Regulated to Death... Life of an RR

[BNTRS]

I used to be all over the VA scene. And used to have a really holier than thou attitude about being securities licensed.

About a year ago I learned I was a much better insurance adviser than investment adviser (that terminology alone could get me in trouble) and during a conversation with someone about insurance products and security products the person I was talking to made a comment that immediately struck a cord with me. Paraphrasing a bit the comment was: "if you need the guarantees, you shouldn't be in a [securities] product."

I know there are those who suggest with VA's investments are still king, the riders are a safety net. But realistically, how many contracts are really following that mantra closely? Pru has a crazy algorithm that stuffs most of your money into fixed account. Everyone else I'm aware of requires models for the rider, except Jackson, and even they are pulling back on this.

 

[VolAgent]

I used to be all over the VA scene. And used to have a really holier than thou attitude about being securities licensed.

About a year ago I learned I was a much better insurance adviser than investment adviser (that terminology alone could get me in trouble) and during a conversation with someone about insurance products and security products the person I was talking to made a comment that immediately struck a cord with me. Paraphrasing a bit the comment was: "if you need the guarantees, you shouldn't be in a [securities] product."

I know there are those who suggest with VA's investments are still king, the riders are a safety net. But realistically, how many contracts are really following that mantra closely? Pru has a crazy antilogarithm that stuffs most of your money into fixed account. Everyone else I'm aware of requires models for the rider, except Jackson, and even they are pulling back on this.

Very well said. What percentage of the individual VA market is sold without a rider? 5%, maybe 10%? A VA definitely has a lot more upside than a FIA, but will they do better for most contract owners?

 

[Norwayguy]

Very well said. What percentage of the individual VA market is sold without a rider? 5%, maybe 10%? A VA definitely has a lot more upside than a FIA, but will they do better for most contract owners?

My mantra lately is "It doesn't matter what you earn, what matters is what you keep". This works twice on the investment side and on their income.

 

[Charpress]

I think many people miss the fundamental problem with VAs that have death and income rider benefits. If the underlying value goes south because of the market, you now have a product you can't get out of.

If you told a prospect honestly that they might be looking not at a 7 year committment, but a lifetime committment, how many would buy? Seriously, most of the VAs I've seen have less value than when purchased. And yet, when I show a prospect a much better investment, they can't move their money out of the VA without substantial loss.

Every time I hear someone say "Yes, but I have this lifetime income guarantee." I have to go into my "Yes, but did you intend to be stuck there forever?"