Insurance Agent Forum

[ajadaca]

Originally Posted by senior-advisor-indiana

Thats ok though because the commissions are usually lower than an annuity sale.

<<<WEIGHING ONE AGAINST THE OTHER???>>>>

The Fact of the matter is the show was aired with only SOME half Truths...and it should delve into unscrupulous behavior by FA's that push 80+ yr old ppl into high risk investments also!!!!

[senior-advisor-indiana]

M&M must have melted away?

[midwestbroker]

Not having sold an annuity prior but getting into that segment, I am looking at this:

CD vs. Fixed Annuity (3-5 year term)

Not rocket science. Neither product is that complex. You deposit money, you get X% back per year. With a CD you get a 1099 each year to pay taxes on the interest earned, with a annuity you do not, it defers to when you actually pull the money out or annuitize it. As long as the client can walk away from the annuity at the end of the term with out being forced to annutize with full value, they are very similar.

Easy to understand, good for the senior who wants to defer taxes, etc.

Now the greedy agent may try to do a 10+ year FIA with a 8-10% commission...but what they are not realizing is that at the end of the short annuity term, they can roll the money into another annuity and get paid again, and they are not putting their licenses on the line.

Or am I missing something?

[Mr. Bill]

Not missing anything, pretty much spot on. I believe some states have even gone so far as disallowing annuities longer than 10 years. Would likely be the trend in the future.

One of the Allianz problems was they were not promoting (through FMOs like GamePlan) walkaway products, when clients found out they had to annuitize (and earn the fixed account rate on the ENTIRE portfolio balance) whew! I believe they have had to change things since.

[senior-advisor-indiana]

Midwest,
That is a great plan that you have. Some seniors want to give themselves the opportunity to get a better return than they could in a regular fixed annuity or CD. I think the MYGA's are better for clients that want a fixed rate.

I have ran into tons of seniors that have bought an Allianz annuity. Most are unhaooy and did not realize the had to annuitize to recieve funds. Allianz really didn't go out of the way to explain that to agents either. I have never and will never sell Allianz. However I did run into a couple that loved the idea that the beneficiaries of their annuity could not recieve the funds in a lump sum.
Also, the 15% bonus annuity they have, does not recieve the bonus until you annuitize it. I had to figure that out for myself even after a 30 min pitch from my marketer. You really have to double check everything some FMO's tell you.
I have had no problems with FMO's that do not carry Allianz. Coincidence? I don't know.

[sman]

Originally Posted by senior-advisor-indiana

Midwest,
That is a great plan that you have. Some seniors want to give themselves the opportunity to get a better return than they could in a regular fixed annuity or CD. I think the MYGA's are better for clients that want a fixed rate.

I have ran into tons of seniors that have bought an Allianz annuity. Most are unhaooy and did not realize the had to annuitize to recieve funds. Allianz really didn't go out of the way to explain that to agents either. I have never and will never sell Allianz. However I did run into a couple that loved the idea that the beneficiaries of their annuity could not recieve the funds in a lump sum.
Also, the 15% bonus annuity they have, does not recieve the bonus until you annuitize it. I had to figure that out for myself even after a 30 min pitch from my marketer. You really have to double check everything some FMO's tell you.
I have had no problems with FMO's that do not carry Allianz. Coincidence? I don't know.

I love when I get the calls from FMO's checking to see if I write annuities and they start pitching Allianz. I stop them dead cold and tell them I will never write an Allianz annuity and they should be ashamed for promoting them. They always start back tracking and stating they have other carriers. This lets me know where their loyalties lie.

I use a website to run comparisons for my own benefit. It's Welcome to Annuity Marketing Services. You can register and use their calculators. If you know the participation rate, spreads and/or margins, you can run a hypothetical for most any index annuity. Of course, the one thing we all know is that these moving parts can change from year to year, so it's not an exact science. There's also EIAnalyzer on Personalyze EIAs. They have many carriers listed where you can run some basic comparisons.

What I have found is that many index annuities will likely give somewhere between a 4%-6% return over the life of the annuity (usually in the 5-10 year range). So if someone isn't getting those types of returns from their other fixed investments and they want to take a portion of their portfolio and put it in an index annuity, I see no problem with it. Just don't use the crap they were using on the show. We have to also remember some of these newer index annuities are providing a lifetime withdrawal benefit regardless of the return (similar to the variable annuity plans).

[CHUMPS FROM OXFORD]

Very nice site. If you would like some free grammatical tips, I'll be happy to email them to you.

[sman]

Originally Posted by CHUMPS FROM OXFORD

Very nice site. If you would like some free grammatical tips, I'll be happy to email them to you.

Chumps,

Was this for me? If so, I'll take whatever grammatical tips you have.

[midwestbroker]

Well I am glad to see that I am on the right track...thanks!

[senior-advisor-indiana]

Originally Posted by midwestbroker

Well I am glad to see that I am on the right track...thanks!

Well, almost. You still need to go to a 3 week class on the ins and outs of CD's.

[CHUMPS FROM OXFORD]

Sman...I sent you a PM with a few ideas. Nothing major. Site looks good.

[Melmunch3]

I am moving this thread to the annuities forum, I may also combine the few dateline threads, so that people only have to respond to one.

