Avoid Being Sold an Annuity That You Do Not Need

Annuities are grossly oversold in the U.S. today. I have a friend in the financial industry who holds a Ph.D in economics, is a Chartered Financial Analyst, and manages hundreds of million dollars who once summed up annuities to me like this: “If annuity companies did not pay big commissions to the agents hawking these annuities, only about 1 of 10 annuity recommendations would be made.” The reality is that most annuity sales in the U.S. are made today because they are very beneficial to the agent and the insurance company, not because they are the best investment option for the investor.


If you are considering an annuity investment, we urge you to do your due diligence to make sure that the annuity is the best investment choice for you. And if an annuity is actually a good fit for your needs, ensure that you are getting the best and most cost-effective annuity available. There are high quality, low priced annuities in the marketplace, but most insurance agents and some investment professionals promote high-cost annuities that pay them the highest commission.

Vernon Litigation Group has been warning investors about insurance products such as annuities for decades (for example, see our post from 2009 and as recently as today on video.


If an insurance agent or investment professional is recommending that you buy an annuity, you should consider a number of factors, some of which are set out below.

Contract is Between You and the Insurance Company

First, keep in mind that an annuity is a contract between you and the insurance company. Insurance companies are entities that are designed and operated to make a profit from the sale of annuities and are part of an industry that has a reputation and history of taking advantage of the public. This fact alone should make you wary of any suggestion that an annuity is a great deal for you.

Recommending Party Will Likely Be Compensated

Second, keep in mind that the person recommending the annuity to you will likely be heavily compensated if you buy the annuity. You should ask the salesperson to disclose (in writing) how much in compensation he or she will receive if you buy the annuity. Do not accept statements from the agent that you don’t need to worry about it because the commission is paid by the insurance company and not you. The size of the commission to be received by the agent or investment professional will reveal the full extent of the conflict of interest inherent in many annuity sales. Like the insurance company, the annuity salesperson typically stands to make a lot of money if you buy the annuity.

Discover Your Other Options First

Third, you should inquire and determine what other types of investments the agent or investment professional could sell you. Some annuity salespeople are not licensed to sell stocks and bonds and other types of more traditional investments. As a result, it is likely they are selling you annuities because that is all they can sell you in the investment world and not because the annuity is the best choice for you among the universe of possible investment options.

Always Get A Second Opinion

Fourth, you should get a second opinion from an investment professional who is licensed to sell stocks and bonds, as well as annuities. Many top investment professionals are licensed to sell annuities, but do not sell them very often because they are usually an inferior investment choice for their clients. As a result, if the professional giving the second opinion does not recommend an annuity, ask them why they would not recommend an annuity that would result in more compensation in their own pocket. The answer will typically be because it is not in your best interest to be sold an annuity.

The foregoing is not an exhaustive list of things you should consider before buying an annuity, but are some simple things you can do to avoid buying an annuity that is not actually a prudent investment for you and your personal financial situation.

In the event, you have already purchased an annuity, but now realize that the annuity may have been inappropriately recommended or sold to you, we recommend you contact Vernon Litigation Group to discuss your legal rights.


Vernon Litigation Group is a financial litigation law firm with offices in Naples, Florida, and Atlanta, Georgia that represents clients in courtroom litigation, arbitration, including FINRA arbitration, negotiation, and mediation throughout the United States. Our lawyers have collectively represented hundreds of clients in financial disputes in arbitration and litigation nationwide and recovered hundreds of millions of dollars from purported financial professionals and financial institutions, both large and small. Please contact us to discuss your rights if you believe an insurance or investment professional has failed to act in your best interests or otherwise abused your trust with respect to insurance products, such as annuities or other investment products or services. For more information, visit our website or contact Vernon Litigation Group at:

Phone: (239) 319-4434


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