There are significant pitfalls lurking in the world of income-generating annuities. In one especially sad case, the sister of a young man with Down’s Syndrome made the mistake of buying annuity products that her brother most likely wouldn’t live long enough to collect any money from. These kinds of annuities are a very poor match for people with medical conditions that could limit their life expectancies. In 2017, the Department of Labor released annuity companies from a rule requiring them to act as fiduciaries who would put their clients’ interests before their own.
- Income-generating annuities are a poor fit for people with medical conditions that limit life expectancy, including Down’s Syndrome.
- In 2017, a Department of Labor decision released annuity companies from the requirement that they act as fiduciaries — putting their clients’ interests first.
- Annuity companies have been marketing their products heavily towards independent financial advisors.
“It wasn’t until it was too late—the assets were locked into two contracts with penalties for early withdrawals—that Victor learned from an independent financial advisor that she had been sold a couple of high-fee annuities that were ill-suited for a person with Down Syndrome.”