Rebate Issue on an Annuity

How long have you had the annuity? What ins company and product is it?

Great advice above.... if you post the answer to these questions, someone can probably give you much more accurate advice to your specific questions... as it relates to your money back, etc. Most annuities have surrender charges, some are fairly steep. As mentioned, if in your free-look period... you are good as far as your premium.

You mentioned suitability being way off. Most companies do a pretty hefty suitability inquiry before issuing business these days. What did they say?

Bottom line, if you are not happy and have something you don't want and/or totally understand, you should remedy it. But at the same time, you have to take part ownership in the situation... your gut told you that you didn't want it and you kept it anyhow.
 
If the OP wants to "save" the family relationship, they need to go to the Agent and have them go back to the carrier and explain what happened. That is the best possible situation for the Agent. There is a chance the Carrier wont report the Agent to the DOI if the Agent is the one coming to them to have it made right. They will certainly drop the Agent's contract... but the Agent might be able to not have their license suspended.

However, if they did this to a family member, they are doing it to others. Maybe this is a small amount of money like $20k... but what if it was $500k? or $1mm?

Unsuitability on an Annuity is a VERY big deal and could potentially be very damaging to a persons wellbeing in retirement. If they dont know what they are doing, that Agent should not be selling Annuities. Term Life would be more "suitable" for the Agent.

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You mentioned suitability being way off. Most companies do a pretty hefty suitability inquiry before issuing business these days. What did they say?


Good point. But at the same time, if the Agent just filled that part out without asking the Client all the questions (or they stretched the truth on the responses) then the Suitability review is useless.

Honestly, how many of your clients have double checked what you entered in the suitability section? I can think of just a few... and usually its because they were just watching me do it.
 
How long have you had the annuity? What ins company and product is it?

Great advice above.... if you post the answer to these questions, someone can probably give you much more accurate advice to your specific questions... as it relates to your money back, etc. Most annuities have surrender charges, some are fairly steep. As mentioned, if in your free-look period... you are good as far as your premium.

You mentioned suitability being way off. Most companies do a pretty hefty suitability inquiry before issuing business these days. What did they say?

Bottom line, if you are not happy and have something you don't want and/or totally understand, you should remedy it. But at the same time, you have to take part ownership in the situation... your gut told you that you didn't want it and you kept it anyhow.

I answered these questions yesterday but apparently the post did not take.

In regards to the devil's advocate comment - that is exactly the reason I have not filed a complaint just yet. However, I firmly believe that a commission earned under dubious and misleading means is not a fair or honest commission.

Moreover, I find myself asking "If this individual has perpetuated this act upon me, who else has she done this to?"

In addition to protecting my interests, I want to at least have a clear conscience that others may not fall prey in the future.

I USED (note the past tense) to value this relationship, but when the trust is violated (especially among family), all is off the table - especially when the individual points the finger at you and blames you because you chose Annuity A over Annuity B. But that is simply a ploy by the dishonest as neither would generate the returns stated.

If you read my initial post, I do take ownership for playing a fool and putting my trust in someone. I know annuities do not fall under the fiduciary rules, but not once did she approach me about performance or reallocation. And add to the fact that the data is updated annually, you would expect an advisor to consult with the client more frequently. At times, I felt like I was doing her job for her by asking questions she should have. But this is not about a he said she said.

Bottom line is that the suitability form revealed a profile of "moderately aggressive" and she gave a rebate to get the business. In doing so, she locked up $500K for 7 years (5 more to go) from someone in their 30s and no longer maintains communication once I stated I would file a compliant. So, suitability, diversification, honesty - these basics must be taught to agents, no?

As far as I'm concerned, I don't care about her commission. She should consider herself lucky I only seek my initial investment and don't go after foregone losses in the stock market given her behavior.

But I do own up to signing the documents.
 
If the OP wants to "save" the family relationship, they need to go to the Agent and have them go back to the carrier and explain what happened. That is the best possible situation for the Agent. There is a chance the Carrier wont report the Agent to the DOI if the Agent is the one coming to them to have it made right. They will certainly drop the Agent's contract... but the Agent might be able to not have their license suspended.

However, if they did this to a family member, they are doing it to others. Maybe this is a small amount of money like $20k... but what if it was $500k? or $1mm?

Unsuitability on an Annuity is a VERY big deal and could potentially be very damaging to a persons wellbeing in retirement. If they dont know what they are doing, that Agent should not be selling Annuities. Term Life would be more "suitable" for the Agent.

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Good point. But at the same time, if the Agent just filled that part out without asking the Client all the questions (or they stretched the truth on the responses) then the Suitability review is useless.

Honestly, how many of your clients have double checked what you entered in the suitability section? I can think of just a few... and usually its because they were just watching me do it.

Thanks. I'm trying to answer questions but am told that my posts need to be reviewed by a moderator. Maybe I'll wait.
 
1. If reported to the DOI, her license would most likely be suspended for a period of time. If I had to guess, I would say anywhere from 3mo to 1yr.

If reported to the Insurer, she will most likely never be able to do business with that carrier again (or at least for a certain number of years). The Carrier might also report the Agent to the DOI depending on the circumstances.

If the Contract is Rescinded, the Agent will then owe her Commission back to the insurance carrier (comp is in the 4%-7% range on most products)


2. You would not be in trouble because you were not aware it was illegal. Technically they might could go after you, but they wont. Only if you knew it was illegal (or you initiated it) would they go after you.


3. Relationship does not matter. Only relationship that matters here is the Agent / Client relationship.


4. You have a chance of it. How long has it been since you took out the contract?

Most states give you a 30day "free look" where you are able to cancel the contract free of charge and receive 100% of your Premium back. Some states give you 60... but if I remember right, its 30 days in IL.

So if still within that time frame, you can still get your original Premium back with a single phone call to the insurance company.

If you are outside of that time frame, it is more complicated and not guaranteed to happen. However, you probably have a decent chance of it.... especially if she offered the Rebate within that 30day Free-Look Period.

I would probably start with the legal department of the insurance company. Write a Certified Letter explaining what happened and stating your wishes for them to Rescind the Contract. I would also (in a polite way) explain that if they dont, you will file a complaint with the state DOI. Start there and see what happens.

Or... depending on the family relationship and situation.... you could let the agent go to the carrier and tell them what happened and what you wish/plan to do.... it would be the best thing for the agent if that was able to happen. The carrier would probably be less likely to report them to the DOI if that happens.

Anyone have a phone number for the compliance department at Allianz?
 
People getting stuck in low yielding annuities and not being able to get out without a sizable penalty is problem in the industry. I have said for years annuities should pay a level commission and have no surrender charges. If the annuity has surrender charges the terms of the contract should be guaranteed and the insurer should not be able to lower the caps or rates until all surrender charges are gone.
 
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People getting stuck in low yielding annuities and not being able to get out without a sizable penalty is problem in the industry. I have said for years annuities should pay a level commission and have no surrender charges. If the annuity has surrender charges the terms of the contract should be guaranteed and the insurer should not be able to lower the caps or rates until all surrender charges are gone.

The contract has multiple guarantees.
 
Most of the annuities that I have seen can lower caps, participation rates and interest rates during the surrender charge period. What company do you have that guarantees all three during the surrender charge period? I would love to contract with them.
 
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