Qualified Money Into An Annuity

[Newby]

Clark Howard is the poor man's Dave Ramsey. Anyone who could ever consider him a credible source of information is very gullible.
Especially when Brian (the money guy) Preston broadcasts from the same town (Atlanta)

 

[Cscott1234]

I would have to say that age 40 is a little young to be socking away in an index annuity unless this person has a low stock market risk tolerance and conservative.

That being said here is something to think about, I will speak as if you were gong to use an index annuity. I am not saying it is appropriate but if it was here is what to consider.

I don't want to discuss VA because I simply don't have that license anymore. The same cocepts below can be applied.

What ever annuity you buy today your not going to own in 20 years.

Also you want to structure the money so that is it 100% liquid at the time he wants to annutize. This will allow you to shop annuitization rates with whoever is the best instead of being forced to use the current company where the money is held.

Look for an annuity that will give a bonus on the first year premium and find out what the bonus will be on additional subsequent premium. Not all will give a bonus or a full bonus on subsequent years. Some will only allow added money for 5 years.

Don't go out more than 10 years on the surrender schedule. Annuities are going to change and the features and benefits avialabe in 10 years could be much better than what we have today. So you are protecting him against innovation risk by using a 10 year product or less.

What I would do is offer a 5, 7 and 10 year with a bonus option. 5 years won't have the bonus but he may like it better for the flexibility to buy a new product in 5 years.

Buy a new annuity at the end of year 10 and capture all the new features and benefits of the new product that might be available. Also his mind may change. Alot can happen in 10years.

He is just barely old enough to have income rider added. Many companies won't let you buy one until you are 40 and then some of them will have a lower roll up unless you are 50 or more.

I would probably ask more questons about how much other money they are socking away and what the purpose of this moeny is to decide if an income rider is appropriate. Still probably too you to consider an income rider in my book unless he absolutely, positively is not going to move or touch this money until he is age 60.

Also would want to make sure this is a small percentage, less than 20, of his overall liquid net worth if going with income rider. No need to pay for something fi they might change their mind and cash it out.

 

[sman]

Re: Annuities Forum

Remember, Clark is the guy who paints with a broad brush. He's also the guy who suggests everyone invest in the market (I'm a fan of the market myself). He also states that the ONLY annuity anyone should invest in is an immediate annuity. In today's low interest rate environment, an immediate annuity may be the worst decision someone could make.

And lastly, I think the mistake almost EVERY insurance agent AND investment advisor makes is COMPARING an index annuity to the market. An index annuity isn't meant to compete with the market. It's a "safe" money alternative. I personally believe index annuities have a place in SOME portfolios. NEVER an entire nest egg. They can be used as a risk management tool.

I've had debates on this forum about why I like the market and why an index annuity is or isn't appropriate in certain situations. But to come on here and copy and paste what a retired travel agent has to say about a product which he likely doesn't know the specific details. Do yourself a favor and get educated on any product for which you intend to give advice. I don't mean that in a derogatory way. I've learned to never say never about products. I may say I will never sell it because I don't believe in it and personally wouldn't purchase it (whatever the product), but I believe there is likely a place for it. Take for example, cancer plans. I'm no fan of these type plans, especially when a person has adequate health insurance, but realize they have a place.

Index annuities are poison for your pocketbook
<*Prev*Next*>
RIP-OFF ALERT:*For years, I have warned people about something known as index annuities. They're one of the hottest products in the investment and insurance landscape, but they're poison for your pocketbook.
Index annuities really took off after the stock market got decimated a few years ago and marketers saw the opportunity to take advantage of people who were worried about outliving their money.
Of all the things you could for your wallet, buying an index annuity at any age is just about the*worst*thought possible.
Money*magazine recently ran a long-form feature about all the problems that have befallen those people who are sold these things. The story also dug into why index annuities are pushed so hard to the great detriment of buyers. The simple reason is a massive commission goes to the insurance salesperson who sells it!
Index annuities are sold with the promise that you can earn a return based on the stock market in good years, along with the guarantee that you'll*lose no money in bad years. That's very attractive to someone who is 65 and worried about having enough money for the rest of their life. It's a lure that makes people think, "Hey, I can play the market with no risk on the downside? What could be wrong with that?!" Actually, so much is wrong here, though chiefly 2 things come to mind:
These plans come with massive fees. There's what's called a "surrender charge" that can hang with you for 15 years. If you buy in and then need to get out before 15 years, that surrender charge can be tens of thousands of dollars or more.
In most of the convoluted contracts for index annuities, the insurance company can decide to change how much these policies earn each year. So they can offer you upfront a great deal and pull a sucker move on you by changing the payout. Then you're stuck unless you want to pay that huge surrender charge.
The number of complaints filed with state insurance regulators about people who sell index annuities around the country is huge. But state regulators often cannot or will not do anything to help those who were sold on false promises.
Here's a final word of warning: The pitch for index annuities often starts with an invite to a free lunch or dinner seminar to learn more. Believe you me, that is the most expensive meal you will ever eat. If you are past 60, index annuities are a danger to your financial health, your financial security and your long term ability to live independently. Kick that insurance person who tries to sell you that junk straight to the curb! *

From clarkhoward.com

 

[0b1kanobee]

I know at least 5 guys that write on average 10 million a year in annuities and I'm being conservative I think. They can tell you about them in ways you never really understood and things about the carriers that they seem to know about and nobody else does. When they pick up the phone they can actually talk to the president of some carriers. In fact, they call them. All of them have securities licenses. They know all about taxes, RMDs, anything that has to do with retirement. If they don't know, they call either 2 financial planners on the payroll or in-house accountant compliance guy.

