Best FIA's for Cash Growth

[Indy007]

Good input, I knew Midland was a sister company to North American, I figured their products were similar so never contracted with Midland. I'm going to look into their annuities a little deeper as it seems their caps are very competitive, and their A+ as well. Is that 10% cap 100% S&P 500 annual pt to pt?

Jackson National also seems like one I will be looking into. With their ratings and straight forward product design, they might appeal to some who like ratings over chasing the highest return potential.

Any other suggestions for FIA's for cash accumulation?

 

[scagnt83]

It would be interesting to find a list of insurance companies that failed and see what they were rated right before they crashed. I know some A rated or better companies have failed.

I wouldn't be afraid to put my own money in a B rated company.

You have to remember that there are 5 or 6 major rating agencies which all have different rating scales.

Some companies are rated by all of them, some are rated by only a couple.

But according to Weiss and their rating scale; only 3 B rated companies have failed over the past 7 years.

Shenandoah Life
American Community Mutual
Triad Guaranty Assurance Co.

The only one of those 3 that had assets over $1bill was Shenandoah with $1.7B. The other two were $128mill & $16mill.

Weiss Ratings

 

[FBN]

I wonder when agents will be allowed to discuss the state guaranty with clients. Ratings may not be so important to the client when that discussion takes place.

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I use Jackson National. For me it's less about bells and whistles and more about the company strength and service.

Larry, which IMO do you use to write Jackson business?

 

[scagnt83]

I wonder when agents will be allowed to discuss the state guaranty with clients. Ratings may not be so important to the client when that discussion takes place.
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That last sentence is exactly why we have the SGA regs that we do.

Once the SGA gets involved things are pretty fubar. Limitations and restrictions can be put on accessing your money, there may be no money to cover your account value so you have to wait on the SGA to make calculations and pay all the policy holders at once, etc. etc.

Plus, SGA is not insurance. It is assurance that the insurance companies will all pitch in to make policy holders right (up to state limits) if another company goes under. There are small SGA benefit pools in each state, but major insolvencies are funded by new contributions by stable carriers.

The SGA does not necessarily make things totally right again. They just help to make a bad situation better.

It is referred to as a safety net often times. I like to compare it to an airbag... sure it might save your life... but your car is totaled and you most likely have a broken nose, arm, or worse.

And just because your car has an airbag, doesnt mean you can 100mph and not worry about getting hurt. And even if you walk away from a crash at that speed, is that something you would want to recommend to a client?


I do understand the argument against this with how the banks can market FDIC insurance all they want. But FDIC INSURANCE pays out a lot quicker than SGA ASSURANCE. In fact, the first step of the SGA is to put limitations on access to prevent a run on the company, and to try and find a suitable carrier to buy up blocks of business from the failing company... it is not to cut checks to policy holders.

Dont get me wrong, I feel that it is good for clients to know about SGA protection. But they should also understand that it is something they do not want to go through. Which is why even with the SGA ratings do matter and should matter.

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Larry, which IMO do you use to write Jackson business?

Jackson contracts direct. You have to go through a regional director/office.

 

[Larry Tew]

I wonder when agents will be allowed to discuss the state guaranty with clients. Ratings may not be so important to the client when that discussion takes place.

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Larry, which IMO do you use to write Jackson business?

You can contract direct with Jackson unless you're a registered rep whose broker-dealer makes you run your fixed business through them.

As to your other point, here in NC we don't have to keep the guaranty association a secret if the point of company failure comes up in the conversation.

The rule is that we can't use the existence of the guaranty to lead a client to believe that financial strength doesn't matter. Example of what you CAN'T say... "Joe, the company I'm showing you doesn't have the best ratings, but it's ok... the Guaranty Association is like FDIC and they have your back if the company tanks."

And if you've ever had a client in a company that became insolvent, even with the guaranty association, it's no walk in the park. Only guaranteed values are covered up to your state's limits, and additional surrender charges and moratoriums on loans, withdrawals and surrenders are put in place to protect against a run on the company.

