Stumped
Hey guys,
Here's a case for you: Client: Married 59 yo female with history of skin cancer (uninsurable) Investment: Variable annuity with cost basis of $130K, death bene of $147K and market value of $130K. VA is out of surrender. Client does not care for this annuity because there are no living benefits and sub-account performance has sucked. Looked at whole-life and term - no go. This client is more concerned with a large death benefit, but feels trapped by this annuity. ie. she has to wait for the market to advance to get her DB higher. Any ideas?She’s not uninsurable, though the she will be graded. If this money is to be left behind, why would she be unhappy about the current contract not having living benefits? If the money is DEFINITELY earmarked for the kids and she doesn’t want the LI, put her in the Allianz Master Dex 10. If it were me, I’d shop around for a single premium whole life policy and give her some options.
Another important thing to investigate before you surrender the existing annuity: find out the details on how partial withdrawals affect the death benefit, and what the minimum balance is that is required to maintain the annuity and, in so doing, the ‘excess’ DB. In certain situations you can do a partial 1035 out into a new product with better living benefits while leaving a minimal amount there (maybe $1K?) in order to maintain the effective $17K DB (difference between the current DB and the market value).
I know $17K DB isn’t a lot, but every little bit helps especially when the client is uninsurable or rated such that the cost of insurance becomes much higher. The client will appreciate the unexpected benefit, and you can still use most of the money to 1035 elsewhere, which you will like.
The requirements on this vary from carrier to carrier, so you need to make some calls to find out what this carrier allows.
Had it shopped to several big carriers for term and WL and she is not insurable period. Cancer advanced to lymph nodes. No carrier will touch her. The money is not going to the kids, but to her husband (he loses her pension when she dies). Living benefits aren't the whole equation but they don't feel they're getting anything out of this annuity. I'll check out Allianz. thanks.She’s not uninsurable, though the she will be graded. If this money is to be left behind, why would she be unhappy about the current contract not having living benefits? If the money is DEFINITELY earmarked for the kids and she doesn’t want the LI, put her in the Allianz Master Dex 10. If it were me, I’d shop around for a single premium whole life policy and give her some options.
Already did that. The contract is dollar for dollar, not pro-rata.In certain situations you can do a partial 1035 out into a new product with better living benefits while leaving a minimal amount there (maybe $1K?) in order to maintain the effective $17K DB (difference between the current DB and the market value).
I don’t get it, does she want the death benefit for the husband or income to replace her pension for the husband?
Trying to mix the two can be like mixing oil with water.She’s down 11 percent from her DB, which I assume is either the high value mark or what she put in. That’s pretty good in this market. … Guessing here, but if it’s out of surrender and she’s held it for a while, being down after 10 years is a drag, but that’s the reality right now.
... I've never run into anybody who a) likes their annuity, or b) can remember who sold it to them, or c) exactly why they bought it.[quote=snaggletooth]I don’t get it, does she want the death benefit for the husband or income to replace her pension for the husband?
[/quote] Husband would prefer a larger DB. But they're ticked because the contract doesn't even have any living benefits that can be attached. If they annuitized it, or we 1035 for a living benefit, it wouln't even come close to replacing the pension, so DB is primary concern.[quote=buyandhold]She’s down 11 percent from her DB, which I assume is either the high value mark or what she put in.
[/quote] Here's the history of the annuity. Bought 6 years ago. Out of surrender. Put in $130. Grew to $147. Market started to tank and I had them move to cash back in April. Now sitting at $130 in a fixed bucket.Before you take advice, read this report: http://www.guardingyourwealth.com/SpecialReports/Allianz.htm I don't even know who you work for, but I doubt your broker/dealer will let you sell this crap.She’s not uninsurable, though the she will be graded. If this money is to be left behind, why would she be unhappy about the current contract not having living benefits? If the money is DEFINITELY earmarked for the kids and she doesn’t want the LI, put her in the Allianz Master Dex 10. If it were me, I’d shop around for a single premium whole life policy and give her some options.
[quote=etj4588][quote=snaggletooth]I don’t get it, does she want the death benefit for the husband or income to replace her pension for the husband?
[/quote] Husband would prefer a larger DB. But they're ticked because the contract doesn't even have any living benefits that can be attached. If they annuitized it, or we 1035 for a living benefit, it wouln't even come close to replacing the pension, so DB is primary concern.[/quote] A few companies allow you to add/cancel any bene's anytime. If you haven't checked with the company, you might do that.[quote=snaggletooth][quote=etj4588][quote=snaggletooth]I don’t get it, does she want the death benefit for the husband or income to replace her pension for the husband?
