A variable annuity is a combination insurance and investment product. A range of investment options can be chosen, typically mutual fund-like accounts with gains that are tax-deferred until the money is withdrawn. At the end of the accumulation stage, you receive the guaranteed minimum payment from the insurer, and the remaining payments vary depending on the performance of the managed portfolio.
Brokers can earn high commissions on variable annuities. This incentive to sell them creates a heightened risk that they may not properly explain to the investor, tax or liquidity factors may not be adequately considered, or the advisor may engage in “twisting.” “Twisting” happens when a broker encourages a client to trade in an older annuity to buy a different one, often at significant cost to the client and benefit to the broker.
There are several types of claims that can arise from the sale of a variable annuity, including the suitability of the variable annuity itself, as well as the suitability of the investment subaccounts and their allocation. If an advisor sold you a variable annuity and misrepresented or omitted material facts about the annuity or its operation, or you believe it was an unsuitable investment recommendation, that is actionable. Contact an experienced investor rights attorney to review your case.
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