Originally Posted by Newby
I would have to have a HUGE advantage to put a very large amount of money in an annuity with no state guarantee protection if a similar annuity was available WITH the protection elsewhere.
The same would be true of doing business with a bank that has no FDIC protection.
It is only one piece of the puzzle. But if all else is close to equal, I want the extra protection.
Here is an actual example I worked on about a year ago. Prospect had $315k from a 401(k) to roll. He was looking at a strong fraternal guaranteeing 3% for the life of the contract, and he was looking at a strong non-fraternal guaranteeing 4.3% the first year and 2% through year 9 (his time frame). At the end of the 9 years, the fraternal account would grow to $411k, the non-fraternal grows to $385k. Both companies had an equal set of financial strength ratings. In summary:
The fraternal provided $26k more based on guarantee to guarantee. It would cost the client a little more than 8% of the original deposit to go non-fraternal. In essence, they would pay a premium of $26k for the state guaranty. They chose the fraternal based of their assessment of odds and consequences.
To me, this isn't one of those always / never
issues. It depends on what matters most to your prospect. "This is what happens if you choose this, and this is what happens if you choose the other. Which option fits you better?"