[/quote] Husband would prefer a larger DB. But they're ticked because the contract doesn't even have any living benefits that can be attached. If they annuitized it, or we 1035 for a living benefit, it wouln't even come close to replacing the pension, so DB is primary concern.[/quote] A few companies allow you to add/cancel any bene's anytime. If you haven't checked with the company, you might do that. [/quote] They cannot be added - already checked.Hartford has some riders that may let you protect the income and increase the death bene, whichever is more important to the clients.
They have a couple of versions of an income rider that guarantee a rising income stream. Basic concept is that your 59 year old client puts money in and holds it for 5 years and from that point on every time she hits an age band they guarantee a .5% raise. So, worst case scenario at 64 she takes a check for approx $6500/yr, then it steps up to $7150/yr at 65, then increases every 5 years after that. That's worst case scenario. On the DB side, you can add MAV Plus which gives her an additional 40% bump on the gains she makes in the annuity, up to I think 200% of the premium payments. I've not used it, so my understanding of it isn't the best. It's kind of overkill to use both, but you can if you want. I'd probably find out which is more important overall and go with that rider. You can also find out from the insurance carriers how long she'd need to be in remission before you should apply for coverage. I understand the lymph node issue may kick her out forever, but some insurance companies have a statute of limitations, so to speak, on cancer. So, she may be uninsurable right now, but 5-7 years down the road if she's still in remission and her doctors have given her a clean bill of health she may be eligible. Just a thought.Before you take ol' Hank's advice, read this report: http://www.guardingyourwealth.com/SpecialReports/Allianz.htm I don't even know who you work for, but I doubt your broker/dealer will let you sell this crap. [/quote][quote=Hank Moody]She’s not uninsurable, though the she will be graded. If this money is to be left behind, why would she be unhappy about the current contract not having living benefits? If the money is DEFINITELY earmarked for the kids and she doesn’t want the LI, put her in the Allianz Master Dex 10. If it were me, I’d shop around for a single premium whole life policy and give her some options.
I know the author. He's a very nice guy. He used to be a registered rep and it didn't work out too well for him. We've spoken on the phone several times and I gave him some tips on how to do business.
He is now a CFP and he has a financial interest in hating indexed annuities. CFP's are like democrats. They don't have useful ideas to offer, so, instead, they blast the competition to try to get clients.
I have never sold a Master Dex 10. The only time it would be right, in my mind, is when all of the money will be left behind. Before I would do that I would exhaust all other options, first. In my opinion, it is a last resort product, not a go-to product.
sorry Hank, Borker is right, that Allianz crap is great for the broker selling it and not for the client.
Hey, where’s Rick Ross when we need him? He’ll know what to do with an annuity.
Why not do a 1035 exchange to an A-share Lincoln American Legacy variable annuity? Low cost, low expenses, solid historical sub-account performance.
With Lincoln you can slap on guarantee riders later on after the policy has a chance to grow some in value (assuming the market starts climbing upward in the next few years. You can start with minimal riders initially to keep the expenses low.
If you want guaranteed step-ups you could look at Hancock’s Variable Annuities. They’re one of the last (only?) AAA-rated insurance companies I believe.
CR.
colorado, take a look at lincoln’s choice plus… another good one, and the JH Venture variable annuities are good products too…
“If you want guaranteed step-ups you could look at Hancock’s Variable Annuities. They’re one of the last (only?) AAA-rated insurance companies I believe.”
Who told you this...a Hancock wholesaler? This person with the cancer is insurable.[quote=anonymous]“If you want guaranteed step-ups you could look at Hancock’s Variable Annuities. They’re one of the last (only?) AAA-rated insurance companies I believe.”
Who told you this...a Hancock wholesaler? [/quote]Why yes, as a matter of fact! How'd you guess? Plus I checked on JH via S&P's website:
[quote]
John Hancock Life Insurance Co.
Description Rating Rating Date CreditWatch Date <tr> <td><a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.ratingssearch/ratings_search/2,1,1,5,0,0,0,0,0,0,0,0,0,0,0,0.html?cspage=rd&entId=103396&debtType=ICR_LC&SearchType=O" target="_blank">Credit Rating(Local Currency)</a></td> <td>AAA/Stable/<br>A-1+</td> <td>Nov 07, 2006</td> <td><br></td> </tr> <tr> <td><a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.ratingssearch/ratings_search/2,1,1,5,0,0,0,0,0,0,0,0,0,0,0,0.html?cspage=rd&entId=103396&debtType=FSR&SearchType=O" target="_blank">Financial Strength Rating</a></td> <td>AAA/Stable/--</td> <td>Nov 07, 2006</td></tr></t></table>[/quote]<br><br><br>Edit: I just found this site that lists AAA-rated insurers: http://www.insure.com/articles/interactivetools/sandp/new_s&p.jsp<br><br><i>I wonder if Cornhusker Casualty Co. has any VA's in their lineup? </i><br>
ColoradoRep, why would we care about their rating from over 2 years ago? Look at the date.
