Press Release 2008-04 Annuities: Assess Before You Invest!


Arizona Department of Insurance
100 North 15th Avenue, Suite 261

Phoenix, AZ  85007-2630

Starting July 1, 2020, we became the
Department of Insurance and Financial Institutions (DIFI).

Media Contact: Erin Klug Public Information Officer (602) 364-3471

For Immediate Release April 8, 2008

Arizona Department of Insurance Develops New Consumer Guide

Over the last 3 years, the Arizona Department of Insurance (ADOI) received 259 complaints from insurance consumers regarding annuity sales and investment transactions. While these complaints represent a small percentage of the total number of ADOI complaints, the nature of these complaints offer important lessons for annuity shoppers, especially for seniors. To help Arizona consumers better understand annuities, the ADOI has created a new “Consumer Guide to Annuities for Seniors”.

The majority of ADOI annuity related complaints allege either that the selling agent mishandled or misrepresented the annuity product sold, or that the annuity was unsuitable for the applicant’s needs. Many complainants did not understand that, upon purchase, the annuity would tie up their funds for many years unless they paid a hefty surrender penalty for early withdrawal of their money. In some cases, elderly applicants invested their retirement “nest- egg” without clearly understanding the restrictions and resulting limited access to their funds.

“Annuities are excellent investment options for many people, but it is imperative that people understand that early fund withdrawal from an annuity may result in a loss from the original investment amount,” said Christina Urias, Director of Insurance. “We developed this new consumer guide after hearing from so many seniors who were confused, misunderstood, or were misled about annuity restrictions.”

Informed Decision Making

An annuity is a contract between the purchaser and an insurance company under which the insurer provides income payments (monthly, quarterly, semi-annually, or annually) in return for premiums paid to the insurer. There are several kinds of annuities (fixed, variable, deferred and immediate), each with differing levels of risk to the purchaser. Various resources are available to help annuity shoppers determine what type of annuity, if any, is suitable for their needs.

State law requires insurers to provide certain information early in the purchasing process to give annuity applicants time to make informed decisions. ADOI encourages annuity shoppers to ask the selling agent for these required items: Buyer's Guides, Disclosure Notice and a Policy Summary.

Shoppers can call the ADOI or visit our website to obtain our new Consumer Guide: Annuities for Seniors, as well as Annuity Buyers’ Guides: 602-364-2499 or 800-325-2548 (outside Phoenix) or

Free Look

Arizona law affords annuity purchasers age 65 and older a 30 day “free look” period [10 days for those under age 65] in which to review the annuity contract and materials and opt out of the contract for any reason and return it to the insurer without penalty.

General tips to consider when shopping for insurance:

  1. Invite a friend or family member. Whenever you are considering a complex investment or business transaction, it is always a good idea to have a trusted friend or family member with you during the sales process to help you think of questions and makes notes about the conversation. Always ask questions and take notes.

  2. Ask for and read explanatory documentation, including Buyer’s Guides, Disclosures, Policy Summaries, and Notices.

  3. Try before you buy. Arizona law affords annuity purchasers 65 and older to a 30 day “free look” period in which to review an annuity contract after you buy it [10 days if under age 65]. You can return the contract for a full refund for any reason within the “free-look” period. Take advantage of this review period to make sure you understand your annuity contract.

  4. Don’t judge financial credentials by title alone. Designations such as “certified senior adviser,” or “certified retirement financial adviser,” or “chartered senior financial planner” might sound impressive, or imply expertise, but such titles don’t necessarily guarantee that the individual you are dealing with actually has specialized knowledge or education.

  5. Don’t succumb to “high pressure” sales tactics. You have the right not to buy and should be completely comfortable with the product and the salesperson before committing any of your hard-earned money to any investment. Unscrupulous salespeople may attempt to scare or pressure you. Do not do business with anyone who employs these tactics.

  6. Be sure the salesperson has a valid license from the Department of Insurance ( or 602-364-2499) and, if necessary, the Securities Division (

  7. Seek objective advice. Before making a commitment to purchase an annuity, discuss the investment with your tax advisor, accountant, attorney, or other trusted financial advisor or friend.