It's the balance between "odds" and "consequences". The odds of any company - even the B companies - failing is extremely low. But the consequences are severe. I feel better staying with higher rated companies and if I can't give a client what they want in an A+ company, I'll either figure out how to give them what they want another way or help them get it with someone else. It's rarely an issue.

 

[FBN]

I am skeptical of all of the rating companies. After all weren't they telling the world that AIG, Lehman, etc. were solid companies back in 2007-2008 before the crash? Client's aren't stupid, they remember what happened.

 

[bobson]

You can contract direct with Jackson unless you're a registered rep whose broker-dealer makes you run your fixed business through them.

As to your other point, here in NC we don't have to keep the guaranty association a secret if the point of company failure comes up in the conversation.

The rule is that we can't use the existence of the guaranty to lead a client to believe that financial strength doesn't matter. Example of what you CAN'T say... "Joe, the company I'm showing you doesn't have the best ratings, but it's ok... the Guaranty Association is like FDIC and they have your back if the company tanks."

And if you've ever had a client in a company that became insolvent, even with the guaranty association, it's no walk in the park. Only guaranteed values are covered up to your state's limits, and additional surrender charges and moratoriums on loans, withdrawals and surrenders are put in place to protect against a run on the company.

It's the balance between "odds" and "consequences". The odds of any company - even the B companies - failing is extremely low. But the consequences are severe. I feel better staying with higher rated companies and if I can't give a client what they want in an A+ company, I'll either figure out how to give them what they want another way or help them get it with someone else. It's rarely an issue.

What's disturbing is the FDIC must be advertised, as if that is a fail safe for banks.

 

[VolAgent]

You can contract direct with Jackson unless you're a registered rep whose broker-dealer makes you run your fixed business through them.

As to your other point, here in NC we don't have to keep the guaranty association a secret if the point of company failure comes up in the conversation.

The rule is that we can't use the existence of the guaranty to lead a client to believe that financial strength doesn't matter. Example of what you CAN'T say... "Joe, the company I'm showing you doesn't have the best ratings, but it's ok... the Guaranty Association is like FDIC and they have your back if the company tanks."

And if you've ever had a client in a company that became insolvent, even with the guaranty association, it's no walk in the park. Only guaranteed values are covered up to your state's limits, and additional surrender charges and moratoriums on loans, withdrawals and surrenders are put in place to protect against a run on the company.

It's the balance between "odds" and "consequences". The odds of any company - even the B companies - failing is extremely low. But the consequences are severe. I feel better staying with higher rated companies and if I can't give a client what they want in an A+ company, I'll either figure out how to give them what they want another way or help them get it with someone else. It's rarely an issue.

Just nitpicking...

When a bank fails, there really isn't much difference between the FDIC and SGA, except...

The FDIC moves faster. They have already decided the bank will fail and have lined up a buyer. They close it on Friday and re-open on Monday as part of the new bank. The accounts become accounts of the new bank and there is a transition of separate existence until the old bank is absorbed by the buyer.

But if the FDIC can't find a buyer or the new bank won't take all the accounts in whole, then it gets ugly, just like the SGA. The FDIC can take their sweet time settling accounts and determining what is covered and what isn't.

To me, counting on the FDIC or SGA to be there to back up your financial institution is courting disaster.

Also, the FDIC has a lot more experience handling failed banks than SGAs have in handling failed insurance companies.

 

[jhouser]

If you're looking for a strong short term accumulation engine, I would suggest the Target Horizon 5 that just recently came out with Aviva. Uncapped accumulation with a very low spread or Genworth with there 7 yr high cap product. Minimum guarantee of 107% after 7 years and has the highest caps I have seen on "A" rated paper.

 

[jmhalvo]

If you're looking for a strong short term accumulation engine, I would suggest the Target Horizon 5 that just recently came out with Aviva. Uncapped accumulation with a very low spread or Genworth with there 7 yr high cap product. Minimum guarantee of 107% after 7 years and has the highest caps I have seen on "A" rated paper.

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