I wasn't questioning Hancock's rates, just the claim that they are the last of the AAA insurers. They still are AAA from S&P.
1)Old information is useless.
2)Don't blindly trust wholesalers.
3)You have a responsibility to work with correct information.
If the client follows this advice, aren't they screwed if the market goes down the next few years?
You mentioned both this and Hancock. Does your information for these products come from wholesalers/marketing material or does it come from the actual prospectus and the contractually guaranteed annuitization rates? If it doesn't come from the latter, do not pass go. Do not collect $200.
For what it is worth…There is no need to worry about a 1035 exchange. Per the original post there is no gain so there is no tax. Doesn’t tell you what to do but it does tell you one less thing to have to “worry” about.
[quote=anonymous]
ColoradoRep, why would we care about their rating from over 2 years ago? Look at the date.
I wasn't questioning Hancock's rates, just the claim that they are the last of the AAA insurers. They still are AAA from S&P.
1)Old information is useless.
2)Don't blindly trust wholesalers.
3)You have a responsibility to work with correct information.
If the client follows this advice, aren't they screwed if the market goes down the next few years?
You mentioned both this and Hancock. Does your information for these products come from wholesalers/marketing material or does it come from the actual prospectus and the contractually guaranteed annuitization rates? If it doesn't come from the latter, do not pass go. Do not collect $200.
[/quote]
1) You're right of course about the ratings dates I quoted.
2) Agreed.
3) Agreed.
And, yes, the client would be "screwed" if the markets go down the next few years, rather than go up. And that should be made clear to the client before the contract is purchased, and considered in the investment choice agreed upon.
Before you take ol' Hank's advice, read this report: http://www.guardingyourwealth.com/SpecialReports/Allianz.htm I don't even know who you work for, but I doubt your broker/dealer will let you sell this crap. [/quote][quote=Borker Boy][quote=Hank Moody]She’s not uninsurable, though the she will be graded. If this money is to be left behind, why would she be unhappy about the current contract not having living benefits? If the money is DEFINITELY earmarked for the kids and she doesn’t want the LI, put her in the Allianz Master Dex 10. If it were me, I’d shop around for a single premium whole life policy and give her some options.
I know the author. He's a very nice guy. He used to be a registered rep and it didn't work out too well for him. We've spoken on the phone several times and I gave him some tips on how to do business.
He is now a CFP and he has a financial interest in hating indexed annuities. CFP's are like democrats. They don't have useful ideas to offer, so, instead, they blast the competition to try to get clients.
I have never sold a Master Dex 10. The only time it would be right, in my mind, is when all of the money will be left behind. Before I would do that I would exhaust all other options, first. In my opinion, it is a last resort product, not a go-to product.
[/quote] Hank, are you at all familiar with the product you are recommending? It is a terrible solution for the situation you suggest. The only way to EVER gain access to the funds without penalty is through some sort of annuitization. It handcuffs the purchasor of the product, but really handcuffs the heirs. The heirs will be given a choice of a lump sum with hefty penalties (even outside of surrender) vs. annutizing the value. 2 great options there.
Before you take ol' Hank's advice, read this report: http://www.guardingyourwealth.com/SpecialReports/Allianz.htm I don't even know who you work for, but I doubt your broker/dealer will let you sell this crap. [/quote][quote=Hank Moody] [quote=Borker Boy][quote=Hank Moody]She’s not uninsurable, though the she will be graded. If this money is to be left behind, why would she be unhappy about the current contract not having living benefits? If the money is DEFINITELY earmarked for the kids and she doesn’t want the LI, put her in the Allianz Master Dex 10. If it were me, I’d shop around for a single premium whole life policy and give her some options.
I know the author. He's a very nice guy. He used to be a registered rep and it didn't work out too well for him. We've spoken on the phone several times and I gave him some tips on how to do business.
He is now a CFP and he has a financial interest in hating indexed annuities. CFP's are like democrats. They don't have useful ideas to offer, so, instead, they blast the competition to try to get clients.
I have never sold a Master Dex 10. The only time it would be right, in my mind, is when all of the money will be left behind. Before I would do that I would exhaust all other options, first. In my opinion, it is a last resort product, not a go-to product.
[/quote] Hank, are you at all familiar with the product you are recommending? It is a terrible solution for the situation you suggest. The only way to EVER gain access to the funds without penalty is through some sort of annuitization. It handcuffs the purchasor of the product, but really handcuffs the heirs. The heirs will be given a choice of a lump sum with hefty penalties (even outside of surrender) vs. annutizing the value. 2 great options there. [/quote]
I'm familiar enough to know that since the money is to be left to his heirs, that annuitization will not be an issue. Are you familiar with ALL of my posts on this thread or did you just make yourself look foolish by not gathering all of the facts before you chimed in?