  8. Check the insurance company’s complaint record and credit rating. Utilizing such resources as Standard & Poor’s, A.M. Best Co. or Moody’s Investors Services, verify the annuity company’s credit rating. An “A+++” or “AAA” rating is a sign of strong financial stability.

  9. Never pay in cash. Always make the check payable to the insurance company, not the agent.

10. Ask for help. If you think you might have been misled, call the Department of Insurance.

Before you buy, assess these annuity features:

  •  Liquidity: Verify the length of investment and maturity dates. Frequently, annuities have expensive surrender charges for early withdrawals (taking out all or a portion of your investment before the maturity date).

  •  Product Knowledge: Make sure you understand how the annuity works, the benefits it provides, and the charges/fees you will pay. Always demand written information about the annuity and the insurance company offering the annuity.

  •  Suitability: Only purchase an annuity after you are satisfied it suits your investment needs and risk tolerance.

  •  Rate of Return: Be aware of introductory rates that may be significantly higher than the rate of return specified in the contract. Annuity interest rates can change over time. Make sure you understand the difference between the guaranteed minimum rate, the current rate, and any first-year or so called “bonus” rates.

  • Volatility: Variable annuities involve a risk that the account value may decline if the underlying investment performs poorly.

  • Rollover: Before you cash in on one annuity to purchase another, make sure the benefits of the purchase outweigh the costs, including surrender costs, penalties, and tax liabilities.

  • Optional Features: For additional premium payments, some annuities may offer additional features, such as long term care insurance. Consider whether you could purchase these additional optional benefits as a separate product, perhaps at a better price.

  • Death Benefit: Not all annuities provide a death benefit. Review and understand what happens to your annuity proceeds upon your death.

Research Annuities



Insurers Offering Individual Health Insurance in Arizona

Lists insurance companies that are offering health insurance to individuals and families in Arizona in 2020.  Open enrollment starts November 1st and now runs through December 17th, 2019.  Individuals can start shopping for coverage now at or (Spanish)

Notice of Proposed Rulemaking - Corporate Governance Annual Disclosure Model Regulation In 2019, the Arizona Legislature adopted the NAIC Corporate Governance Annual Disclosure Model Act at Arizona Revised Statutes (“ARS”) by enacting the Corporate Governance Act at Title 20, Chapter 2, Article 16 (Laws 2019, 1st Reg. Sess., Ch. 180, § 1).   The Department of Insurance (“Department”) seeks to adopt the correlate Corporate Governance Annual Disclosure Model Regulation.  ARS § 20-492.02 allows the Department to adopt rules to carry out the Act upon notice and an opportunity to be heard.  The Legislature has exempted the Department from Title 41, Chapter 6 for one year after the effective date of the Act.  (Laws 2019, 1st Reg. Sess., Ch. 180, § 2.)
Arizona's Surprise Bill Resolution Report for 2019

As shown in the attached report prepared pursuant to A.R.S. § 20-3118(A), the Department of Insurance received 91 requests for dispute resolution in Calendar Year 2019.  Of those, 53 have been resolved or closed, and health plan enrollees saved $41,538 by submitting their surprise bills for resolution.  

Not all health care bills qualify for the surprise bill resolution process.  The Department's Suprise Out-of-network Billing Dispute Resolution website (, and especially the section entitled, "I got a surprise bill. Can I submit a request for arbitration?") lists conditions when a health care bill may not qualify under Arizona law for the dispute resolution process.  But for those that do, the enrollee will only be responsible for paying the enrollee's cost-sharing amounts (copay, coinsurance and deductible) if the enrollee provides information the Department needs, and participates in an informal settlement teleconference with the health care insurer and the health care provider.

