So my client took out an annuity in August before i met her...that gave her a 1.45 bonus and 1% min guarantee. It had a ROP rider which was great! I met her 2 months ago and obviously sold her a much better annuity product offering a greater amount of interest. Especially the bonus. The carrier declined the case because although she does not have any surrender charges, if the client is not in free look status they will not take the case due to a 3 year rule they have. Are all carriers the same? Do I really have to wait 3 years before I can get her out of that annuity? Any suggestions of carriers that would accept this would be greatly appreciated. I was offering her a 10% bonus 10year contract. I'm in Illinois. Thank you
- 8,707
I would never recommend violating compliance but is this non qualified or qualified. I have "heard" about rolling to a savings account and then submitting a new app.
- 106
Is it qualified or non-qualified? Also, I do not know any annuity that offers a 1.45% bonus? Also, you said that it has a 1% minimum guarantee...this most carriers. What are the two products you are referring to?
- Thread starter
- #4
I definitely do not want to violate compliance that's why I'm seeking advice on the right way to go about this. It is qualified funds. I don't want to submit new app to same company cause I already talked to them about that and they won't accept it, if I did that, it would be violating compliance. If I had her cash it out, and submit to different company, would that be ok? If so, which carrier offers a 10% bonus on a 10year contract?
Josh to answer your question, it's western and southern that she is currently with and equitrust market power index is who I tried placing her with.
Josh to answer your question, it's western and southern that she is currently with and equitrust market power index is who I tried placing her with.
- 106
Unfortunately, most carriers will look at it the same way that Equitrust did, meaning even though it's a ROP, they will still consider it a replacement if it's within 3 years. Also, you don't wan't to cash it out and write a new policy if it's qualified money bc of tax consequences. You can only have 1 rollover per 12 month period, so if you took it out, and then submitted it to a new carrier, then you're looking at a second rollover, until 12 months has passed.
Did he say if the first annuity was a rollover or trustee to trustee?
I'm sure it's 1.45 plus1.0 year one, then 1.0 after that. Not a bonus, but a higher initial rate. As you know, a common practice esp in a bank b/d
The only thing that may "fly" with this is rolling it into a brokerage account for 6 months and then put it in another annuity if you choose. If you move it to any other financial product you are going to have to wait the 6 months for it to NOT be considered a replacement and I'm 99.9% certain you are not going to find a carrier that will replace this in under 2 years minimum.
StanTheInsMan
Expert
- 50
If it is non-qualified and the client wants out of the program they can cash it out put it in a savings account and then shop a new annuity, but not with you. You ethically can not do this. You must disclose the replacement if it is within six months in Illinois. When you cut corners in annuity business complaints come even if you are trying to improve your clients situation. Nothing is worth your license. Tell the client if she wants out using ROP put it in a savings account and in six months we will move you into a better program that fits your needs. If qualified the once a year rollover comes into play and makes it a more complicated situation. Good Luck
