Aviva Annuities

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Oct 2, 2008 7:15 pm

Anyone have info on Aviva annuities, looking at 10 yr product with 10% bonus and 6% annual step up...any info would be helpful

Oct 3, 2008 11:29 am

Is this some kind of equity indexed annuity? 10% bonus seems a little extreme

Oct 4, 2008 6:22 am

Anyone have info on Aviva annuities, looking at 10 yr product with 10% bonus and 6% annual step up...any info would be helpful

 
1)TANSTAAFL
2)Before asking about any specific annuity product, you should take a look at the contract and understand the annuitization rates.  It is these rates combined with the 6% step up  (and the details behind the step up) that will determine the client's worst case scenario.  6% in and of itself is pretty meaningless.
 
As a general rule, as reps we are idiots when it comes to the selling of VAs.  This is true of anyone of us who has sold a VA and before selling it has only looked at marketing material and a prospectus.  A VA is a contract with guarantees.  These guarantees are only in the contract, yet most of us sell without ever seeing the contract!
Oct 4, 2008 2:12 pm

This is a fixed indexed annuity, first 3 years have a 12% surrender, I am selling against this product with a 3 year L share. I just don't understand the appeal of these products with the long lock periods.

 
Could someone make the case for an equity or fixed index annuity other than the payout? Someone please make the case for this product, since my B/D does not have selling agreements for indexed annuities.
 
My feeling is that these products are sold not bought and if the payouts were as meager as a CD, no one would know about them.
Oct 5, 2008 9:06 am

The annuity your referring to is what Allianz has coming out next Tuesday.  It is not clear if it is index or not.  The product is called the Master Dex X.  Obviously, when dealing with Allianz, their is always a catch. Meaning, I would hate for the client to walk-away from the product.


I spoke with one of the AVIVA RVP's 2 weeks ago and they too want to mirror the Allianz contract.  The new fixed annuities will be out in November and it too will look similiar to their current index annuity line up w/o the confinement waiver but with a fixed rate.
 
I think the agressiveness to the new fixed annuities with living benefits are the way the insurance giants are getting back at the SEC's 151 ruling which was proposed a few months ago.
Oct 6, 2008 7:16 am

Could someone make the case for an equity or fixed index annuity other than the payout?


 
They can make sense for a person who wants a fixed annuity, but is willing to take the risk that they may not do as well as other fixed annuities in exchange for the opportunity to possibly do better than other fixed annuities.
 
Oct 6, 2008 9:26 am

Unfortunantly, the opportunity is rare (index outperforming fixed) since the insurance company has the ability to change the caps and spreads on the contracts.  The question needs to be asked, why does an index have a caps and spread minimum?  Obviously, to control the rate of return on the policy.  We all have to remember the insurance company ONLY cares for one party...themselves.

 
You can easily find many fixed annuities with an over a 5% guaranteed rate of return.  It is just a matter if the agent wants to sell it for far less commission than an index. 
Oct 6, 2008 11:00 am

Unfortunantly, the opportunity is rare (index outperforming fixed)



 
Can you back that up?  I don't know that to be true.  I also don't know that to be untrue.  
 
The question needs to be asked, why does an index have a caps and spread minimum?  Obviously, to control the rate of return on the policy. 
 
They have to control the rate of return since the money is not in separate accounts.   Otherwise, they would be taking risk on the sale of these products.
 
 
 
I have to point out that I'm just answering the question.  I've never sold an FIA. 
 
Nov 29, 2008 2:46 pm

They also offer a 10% bonus w/ a 7.2% annual return for income seeking clients (50 bp annual fee).

Dec 1, 2008 8:32 pm

The underlying theme of the FIA is an insured premium allowing for interest crediting linked to the market indices. Insurance companies buy debt instruments i.e. govt. and corporate bonds first then cover all administrative expenses i.e. commissions,salaries,light gas you name it then they use the remaining spread on the bonds to buy call options. Call options will not generate the full gain of the market only to the stike price unless held longer which gets risky and then keepin mind there is a cost of the call option. This is why there are caps,participation rates and upper limits to interst earned on these contracts. The clients opportunity cost to get a better gain is by risking the guaranteed interest they could have received in the fixed account that most FIA's offer. Some Fixed Indexed Annuities do not offer a fixed interest account.

Dec 2, 2008 11:22 am

In regard to Aviva, there was just a settlement in MN on their bonus indexed annuities that allows 65+ clients to opt out surrender free.  I know this because I had a client get lured into a contract with a 15 yr, 19% surrender and was trying to research a way out of it.  Their stategies are ridiclous and even more so are their illustrations.  To be fair however, the contract in question was issued by a subsidiary company under Aviva so I can't 100% say that the current products are as terrible as the one referenced to.

Dec 2, 2008 3:57 pm

All I can say to this ^^^ is that there are and always will be unscrupulous advisers/insurance guys out there that are not looking out for the best interest of their clients...it happens...but, it is up to the rest of us to carry the torch of integrity.

Dec 11, 2008 2:10 pm
Joshua Cleary:

All I can say to this ^^^ is that there are and always will be unscrupulous advisers/insurance guys out there that are not looking out for the best interest of their clients...it happens...but, it is up to the rest of us to carry the torch of integrity.

 
True, I'll give you the benefit of the doubt. Name me just ONE example where this equity indexed Aviva annuity will be more beneficial for a client versus a fixed annuity?
Dec 15, 2008 11:38 pm

Hey Chris,


The Aviva FIA allows clients to participate in the market without a Cap while protecting principal.  The client can lock in their gains on a yearly basis and protect their earnings from years such as 2008.  Tell me, what other product would you put  some of your clients money in that are over the age of 65?

Dec 15, 2008 11:42 pm

Hey Axle,


I just read an article that said United States retirees have lost 2 trillion dollars in wealth in the past year due to being exposed to the stock market!  And you thought Aviva annuities were bad for you!

Dec 16, 2008 1:55 am
gspy:

Hey Axle,


I just read an article that said United States retirees have lost 2 trillion dollars in wealth in the past year due to being exposed to the stock market!  And you thought Aviva annuities were bad for you!

 
Some folks just look at the animal from the wrong end.
Dec 16, 2008 8:26 am
Dick Butkus:
gspy:

Hey Axle,


I just read an article that said United States retirees have lost 2 trillion dollars in wealth in the past year due to being exposed to the stock market!  And you thought Aviva annuities were bad for you!

 
Some folks just look at the animal from the wrong end.



How long have you been waiting for an opportunity to use that line?

Dec 16, 2008 3:36 pm
iceco1d:

How about that...Dick & GSPY registered on the same day, post back-to-back with each other, and share similar viewpoints.  Holy coincidence Batman.

 
I guess it means someone else agrees with my philosophy.
 
I don't know who GSPY is.  As far as the correlation between our posts, why would I post about something I have no interest in?
Dec 16, 2008 4:44 pm

gspy..is Aviva market value adjusted? i think it is...you should really look at American Equity's Bonus Gold the 10% Bonus is used in the calculation of the GCSV, Death Benefit, Income account value and most improtantly Cash Surrender Value. This product has very little moving parts and will not bite you like Allianz,Aviva,Midland National,North American need I go further and has the only 8% lifetime income account rider in the industry and also contains a nursing care and terminal illness rider with 100% refund....i love this product cause it sooo friendly. The client can be whole in this product after only 4.8years if surrendered early

Dec 16, 2008 4:45 pm

American Equity is the all time #2 writer of Fixed Index Annuities