Fire Readiness and Your Insurance Coverage

Complete three steps to be prepared

STEP ONE: Inventory your contents. 
Making a record of what you have provides two major benefits.  First, it could help you estimate the cost of replacing your contents, which you could use to make sure you have enough insurance coverage.  Second, it will help you identify missing or destroyed items if you need to file an insurance claim. Keep your inventory records in a safe place outside your home, such as a safe deposit box at a bank, or in a secure online location. 

  • The National Association of Insurance Commissioners (NAIC) has a free app called, “MyHome,” available from Google Play and from the Apple App Store, which can help you keep track of your personal property. 
  • The Insurance Information Institute provides advice that can make creating a home inventory easier (

STEP TWO: Understand what your homeowners’ insurance policy covers.
If you do not have your policy on hand, get a copy from your insurance company or insurance agent. Then, make sure your policy provides enough coverage for your dwelling, contents and additional living expenses.

  • Dwelling Coverage:  This pays to reconstruct your home, from ground up if necessary.  It does not include the cost of the land on which your home sits because you will still have that, but it should include the cost to remove a destroyed structure and replace it a home that is similar to what you had prior to the fire.
  • Contents Coverage:  This pays to repair or replace your personal belongings. Your policy may provide contents coverage based on a set percentage of your dwelling coverage, but you can pay for more contents coverage if you think you need it. 
    • Check to see if your coverage will pay “actual cash value” or “replacement cost.”  Actual cash value (ACV) means what an item was worth when it was destroyed based on its initial cost minus depreciation or loss in value due to its age, condition and wear-and-tear.  Replacement cost (RC) means the cost to replace or repair damaged or destroyed property with materials of “like kind and quality”. Claims for damaged or destroyed items will initially be paid based on the ACV of the item.  When the item is replaced, a copy of the receipt must be provided to the insurance company to obtain payment of the balance owed.  Many policies require the damaged items to be replaced within six (6) months.
    • If you have expensive items, such as artwork, jewelry or computers, you can purchase or increase “scheduled” property coverage to make sure you have sufficient coverage for those items.
  • Additional Living Expense (a.k.a. Loss of Use) Coverage. This pays additional costs you may resulting from the property damage.  For example, if you are not able to live in your home, your policy may cover the costs of lodging and food, boarding your pets, etc.

Importantly, insurance policies are often lengthy, detailed documents.  Do not hesitate to contact your agent or insurance company representative if you have any questions. 

STEP THREE: Minimize your fire risk.
Periodically inspect your home for overloaded power strips, damaged electrical cords or other potential fire hazards.  Keep vegetation and combustible materials away from your home.  If you are in an area that is at higher risk for wildfire, follow “Avoiding Wildfire Damage” guidelines published by the Federal Emergency Management Agency ( 

Remain organized and keep good records

If you are the victim of a fire, remaining organized after an event can be difficult, but it is essential so that you can receive the benefits that your insurance coverage provides.

  • Keep all receipts for living expenses (housing, food, etc.) and for all items that you replace or repair.  Insurance companies may require that you submit original receipts. You should either copy, scan or take clear photos of receipts to provide yourself a backup. 
  • Take photos of your property and the damage.
  • Keep records of all your conversations, emails and letters about your claim with your insurance company and agent.  Take notes of conversations, documenting who you talked to, when you talked to them and what you were told. When possible, send an e-mail message to the person with whom you had the conversation to confirm your understanding of what you were told.
  • Do not throw away or destroy damaged property until your insurer inspects the property and tells you in writing/e-mail that you can do so.
  • Take an inventory of the damaged contents.  If you have an inventory from before the fire, use it to help identify items that were damaged/destroyed. 
  • When the insurer inspects the damage, do a complete walkthrough of your property and point out any issues or concerns you have.
  • When beginning the repair process, get multiple repair estimates from licensed contractors (look up records on the Arizona Registrar of Contractors “Contractor Search” page at with good reputations (look up records on the Better Business Bureau website at
  • Don’t delay.  Insurance policies generally have restrictions on how long after a fire you can file claims.

Persons with disabilities may request materials in an alternative format by contacting our Americans with Disabilities Act Coordinator at (602) 364-0108. 

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