310, in the U.S. District Court for the Southern District of California.

Free Equity Indexed Annuities (EIA) Deceptive Marketing Case Evaluation

If you purchased an EIA, you may have been misled into purchasing your EIA due to deceptive marketing practices. If so, you may be eligible to join this Equity Indexed Annuities Deceptive Marketing Class Action Lawsuit investigation.

Get a Free Case Evaluation

This article is not legal advice. It is presented
for informational purposes only.