Annuity Purchase Program?

Waterfront Financial · 06-03-2009, 01:28 PM

[COLOR=black][COLOR=black][COLOR=black]Received an email today on this.[/COLOR]
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[COLOR=black]Jack purchased an annuity several[/COLOR][COLOR=black]years ago and is receiving $6,000 per [/COLOR][COLOR=black]month for the next 95 months. His financial circumstances have changed and it now makes more sense for him to receive a cash lump sum rather than waiting nearly eight years to receive the remaining payments. [/COLOR]
[COLOR=#4d4d4d]The XXXX Group Annuity Purchase Program[/COLOR][COLOR=black] proposed a lump sum payment of $360,000 to help Jack better manage his current change in financial circumstances. If this was your client, you would have earned a 3% referral fee. [/COLOR]

[COLOR=black]Client Received: $360,000 [/COLOR]

[COLOR=#4d4d4d]REFERRAL FEE paid to[/COLOR][COLOR=black][/COLOR]

[COLOR=#4d4d4d]F Garcia: $10,800[/COLOR][COLOR=black][/COLOR]

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[COLOR=#4d4d4d]Also received this in the email[/COLOR][COLOR=black][/COLOR]

[COLOR=#1f497d]This option is great for clients in a cash strapped economy, who’s needs may have changed since they purchased the annuity.[/COLOR][COLOR=#4d4d4d][/COLOR]

[COLOR=#4d4d4d][/COLOR]
[COLOR=#4d4d4d]My question is why isn't there a plan in place for those new needs? Annuities are a long term product that shouldn't be touched. It feels like a JD Wentworth deal. Anyone else ever hear of this?[/COLOR][COLOR=#4d4d4d][/COLOR]
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voliosclark · 06-03-2009, 01:35 PM

Got the same e-mail today. Not a fan of advising a client to sell off an annuity, however some folks tend to find themselves in a position where there aren't a lot of other options.

Waterfront Financial · 06-03-2009, 02:14 PM

Originally Posted by voliosclark

Got the same e-mail today. Not a fan of advising a client to sell off an annuity, however some folks tend to find themselves in a position where there aren't a lot of other options.

The problem I have is the client should have a back up plan when they do find themselves in a position where they dont have options. I tend to do a full financial plan for the client so they won't touch that annuity and and I know things change,but I still dont like this idea at all.

InsureGuy5 · 06-03-2009, 02:22 PM

I am also not a fan. I wonder if certain annuity companies will ever allow for back-out provisions on SPIA's where taxes and IRS regulations would be minimally affected.

This deal seems exactly like the structured settlement buyers.

insuranceexec · 06-03-2009, 03:13 PM

It appears to be a sweetheart deal for the Settlement company.

golfnut · 06-03-2009, 09:05 PM

You know it is a sweet deal. I had a company out of Mass. offer annuities purchased this way subsequently being sold where the buyer makes a 8% return and I would makea 4% commission. Now I haven't offered that to any Clients, but it seems like a deal,assuming all is legal with it......

aguilartx · 08-07-2009, 11:01 PM

Always a bad deal for client...these companies know the client is desperate for money....

emptyeternity · 08-08-2009, 08:11 AM

"Its my money, and I need it now"

Charpress · 08-08-2009, 04:22 PM

Probably most if not all potential customers for this are folks who got injury settlements and took it structured in the form of an annuity. They probably weren't happy that the courts, defendant insurance company, and their own lawyer set them on this path.

So, it is like shooting fish in a barrel to go to some Joe who got a "big" settlement but is only seeing income and offer him a chunk of money.

I had a doctor on disability income of $14,000 a month come in last week who was offered $1.2 million to lump-sum out. He is 57 and in good health from an actuarial viewpoint.

I told him to run the numbers and see if it made sense. Of course, his numbers and my numbers showed that it certainly did not make sense. It didn't make sense even if you don't factor in that his current disability income is tax-free.