Equity Indexed Annuities: Are they the real deal or junk products?

[Chris235]

I meant to write, "allows their money to continue to grow tax" DEFERRED, not tax free.

 

[kingedgars]

EIAs and class-action lawsuit

Hey, the top seller (Allianz) of EIAs is embroiled in a class-action lawsuit for marketing tactics and for selling to seniors that likely will not live until the end of their annuity's surrender period. EIAs are a controversial product in the life insurance business, right now. Right product for the right person, but watch your step and disclose, disclose, disclose.

http://www.annuityiq.com/blog/main/allianz-lawsuit-goes-to-class-action/

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20070507/FREE/70507008/1009/TOC

 

[joshril]

Hey, the top seller (Allianz) of EIAs is embroiled in a class-action lawsuit for marketing tactics and for selling to seniors that likely will not live until the end of their annuity's surrender period. EIAs are a controversial product in the life insurance business, right now. Right product for the right person, but watch your step and disclose, disclose, disclose.

http://www.annuityiq.com/blog/main/allianz-lawsuit-goes-to-class-action/

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20070507/FREE/70507008/1009/TOC

Allianz is the top carrier for EIAs because they have among the highest commissions available to agents. The reason their commissions are so high is because most of the Allianz products offer a huge bonus to consumers (10-12%) for the first year on a customers money. Often tied to this bonus, the annuity has to be annuitized or has a rediculously long surrender period (sometimes 12 years). I am sure the high commissions caused many agents to engage in unethical sales tactics..

Not all EIAs are bad. Some companies offer excellent products that in many cases are much better than CD's and traditional fixed anuities. Even the high bonus products can be suitable if disclosed properly and sold in the proper situations.. It's the bad agents out there not selling products correctly that give us all a bad name!

 

[senior-advisor-indiana]

I have NEVER sold an Allianz product nor will I ever. I have been contracted with them for 3 years. Their products have never been the best fit.

 

[Mr. Bill]

Well, luvs, this has been an interesting discussion.

I agree, EIA's are not for everyone. However, I would absolutely argue that the older one gets, the less actual stock market exposure one should have, and that includes contact with stock brokers at wirehouses (you can call them whatever you want, but they are simply glorified stock brokers).

READ THIS ARTICLE:
http://www.businessweek.com/ap/financialnews/D8PJGSRO0.htm

I have encountered this type of behavior in the past, with all kinds of wirehouses in the mix. It is truly disgusting.

With respect to Allianz, I have only sold walkaway products and none for years. Their other products were (are?) frightening, and the lawsuits are only starting...

GamePlan is owned by Allianz. Allianz has an exceptionally high override payment to the FMO, so nearly every FMO wants your Allianz contract. Disgusting.

Don't forget to review the FMO sticky on this board.

 

[djs]

I'm new to this forum and I don't have my securities licenses. Why aren't people with security licenses allowed to give their general impression of different investments? I understand that each person is different, but what harm is there in generalized information with the understanding that it is an opinion and not specific to any one person?

Securities licensed individuals are well trained (under threat of their license) to realize that investment information is specific to the individual. It's hard to make general statements without it being misinterpreted by someone. What's good general advise for someone in the aggressive growth mode is usually lousy general advise for someone in the capital preservation mode.

For most securities people, any advise given in a written form has to be approved by the compliance department of the broker-dealer they work for. WAY to much of a hassle....

On the other hand, most will gladly talk to you on the phone....

Dan

 

[JMO Fan]

The pressure on SEC to regulate and register all EIAs and those who sell them is increasing. Here's an informative discussion: http://www.actuarialoutpost.com/actuarial_discussion_forum/showthread.php?t=60315

 

[Crabcake Johnny]

Anytime a sales force is being trained to tell people "all upside and no downside" or things like "cannot lose your money" you have to know it's gonna hit the fan sooner or later.

I had two marketing companies contact me to sell annuities. I baited both of them and kinda played along. Safe to say I felt like taking a bath after both of them finishing telling me how to close deals.

Also, although we are all paid more as the premium increases that also requires clients to spend more money. Am I gonna convince someone to get a $2,600 a month health insurance premium? Not likely.

However, with annuities - and take a 10% commission level - the more you get people to invest the more you make - no ceiling. So if you can talk that senior into putting $200,000 into an annuity to cashing out all CDs and other investments you stand to make a $20,000 commission. Horrible.

So how does an agent answer this question from a senior:

"Ok, I'd LOVE to get this annuity! I have $600,000 in CDs and investment. How much do you think I should put in?"

 

[senior-advisor-indiana]

Depends on what they want and what they have. I always tell the mto keep at least 30k in the bank. If they have 300k in CD's and the rest in securities I would go for atleast 270k. OR if they are healthy, I would first start with a SPLI policy. I guess you really can't answer this question without knowing the situation. So forget what I said.

 

[Crabcake Johnny]

The question is what is in place to stop an unethical agent from taking advantage of a senior and having them put their entire life savings into an annuity? Are their any checks and balances? Does anyone have a responsibility to call a 78 year old senior and go over that $500,000 annuity she's buying? I know if I had an agent who turned in 5 Right Start PPO plans in a row I have an ethical responsibility to call those clients and make sure the sale is proper. Who's the gatekeeper for annuities?