In a deferred annuity, a purchaser deposits premiums and receives a rate
of return, the realization of which is deferred until the term of the
annuity. At the annuity term, the purchaser has the option of "annuitizing,"
that is, receiving periodic payments at a set interest rate. Surrender
charges, which decrease over time, are imposed for early withdrawal. The
rate of return is typically guaranteed for the first year, then subject
to a minimum guarantee (usually at a much lower rate) over the term of
Deferred annuities have been the subject of a number of class action lawsuits
because they hide costs that suppress the rate of return over the life
of the investment. They also carry onerous surrender charges that are
often not disclosed in the required manner. Deferred annuities are often
sold with the promise of a “bonus,” extra premium to be added
at purchase but which never materializes when the money is ultimately
Gianelli & Morris has been successful in bringing class action lawsuits
over unfair annuities, collecting millions of dollars for policyholders.
Some of these cases include:
Cheves v. American Investors Life Ins. Co. San Luis Obispo Superior Court Case No. CV031024;
Peterman v. North American Co. for Life & Health, Los Angeles Superior Court Case No. BC 357194;
Iorio v. Allianz Life Ins. Co. of N. America (S.D. Cal.) Case No. 05-CV-0633 IEG.