NYL Special Annuity Taxation?

[iceco1d]

Umm, not that I really want to get involved, but when you start flaming people for allegedly not knowing what they are talking about and then use Pac Life, ONL, and Allianz as examples of the Mutuals with competitive income riders on their VA's, I can't help but chuckle a little.

I'll let Pac and ONL slide as MHC's, but Allianz? The mother ship is a publicly traded company...

And as someone who was very intimately acquainted with the Mutuals for quite a while, I'll also note than when we talk about the Mutuals, none of those companies come to mind.

Just sayin...

Of course, I'm sure I have no idea what I'm talking about.

Sorry, I got my signals crossed from another thread (also about variable annuities). You're right, he asked specifically about the big mutuals (NYL, NWM, Mass, and Guardian) having an income rider. My mistake - and yes I know who the "big mutuals" are, and what a mutual is.

However, I will say a company like Penn Mutual has a nice income rider too (but for some reason they are excluded when it comes to discussions on "big mutuals").

 

[scagnt83]

Sorry, I got my signals crossed from another thread (also about variable annuities). You're right, he asked specifically about the big mutuals (NYL, NWM, Mass, and Guardian) having an income rider. My mistake - and yes I know who the "big mutuals" are, and what a mutual is.

However, I will say a company like Penn Mutual has a nice income rider too (but for some reason they are excluded when it comes to discussions on "big mutuals").

Penn is usually excluded because they are not that large.

It usually isnt a problem in the Individual Market.

But I have recommended them in Deferred Comp cases before and business owners always seem to opt for the larger better known companies with a larger asset base, even though Penn has better ratings.


But for those of us in the industry. Penn is right on the edge of being a "big mutual" imo. Its usually left out because of its smaller size, therefore it just doesnt have as big of a presence in the industry.
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You're mistaking "competitive" to only mean the b.s. "Smoke and Mirrors" portion of income riders.

And to answer your question...

1. For someone in the 59.5 - 70 range, I think Pac Life has an awesome product for "income now." 5% withdrawals for life. No smoke and mirrors ratchets. 50 bps cost. Up to 75% equity exposure.

2 For "income later" when income will start over age 70, I think JNL is pretty good (especially for income at 76 or later). Doubling of income base after 10 years, 5% withdrawals at 65, or 6% at 76%. No limitations on equity exposure.

3. For entities (like an endowment), JNL's combined LB/DB rider can be great.

4. Ohio National used to have a very strong GLWB rider on a very inexpensive contract, buuuut I think they've lowered their income percentages.

5. Allianz has the same rider available for their variable products that they do for their indexed products.

Again, I will ASSume that my posts above will be essentially ignored, and our audiences attention will be diverted back to the fact of the "smoke and mirrors" of the indexed product riders, rather than what the client ACTUALLY wants to accomplish.

Exactly which indexed product right now gives you an expected return of 5% (forget 6%+) based on current cap/spread/part/trigger rates available?

So what is the difference between an Income Rider on an IA and one on a VA?

Im pretty sure you said it yourself about Allianz.... nothing; the only difference is the underlying product.

Do I really need to sit here and list all of the IA companies that have better riders than the VAs?


-GAs "Safe Return" product has a 4% cap, ROP, and a 3.5% bailout.
--The Income Rider is 10% simple followed by 5.5% income at age 65. It costs 80bps.
Its one of the most competitive IRs on the market for years 1-12.

-AE gives you 4.5% compounding with no cost at all, its followed by 5% ages 65-69, or 4% income at 3% compounding.
-- For 60bps, they offer 6.5% compounding followed by the same income options.

-Annexus offers 6.5% with 5% at age 65. The Income doubles if a LTC need occurs. There are also COLA options on the income.
--The underlying product has an uncapped 4 year p2p on 50% and a fixed rate on the other 50%. The fee is around 80bps per year for the product, assessed at the end of the crediting period on gains only. You can also "lock in" your gains during the crediting period if you wish, and not wait until the end of the crediting period.
Its a good product, but they charge a full 1% for the rider.

-ING offers 6% and 4.5% withdrawals at 65.

-LFG offers 5% with 5.5% at age 65. For a LTC need the income jumps to 10% of the benefit base at the time income was chosen. The rider costs 65bps.

-NA offers 7% with 4.75% at age 65.

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You see Ice, you totally missed my original point.
It was not about VAs being bad.
It was about Income Riders on IAs being more competitive than their VA counterparts.

If your pimping (to use your language) Income Riders, which it seems you are, then why not go with the highest income option on the market if the main purpose of the sale is the Income Rider.
If the underlying product is secondary, then it should be treated as so, and ALL Income Riders on any available product should be compared first and foremost.


Sure, ON offers the lowest fee option with a rider... but there you are selling the rider... and is it the best income rider?
If the money is market focused, then why not opt for the best subaccounts?


And ON is the exception to my 3%-4% fee comment (you happened to cut off the 3% part when you quoted me...).

For the majority of VA contracts out there if you include a rider you are at 3%-4% in total fees charged against you.
This is just my opinion, but that is a lot in fees.

You can go on and on about 10%-14% market returns. But reality has told us that the average client out there averages around 5%-6% after its all said and done. And its because of a combination of bad timing and excessive fees.

Most people could just skip all the bs and throw their money in an S&P 500 Index fund for 50bps per year, and not move a dime of it until a few years out from retirement.
The majority of people would earn a hell of a lot more in the market if they just kept it simple.

And before you start in on this retirement investing theory Ice; I am not the only one who feels this way. Some of the greatest minds of the market have said this very thing.
Most people pay more in fees than they should, and most make knee jerk decisions based on current market sentiment aka: emotion, not logic.


Again, are you willing to send me a VA proposal (with your name on it) and write on it that the market returns 10%-14%??

And if you are throwing out those numbers, I assume that you are managing returns indicative of that for your clients... over the long term...??
Because if you are, you wouldnt be slinging VAs.... you would be trading for a hedge fund.