[bobson]

Originally Posted by midwestbroker

Not having sold an annuity prior but getting into that segment, I am looking at this:

CD vs. Fixed Annuity (3-5 year term)

Not rocket science. Neither product is that complex. You deposit money, you get X% back per year. With a CD you get a 1099 each year to pay taxes on the interest earned, with a annuity you do not, it defers to when you actually pull the money out or annuitize it. As long as the client can walk away from the annuity at the end of the term with out being forced to annutize with full value, they are very similar.

Easy to understand, good for the senior who wants to defer taxes, etc.

Now the greedy agent may try to do a 10+ year FIA with a 8-10% commission...but what they are not realizing is that at the end of the short annuity term, they can roll the money into another annuity and get paid again, and they are not putting their licenses on the line.

Or am I missing something?

Perfect. If that is all you did, you'd be doing good work.

I do think you are glossing over the power of an indexed annuity and just assuming they are bad. They aren't in any way shape or form. About 1/2 of my retirement money is indexed annuities. Am I hitting homeruns? Nope, but my mutual funds are gradually shrinking it seems while my annuities stay level or go up every year.

[URDRWHO]

Ok, you are today's bait.

When you make a statement be prepared to offer your solution. EIA's were around when CD's were paying a pittance. The FIA's had returns that were higher than those CD's.

Nov 2002
6-month CD yield: 1.35%, down from 1.50% last week
1-year CD yield: 1.54%, down from 1.68% last week
5-year CD yield: 3.30%, down from 3.39% las

CD's rates aren't that great in 2008.

I've posted this question on other forums and it seems that the down side risk throws people. What would you do with a senior that still wants to make more than a CD but have no market risk, by-passes probate, can grow tax deferred, and (depending on the State) is arms length from creditors and attorny's?

"The former Enron CEO whose wife said that they are guaranteed about $400,000 a year in income starting in 2007. Unlike the Lays' other assets, which are threatened by lawsuits, Texas state law puts annuities out of reach of creditors and plaintiffs' lawyers."

Would anyone like to bet that there are seniors with Income Mutual Funds that are not thrilled at the moment.

Maybe some GO bonds; Revenue bonds; Double Barrel bonds; some Bills?

>>>>>Note credit ratings are not foolproof. Enron had an investment-grade rating right up until it declared bankruptcy and WorldCom up to 3 months before filing for bankruptcy>>>>>>>

For the 15 years I had my Series 7 shingle out, the general securities people thought stocks were the only way. When I was an RIA my RIA brethren all thought the fee only was the best. So when people talk about the best option or something should never be used I always like to hear the views on the best option.

I've said this before, I am not against disclosure but people can and do make their own decisions based on personal decisions. Not every bit of life's risk can be disclosed. You go to your doctor for an ear ache and he prescribes an antibiotic. Does you doctor sit and tell you all that can go wrong with that antibiotic? Does your pharmacist explain that this antibiotic could kill you (I have experience on that one)? No they give you a paper with your drugs. Read it if you are concerned.

Originally Posted by moonlightandmargaritas

You won't hear it from the insurance companies naturally, but there are very few situations where a deferred annuity is an appropriate product for anyone, not just seniors. It's kinda like whole life...

Immediate annuities are an entirely different story.

[URDRWHO]

Ok....I do to the tune of around $80,000. One of them is with LBL and I've had it since the mid 1990's. Seven year surrender and then I have the choice to roll it, which I did.

Fifteen years Series7 and 2 years RIA I think just maybe I have a bit of an understanding about other investments. Ya think!

You say "Different kinds of CD's?" A CD is a time deposit debt insturment and I am not sure what you are trying to say.


Certificates of Deposit: Tips for Investors

From the SEC:

"Here’s how CDs work: When you purchase a CD, you invest a fixed sum of money for fixed period of time – six months, one year, five years, or more – and, in exchange, the issuing bank pays you interest, typically at regular intervals. When you cash in or redeem your CD, you receive the money you originally invested plus any accrued interest. But if you redeem your CD before it matures, you may have to pay an "early withdrawal" penalty or forfeit a portion of the interest you earned.

Research Any Penalties for Early Withdrawal – Deposit brokers often tout the fact that their CDs have no penalty for early withdrawal. While technically true, these claims can be misleading. Be sure to find out how much you'll have to pay if you cash in your CD before maturity and whether you risk losing any portion of your principal. If you are the sole owner of a brokered CD, you may be able to pay an early withdrawal penalty to the bank that issued the CD to get your money back. But if you share the CD with other customers, your broker will have to find a buyer for your portion. If interest rates have fallen since you purchased your CD and the bank hasn't called it, your broker may be able to sell your portion for a profit. But if interest rates have risen, there may be less demand for your lower-yielding CD. That means you would have to sell the CD at a discount and lose some of your original deposit –despite no "penalty" for early withdrawal."

Originally Posted by healthagent

I'm not saying everyone out to do harm. However, the road to hell is paved with good intentions.

It's not about knowing in the ins and outs of the annuities you're selling (which most agents don't) but it's knowing, in detail, how all of the other financial instruments work.

I'm also a fan of "doctor heal thyself" which means I'd expect any agent selling annuities to own one.