None of them could even begin to tell you what a cancer policy is. They couldn't even tell you how their health insurance works or their dental plan. They don't even pick out their own clothes. That's how small their brush stroke is.

 

[sman]

They have a system that works. I bet they spend some serious jack on marketing. I only know one guy personally in the business that makes 7 figures. He has a ton of assets under management and he's specialized like the guys you describe. He has clients/prospects set up to come see him throughout the day. He has no time for anything during the week.

While I'd love to make 7 figures, I kind of like playing golf at least once a week DURING THE WEEK when it's not busy on the course.

I know at least 5 guys that write on average 10 million a year in annuities and I'm being conservative I think. They can tell you about them in ways you never really understood and things about the carriers that they seem to know about and nobody else does. When they pick up the phone they can actually talk to the president of some carriers. In fact, they call them. All of them have securities licenses. They know all about taxes, RMDs, anything that has to do with retirement. If they don't know, they call either 2 financial planners on the payroll or in-house accountant compliance guy.

None of them could even begin to tell you what a cancer policy is. They couldn't even tell you how their health insurance works or their dental plan. They don't even pick out their own clothes. That's how small their brush stroke is.

 

[0b1kanobee]

I have been around here long enough and I don't talk any BS (well maybe a little sometimes lol). In all seriousness though, they don't spend anything on marketing. Now, the agents under them do but not a whole lot. I'm under them for some stuff.

I can't imagine how much business they would do with a 'real' website. The one they have is a joke. You can't even find it if you type the darn name in. They sent out some mailers recently, for what I don't know. They were going to give the biz from the mailers to some of the loyal guys that have been there a while from what I gather.

Yeah, these guys make commissions in the stratosphere (the level they are on).

I know of one case a few months back that I heard about where 1.6 mill was put into three products. Two annuities and one life policy. The commission was somewhere around 150k. Can You imagine making 150k in one day lol.

No doubt though, some of the hardest working guys I have ever seen. When they play though, they play in style. Actually, they are pretty normal with the exception of being rich.

We call them 'the rainmakers'.

 

[Guest]

Excellent input guys. I have considered offering annuities to help people safeguard their money and have contracted with several carriers. It just seems so overwhelming with the different surrender periods and interest crediting methods. How would I know which ones would be the best for my customers? Ing vs. Genworth vs. Americo vs. American Equity? Oh my!

 

[Fisher]

Excellent input guys. I have considered offering annuities to help people safeguard their money and have contracted with several carriers. It just seems so overwhelming with the different surrender periods and interest crediting methods. How would I know which ones would be the best for my customers? Ing vs. Genworth vs. Americo vs. American Equity? Oh my!

I only hope you don't hurt anyone besides your own folks, dude. And even them I fear for.

 

[0b1kanobee]

Excellent input guys. I have considered offering annuities to help people safeguard their money and have contracted with several carriers. It just seems so overwhelming with the different surrender periods and interest crediting methods. How would I know which ones would be the best for my customers? Ing vs. Genworth vs. Americo vs. American Equity? Oh my!

First off, don't get involved with so many companies. ING is a good one to start off with. They have good name brand recognition and good products. Frankly, I'm surprised they aren't mentioned more around here on the forum.

Second, you need a good FMO or whatever they are called. I don't know who you are using but I know a group out in Phoenix that is very helpful. Commissions are on par with others and they will help you with any case you have. You want charts and graphs with a product summary? You want something geared right to your client? You want it all in writing and within a few hours? They can do it and they will. They do it for me when I ask.

Lets see what else..........Have you read any books on annuities? Have you gone on any sites which teach annuities? Is there anyone you know in the area who can help you? (that is usually a hard one, personal training).

If I didn't know crap about annuities, I would get me a darn good FMO who will do it all for you. You do the fact finding. Give them all the info. They put it all together and tell you all the bullet points to hit and how to sell it.

Whatever you do, don't get all wrapped up in these different products. Too confusing even for the veterans and they are always changing.

 

[TheInsuranceChic]

I learned about annuities when I went to a CE seminar luncheon. I was doing only health insurance then, sprinkled with a life case here and then. I was very impressed and eager to get going. It seemed the only answer I was given was to do seminars. That wasn't in the budget. I ended up having another agent that did do them go with me when I had a client requesting one. We split 2 cases. The comp. even at 50% for an hour appointment was very appealing. The agent made the mistake of telling me one simple thing and I never needed help again. An annuity is nothing more then a glorified savings account with rules attached. Once I got my head around that I was fine.
I have been sticking to fixed for the last 5 or so years.
I agree, check out ING.