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Annuities
Annuities are complicated investments sold by life insurance agents. Some are called "variable annuities" and they are invested in "sub-accounts", that are like mutual funds. Their value can go up or down.
Equity indexed annuities are a little different--but they are also tied to the stock market, and, contrary to a lot of the sales pitches, you can lose money in them also. All annuities require you to "lock in" your money for many years or pay high surrender fees to get your money back. Unlike stocks or bonds, you cannot sell them to someone else. You are stuck in them. This is because the insurance companies pay the salesmen a very large commission--from 7 to 10% of the money you invest--when they sell you an annuity. To recoup the money, the insurance company wants to keep your money for many years so they can earn interest on it. The Nygaard Law Firm is currently representing a class of consumers in an equity indexed annuity fraud class action. In addition, the firm is currently investigating other potential cases involving equity indexed annuity fraud. We are also investigating potential cases involving the fraudulent sale of annuities that purport to pay an "up front" or "immediate" bonus, also known as bonus annuities.
Annuities are not suitable for older people or for anyone who may need access to their money. They are not liquid, so there is always a chance that the insurance company will go bankrupt and you will be left without your money. Some salesmen try to sell these claiming that they are "guaranteed" and that you cannot lose money in them. If a salesmen tries to tell you that, you should know that it is false.
For more information on annuities, we suggest you visit the NASD website at www.nasd.com and read its Notices to Members on annuities. If you do not understand an annuity that was sold to you, please call us or fill out the form below, so that we can contact you to to help you understand your annuity. In addition, take a look at "Missouri Needs Variable Annuity Protection" (Kansas City Star), which contains further discussion of annuities and annuity sales practices.
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