Fixed Annuities

or Register to post new content in the forum

64 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Sep 20, 2008 11:33 pm

In light of the recent AIG hubbub, our firm has reason to get back into the fixed annuity business (we have clients who want out of Aig Retirement, but want to stay with fixed annuities). 

Seeing as we have not done much independent business in the fixed annuity world, I hoped you all could provide some feedback as to which companies you've had good experiences with, and what products you're using.

Some features I'm looking for are:
1. Short cdsc: 3 to 5 years
2. 10% annual free out
3. RMD friendly
4. Fed/State tax with-holding friendly (some companies won't do state for some reason)
5. Electronic forms!

I've been using ING, Hartford, and New York Life this last week, but none of them have all the features I'm looking for.  Thanks!

Sep 21, 2008 12:27 am

Take a look at JNL.

Sep 21, 2008 1:51 pm

Take a look at Mass Mutual.

Sep 21, 2008 7:43 pm
gvf:

In light of the recent AIG hubbub, our firm has reason to get back into the fixed annuity business (we have clients who want out of Aig Retirement, but want to stay with fixed annuities). 

Seeing as we have not done much independent business in the fixed annuity world, I hoped you all could provide some feedback as to which companies you've had good experiences with, and what products you're using.

Some features I'm looking for are:
1. Short cdsc: 3 to 5 years
2. 10% annual free out
3. RMD friendly
4. Fed/State tax with-holding friendly (some companies won't do state for some reason)
5. Electronic forms!

I've been using ING, Hartford, and New York Life this last week, but none of them have all the features I'm looking for.  Thanks!

 
How are NYL's rates these days?
Sep 21, 2008 8:40 pm

NYL's 5 year is currently at 4.6.  Not the greatest around, but they are the highest rated by Moody's and Fitch that I've seen, which is something a few of my clients care more about recently.  

Sep 22, 2008 1:21 pm

Mass Mutual's fixed looks pretty bad.  Their 5 year has an "enhanced" rate of 4.75.  When I asked what "enhanced" meant, they said it's only for year 1.  Year 2 drops to 3.75, and after that it's the pool rate, not to drop below 2%.

Oct 16, 2008 10:31 pm

Just if anyone's interested, Metlife released their Fixed annuity numbers the other day



5 year: 5.80%

3 year: 4.60%



I wouldn't believe it till I called and confirmed today.

Oct 19, 2008 8:06 pm

Here's a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.

Oct 19, 2008 8:16 pm
Gordon Gekko:

Here's a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.

 
It depends.  The fixed annuity is tax-deferred.  Other than that, I would ask the same question.
 
Something else to consider:  I believe fixed annuities are held in the insurance company's general account, which is accessible to creditors. 
Oct 21, 2008 11:40 am
snaggletooth:
Gordon Gekko:

Here's a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.

 
It depends.  The fixed annuity is tax-deferred.  Other than that, I would ask the same question.
 
Something else to consider:  I believe fixed annuities are held in the insurance company's general account, which is accessible to creditors. 
 
I too, have thought about this myself. After doing the math, years of tax deferrals with a high income tax bracket would make the client a lot more money. However, you are correct snaggle, the fixed annuity is held in the general account. I think most insurance companies pay 2-3% commission on their fixed annuities, which isn't much considering you put them into a 5 year FA...
Oct 28, 2008 12:05 pm

With respect to MassMutual, their "enhanced rate" is 6.25% first year, 4.75% second year (base), from thereafter it ranges from 3.5-4.5% depending on when it was purchased.

Oct 28, 2008 12:11 pm
snaggletooth:
Gordon Gekko:

Here's a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.

 
It depends.  The fixed annuity is tax-deferred.  Other than that, I would ask the same question.
 
Something else to consider:  I believe fixed annuities are held in the insurance company's general account, which is accessible to creditors. 
 
All the more reason to choose a mutual company with good ratings.  A fixed annuity has some advantages that a CD would not (assuming it is taxable money):
 

Tax-deferral
Creditor-protected for the client
Avoids probate at death
Oct 28, 2008 9:36 pm

It's not that hard to set up a TOD account at the bank.  And you get step-up.  

Nov 21, 2008 5:59 pm
Gordon Gekko:

Here's a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.

 
 
principal guarantee...even if you surrender early. unlike a cd if you surrender early that may cause a reduction in principal.
Dec 21, 2008 1:04 pm

You can add on to a FA which is not always the case (if ever) with a CD. Granted you add on at whatever the current rate is, its still an added advantage.

 
Include that with the tax deffered growth, ability to add bene's, and withdraw up to 15% each year w/o penalty - well its a no brainer.
Jan 2, 2009 5:50 pm
gvf:

Just if anyone's interested, Metlife released their Fixed annuity numbers the other day



5 year: 5.80%

3 year: 4.60%



I wouldn't believe it till I called and confirmed today.





That was a nice rate, locked in a couple of those.



Anyone willing to take a change with AIG fixed(actually American General) but same idea.



5 year 5.00% fixed

Jan 21, 2009 9:11 pm
Gordon Gekko:

Here's a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.

 
Wow, has this dynamic changed since GG wrote this back in mid-October...I compared a 5-yr CD at 3.5% to a 6-yr JNL fixed that starts at 4.85% and has a 3% floor and it's a no-brainer when tax-deferral is considered.  Better yet, the lady I set this up for today made a charity the primary beneficiary, so any interest she doesn't take is tax-free to the charity at death.
 
For the first time in awhile, traditional fixed annuities look very attractive when compared to just about any other fixed income option available.  Sure, you can get more coupon, but you're probably taking a fair amount more risk to get there.  I was doing a fair number of munis but within the last two weeks, those rates have come down quite a bit, especially on the short end (less than 7 years).
 
My question for the rest of you is, aside from JNL which I know well, what are the best rates you are seeing out there that (1) are not with troubled insurers, (2) pay me reasonably and (3) are 7 years or less to surrender?
Jan 21, 2009 9:22 pm
Indyone:
Gordon Gekko:

Here's a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.

 
Wow, has this dynamic changed since GG wrote this back in mid-October...I compared a 5-yr CD at 3.5% to a 6-yr JNL fixed that starts at 4.85% and has a 3% floor and it's a no-brainer when tax-deferral is considered.  Better yet, the lady I set this up for today made a charity the primary beneficiary, so any interest she doesn't take is tax-free to the charity at death.
 
For the first time in awhile, traditional fixed annuities look very attractive when compared to just about any other fixed income option available.  Sure, you can get more coupon, but you're probably taking a fair amount more risk to get there.  I was doing a fair number of munis but within the last two weeks, those rates have come down quite a bit, especially on the short end (less than 7 years).
 
My question for the rest of you is, aside from JNL which I know well, what are the best rates you are seeing out there that (1) are not with troubled insurers, (2) pay me reasonably and (3) are 7 years or less to surrender?
Look at the picks of the week from research. We like the fact that the rates are fixed, no surprises to client.
Jan 22, 2009 12:03 am

MET , American General(yeah I know), and Allianz(Dominator)

Jan 22, 2009 12:10 am

Thanks, Nog for making me feel stupid...


...and I see Allianz Dominator is on the list...good stuff...