Annuity Applications

[Gulliver]

I have a family member who is a newer life agent. I used to write a lot of life but 20 years ago and did a few annuities back then, however, he is trying to do an annuity on a family member and the net worth questions are getting way too personal. Are all the companies asking 35 questions about income and net worth? This has put him in a very uncomfortable situation. Additional info. This is just a 1035 from another company. It is is MYGA with F and G. Any advice or recommendations?? Thanks.

 

[scagnt83]

That is normal these days due to 20 years of updated rules and regulations. (really the past 10 years)

Carriers are required to judge suitability and gather detailed financial info to do so.

If the person wants an annuity. They will have to answer the questions with someone, either that agent or a different one.

Just be glad its not in NY. Even more detailed financial questions.

 

[Gulliver]

Thanks

 

[Allen Trent]

Yup, perfectly normal & a direct result of some of the sales practices, churning & creative design of those products 20 years ago.

I literally just had some of my own personal annuity policies out the other day from 25 years ago. The application was not even 1 full page & the right side of that 1 page was almost never used as it was only if person was turning into a payout annuity or setting up systematic distributions at time of issue. Today, not uncommon to see some apps get to be 10-15 pages.

Depending on carrier, some have a spot in the best interest/suitability section that allow consumer to opt out of answering the questions if they complete another form opting out

 

[Tahoe Ray]

consumer to opt out of answering the questions if they complete another form opting out

And some carriers will just straight up reject a policy with that opt-out form or "partial information" or "not a complete description" whatever box is checked on the suitability form.

 

[Gulliver]

The Opt Out situation might be good. The client already has an active annuity from 22 years ago with F and G. I bet they would honor the opt out. I would not do the app myself after looking at the questions. It is bull for a 1035 to be questioned at this level. Also way too much info shared amongst the people touching the apps.

 

[scagnt83]

Even most life policies these days require listing income/assets/etc.

 

[scagnt83]

The Opt Out situation might be good. The client already has an active annuity from 22 years ago with F and G. I bet they would honor the opt out. I would not do the app myself after looking at the questions. It is bull for a 1035 to be questioned at this level. Also way too much info shared amongst the people touching the apps.

99% certainty they will reject it. Suitability is a huge thing these days.

Being a 1035 has no bearing on suitability.
In fact, it could be a reason to reject the app... especially without knowing the rest of the financial picture.

Many e-apps will not even let you sign without that info filled out.

Even life insurance usually requires income/assets on the app these days.

 

[Allen Trent]

The Opt Out situation might be good. The client already has an active annuity from 22 years ago with F and G. I bet they would honor the opt out. I would not do the app myself after looking at the questions. It is bull for a 1035 to be questioned at this level. Also way too much info shared amongst the people touching the apps.

the Assets & income questions were actually built more for 1035 & rollovers than they were for new money. Tons of agents over the years churning old annuities that were long out of surrender charges into new contract with new & forever surrender charges in some cases. Also, many of those old contracts had much higher minimum forever interest rates & also much higher payout rates for owner & beneficiaries & shorter mortality tables for those payout tables--IE: old annuities & life contracts have higher payout tables because of higher guarantee & shorter mortality tables

I just saw a client move $450,000 annuity from 1992 that has a forever guarantee of 4.5%, surrender charges were gone since 2000, client was able to add more money to the contract as it was flexible & no surrender charge restarted.

Agent was making the case that 4.5% was too low as client can get 5.8% on a 5 year MYGA today...............Yes, today. But, the minimum guarantee on that MYGA was 2% & it has surrender charges that restart every 5 years.

not saying client shouldnt move some, but churning sometimes is based on a recency bias & forgetting what history has shown. Client didnt care that they made 4.5% from 2012 - 2023 when MYGA & bank rates were in the .5% range to 2% range, etc.

Anyway, carriers are held responsible for knowing liquidity in case client needs money or faces medical/nursing home costs, etc.

 

[LostDollar]

I have a family member who is a newer life agent. I used to write a lot of life but 20 years ago and did a few annuities back then, however, he is trying to do an annuity on a family member and the net worth questions are getting way too personal. Are all the companies asking 35 questions about income and net worth? This has put him in a very uncomfortable situation. Additional info. This is just a 1035 from another company. It is is MYGA with F and G. Any advice or recommendations?? Thanks.

Caveat, NOT an agent.

"newer life agent" -- I'm assuming he could use the commission, however if the finances reporting is becoming too much of an issue and he "is in a very uncomfortable situation" with the other family members, perhaps he should just not write the contract.