Silac Downgrade and Hate

[AnnuityGuy63]

Yes I know that Silac was downgraded and for some reason there is a lot of hate going on for them....

But my client just received his 11 month Denali Reallocation Letter.

Client wanted 10% in the fixed bucket and 90% in the SILAC NASDAQ G-5 TPT with 230% Par.... The letter states 14.85% return. Now that doesn't mean in 30 days that's what it will be but it's a fair estimate.

And my client is very happy with that return. The client has systematic withdrawals turned on to execute his RMD's on a monthly basis so even if SILAC got in trouble and went into receivership my understanding is that since payments have started they can't stop.

Can anyone confirm or correct me on this?

 

[scagnt83]

First year teaser rate returns are meaningless. Wait for 5 years of renewal rates and report back.

 

[Tahoe Ray]

The client has systematic withdrawals turned on to execute his RMD's on a monthly basis so even if SILAC got in trouble and went into receivership my understanding is that since payments have started they can't stop.

Can anyone confirm or correct me on this?

Where did you hear that?

RMDs are just withdrawals. If a company goes into receivership, they will freeze all of the assets (including withdrawals) until a full accounting is completed and then determine next steps.

It can take years.

Go read through the Colorado Bankers threads on this site if you want to see what is currently happening with a company that has been placed into receivership.

Those folks are probably having to file 5329s to waive the excess tax on RMDs (or pull RMDs from other sources if available) and then hoping to get all or most (depending on the state) of their money back at some time and then back pay all RMDs at once.

With an indexed annuity, you're likely going to lose any ability to participate in an index as well (the guaranty association will not administer index crediting and will want to move policy owners to fixed rates)

Not a road you want to go down.

 

[marindependent]

If a company goes into receivership, they will freeze all of the assets (including withdrawals) until a full accounting is completed and then determine next steps.

 

[scagnt83]

Y The client has systematic withdrawals turned on to execute his RMD's on a monthly basis so even if SILAC got in trouble and went into receivership my understanding is that since payments have started they can't stop.

Can anyone confirm or correct me on this?

That is not correct.

Payments are still subject to the claims paying ability of the Carrier.

Doesn't matter what type of payment or why.

That is true for any and all annuity carriers.

The longer the time frame... the more important ratings are.

Using low rated carriers for lifetime product, carries much more risk vs. using a highly rated carrier.

I will sell an A rated MYGA all day long.

But for a lifetime solution.... Im not risking my career or my clients financial well being.

 

[Allen Trent]

Yes I know that Silac was downgraded and for some reason there is a lot of hate going on for them....

Hasnt SILAC been B+ for 3 or 4 years? Only thing I saw was the outlook was changed to negative from stable, but they still have same rating class.

Just wait, you will likely see a ton of PC carriers experience change in outlook & some actual rating drops. Entire reinsurance market is atrocious & putting major strain on all carriers, especially smaller regional carriers

 

[DHK]

The longer the time frame... the more important ratings are.

^^^ THIS ^^^

I watched a SILAC webinar on their product and the potentially outrageous income base the product could accumulate to. It was showing something like $100,000 growing to over $4 million (if I remember correctly) over a 20 year period.

Just insane. (Assuming those were the numbers, the value of the contract would have to grow by 20.25% each year for 20 years. Even if it was $2 million, that would be a little over 10% each year for 20 years.)

But they opened it up for Q&A and I asked about their ratings to the actuary that was on the call. The response was essentially "If we wanted more reserves, we'd get them."

What a shill.

From that point, I knew I'd never consider SILAC for any 'serious' money. Under $100,000 if that. I never sold SILAC and at this point, I never will.

I prefer to under-promise and over-deliver whenever possible.

 

[HoosierLife]

So if someone already put 125,000 into the 14 year Vega product a year ago, what would be your recommendation?

 

[scagnt83]

So if someone already put 125,000 into the 14 year Vega product a year ago, what would be your recommendation?

Lube.

 

[scagnt83]

So if someone already put 125,000 into the 14 year Vega product a year ago, what would be your recommendation?

If they want out, there is not much they can do.

Take 10% free withdrawals each year is about all they can do.

That is assuming they are age 59.5+

If they are younger, they would be hit with a 10% tax penalty. So they are basically stuck if that is the case.