Fixed Annuities - Info + Questions

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Feb 13, 2010 5:42 pm

Guys,

I remember there was a discussion on here a few weeks ago about fixed annuity rates.  If this helps anyone, I'm using two different ones right now...

VALIC ProFlex

-First year rate = 4.75%, minimum gtd rate for years 2 - 5 is 2.0%.
-5 year CDSC, 5% each year. 
-Pay Options:
     A = 5% up front
     B = 3.75% up front + 30 bps trail
     C = 2.25% up front + 75 bps trail

The payouts change if older than ~56 y/o (the trails are the same, only the up front is reduced a bit).

Penn Mutual 5 Year CD-type

-3.75% for 5 years
-Pay Options:
     A = 5% up front
     B = 3% up front + 50 bps trail

If anyone else has any that would be worth listing, go for it.

I've considering doing a cold calling campaign on these products, anyone have any success doing this?  If so, what's your script look like, if you don't mind sharing?

FWIW - I'm having great success grabbing CD $$$ from existing clients and warm prospects using these products.

Feb 13, 2010 5:54 pm

That Penn Mutual looks like a REALLY nice contract.  What are the liquidity features?

Don't do the VALIC and the teaser rates.  People will forget about the bonus they got in year 1 and call you year 2 pissed which will destroy any chance of additional business with them.

Feb 13, 2010 7:46 pm
Don't be seduced by a high first year rate.  What is their history on rates for 2 years and beyond?  You don't want your client to be in a situation where they have an annuity paying 2% while they could be getting 4% in a 6 month CD.
 
Characteristics of an excellent fixed annuity.
1) Non-rolling surrender charges
2) Bonus rate on all new money
3) Competitive rates after the 1st year
 
I've come to the conclusion that virtually every one of our clients age 50 and older should have money in a non-qualified fixed annuity with the above 3 features.
Feb 13, 2010 8:19 pm

Ice, you do NOT want the type of people that buy fixed annuities finding out they just lent their money to AIG

The Penn Mutual product looks like a winner, I'd stick with that and you should do well!

Feb 13, 2010 8:20 pm
anonymous:
Don't be seduced by a high first year rate.  What is their history on rates for 2 years and beyond?  You don't want your client to be in a situation where they have an annuity paying 2% while they could be getting 4% in a 6 month CD.
 
Characteristics of an excellent fixed annuity.
1) Non-rolling surrender charges
2) Bonus rate on all new money
3) Competitive rates after the 1st year
 
I've come to the conclusion that virtually every one of our clients age 50 and older should have money in a non-qualified fixed annuity with the above 3 features.



I concur.  It gives them a tremendous amount of flexibility.

Feb 14, 2010 10:43 am

Ice, those rates absolutely kill what we have available to us at the bank, not including the haircut on the payout we get drilled with.

 



3 yr rate for term is 1.5% - transamerica
5 yr rate for term is 2.3% - symetra
7 yr flex is 3.4% yrs 1-3, 4-7 min gtd rate is 2% - nylife
 
I think you could definitely execute a successful campaign with those type of fixed rates. People are dying for things like that. I see money exit the bank daily because they don't want rates under 2% on anything.
Feb 14, 2010 7:01 pm

Jones best rate is 5yr 2.6% (over 100k) .. pays the advisor 2%

Feb 14, 2010 9:41 pm
BioFreeze:
Ron 14:

Ice, those rates absolutely kill what we have available to us at the bank, not including the haircut on the payout we get drilled with.

 



3 yr rate for term is 1.5% - transamerica
5 yr rate for term is 2.3% - symetra
7 yr flex is 3.4% yrs 1-3, 4-7 min gtd rate is 2% - nylife
 
I think you could definitely execute a successful campaign with those type of fixed rates. People are dying for things like that. I see money exit the bank daily because they don't want rates under 2% on anything.



Are your CD rates higher than your fixed annuity rates?



Typically, they are not.
During the beginning of the crisis in fall '08, the FA rates were much higher.  Since then they have continued to fall, even lately with CD's having bottomed out. 

Right now I don't recommend anyone our FAs b/c CDs offer more, and I know rates will be going higher before they come out of surrender.


Feb 14, 2010 9:44 pm

Also, abt the original post:

I agree that the Penn FA, that sounds like a great product & solution right now.

If I had that to offer I definitely would be selling a ton of those...I would win all the CD business and be able to woo some of the cash-sitters off the fence. 


Feb 15, 2010 10:07 am
BioFreeze:
Ron 14:

Ice, those rates absolutely kill what we have available to us at the bank, not including the haircut on the payout we get drilled with.

 



3 yr rate for term is 1.5% - transamerica
5 yr rate for term is 2.3% - symetra
7 yr flex is 3.4% yrs 1-3, 4-7 min gtd rate is 2% - nylife
 
I think you could definitely execute a successful campaign with those type of fixed rates. People are dying for things like that. I see money exit the bank daily because they don't want rates under 2% on anything.



Are your CD rates higher than your fixed annuity rates?

 
Yes