Insurance Agent Forum

[Winter]

I notced that American Equity has come out with a fixed 5 yr annuity with a 4.9% return guaranteed. This is a traditional old-time type of annuity, not an EIA with 10% penalty free withdrawal and all of that. Free withdrawal is limited to interest only for that year. I think you are locked in on the principle but I dont know, maybe there are surrender charges.

Anyway. Is anyone having experience, success or whatever in working with this type of short, ultra-simple, no frills type of product. Obviously it appeals to the folks who want to stay a point or two ahead of CD's down at their local bank or who want to roll out of something more volatile but not all the way back to a CD or savings account.

Experiences or thoughts here anyone?

Winter

[joshril]

OM has a nice 4 year annuity earning over 5% and I believe their 3 year product is right at 5%... These products are great to advertise in the paper, but it definitely takes a lot of sales to make a living selling these things. Most of the commission rates are 2-3%. I think they're fantastic to generate leads to cross-sell to.

[BrokersAllianceAnnuities]

[COLOR=black]Mr. Winter,[/COLOR]

[COLOR=black]Sorry for the delay in response, but first time to visit the boards in several days. [/COLOR]

[COLOR=red][COLOR=black]There are a variety of fixed annuities out there today that offer a range of guaranteed yields from 3 - 6% over 3 to 10 year periods of time. Some of these provide liquidity features such as 10% free withdrawals and systematic interest withdrawals, and some provide these options in the form of a rider which typically carries a cost that will reduce the overall yield. One very important thing to keep an eye on is the Surrender schedule. Many carriers have what they call a MYGA (multi-year guarantee annuity) that will guarantee a rate for a number of years. An example of this would be a 5 year rate guarantee of 5%, but a 10 year Surrender schedule. The rates will renew for years 6 through 10. Again, some carriers provide additional options with a MYGA to allow the client a 30-day window after the rate guarantee period to exit without a surrender penalty and some do not.[/COLOR][/COLOR]

[COLOR=red][COLOR=black]The most important thing to know is that these products DO vary in many ways depending on the insurance carrier. It is crucial to read the product spec sheets to know for sure. Many also have “MVA” which can reduce the surrender values for your clients in some cases.[/COLOR][/COLOR]

[COLOR=red][COLOR=black]These products are extremely popular. They are used in a number of ways to provide a client the opportunity to take income without reducing principle or simply just provide solid guarantees. They are also used in “Split Annuity” concepts where we put some of the client’s money into a SPIA product for immediate income and put the rest in a fixed annuity to rebuild what we used in the SPIA. This laddering of annuities can help create future tiers of income and preserve the Principal as much as possible to create some longevity. [/COLOR][/COLOR]

[COLOR=red][COLOR=black]Great subject. I hope this helps you or anyone with some ideas and strategies.[/COLOR][/COLOR]