Before you take ol' Hank's advice, read this report: http://www.guardingyourwealth.com/SpecialReports/Allianz.htm I don't even know who you work for, but I doubt your broker/dealer will let you sell this crap. [/quote][quote=moneyguy][quote=Hank Moody] [quote=Borker Boy][quote=Hank Moody]She’s not uninsurable, though the she will be graded. If this money is to be left behind, why would she be unhappy about the current contract not having living benefits? If the money is DEFINITELY earmarked for the kids and she doesn’t want the LI, put her in the Allianz Master Dex 10. If it were me, I’d shop around for a single premium whole life policy and give her some options.
I know the author. He's a very nice guy. He used to be a registered rep and it didn't work out too well for him. We've spoken on the phone several times and I gave him some tips on how to do business.
He is now a CFP and he has a financial interest in hating indexed annuities. CFP's are like democrats. They don't have useful ideas to offer, so, instead, they blast the competition to try to get clients.
I have never sold a Master Dex 10. The only time it would be right, in my mind, is when all of the money will be left behind. Before I would do that I would exhaust all other options, first. In my opinion, it is a last resort product, not a go-to product.
[/quote] Hank, are you at all familiar with the product you are recommending? It is a terrible solution for the situation you suggest. The only way to EVER gain access to the funds without penalty is through some sort of annuitization. It handcuffs the purchasor of the product, but really handcuffs the heirs. The heirs will be given a choice of a lump sum with hefty penalties (even outside of surrender) vs. annutizing the value. 2 great options there. [/quote]
I'm familiar enough to know that since the money is to be left to his heirs, that annuitization will not be an issue. Are you familiar with ALL of my posts on this thread or did you just make yourself look foolish by not gathering all of the facts before you chimed in?
[/quote] I'm referring to how the product works, or isn't that important? The heirs will have to annuitize the contract, or pay significant penalties for taking a lump sum, even after surrender. You don't find that important? Well, let me rephrase that; you don't think the client would find that to be important? I don't see anything in this thread that you posted that changes the facts as I see them. I think your recommendation would be a poor choice. I didn't expect you to agree with me, but it certainly doesn't make me a fool for disagreeing with you.
Before you take ol' Hank's advice, read this report: http://www.guardingyourwealth.com/SpecialReports/Allianz.htm I don't even know who you work for, but I doubt your broker/dealer will let you sell this crap. [/quote][quote=Hank Moody] [quote=moneyguy][quote=Hank Moody] [quote=Borker Boy][quote=Hank Moody]She’s not uninsurable, though the she will be graded. If this money is to be left behind, why would she be unhappy about the current contract not having living benefits? If the money is DEFINITELY earmarked for the kids and she doesn’t want the LI, put her in the Allianz Master Dex 10. If it were me, I’d shop around for a single premium whole life policy and give her some options.
I know the author. He's a very nice guy. He used to be a registered rep and it didn't work out too well for him. We've spoken on the phone several times and I gave him some tips on how to do business.
He is now a CFP and he has a financial interest in hating indexed annuities. CFP's are like democrats. They don't have useful ideas to offer, so, instead, they blast the competition to try to get clients.
I have never sold a Master Dex 10. The only time it would be right, in my mind, is when all of the money will be left behind. Before I would do that I would exhaust all other options, first. In my opinion, it is a last resort product, not a go-to product.
[/quote] Hank, are you at all familiar with the product you are recommending? It is a terrible solution for the situation you suggest. The only way to EVER gain access to the funds without penalty is through some sort of annuitization. It handcuffs the purchasor of the product, but really handcuffs the heirs. The heirs will be given a choice of a lump sum with hefty penalties (even outside of surrender) vs. annutizing the value. 2 great options there. [/quote]
I'm familiar enough to know that since the money is to be left to his heirs, that annuitization will not be an issue. Are you familiar with ALL of my posts on this thread or did you just make yourself look foolish by not gathering all of the facts before you chimed in?
[/quote] I'm referring to how the product works, or isn't that important? The heirs will have to annuitize the contract, or pay significant penalties for taking a lump sum, even after surrender. You don't find that important? Well, let me rephrase that; you don't think the client would find that to be important? I don't see anything in this thread that you posted that changes the facts as I see them. I think your recommendation would be a poor choice. I didn't expect you to agree with me, but it certainly doesn't make me a fool for disagreeing with you. [/quote]
What part of "last resort" product do you not understand? You're lying about having to pay "significant penalties" to take a lump sum.
At AGE we have specialists through Time. The guy I worked with was a master of underwritting. I got a guy a life policy that had COPD with a hisory of cancer in the last five years. 170K DB for $10,500 annual…they guy was 72 year old on issue date. I would have never had a prayer.
Point? If you have an affiliate that works with your firm like Time call them. They dont even get a comm split.Second thought, it was a level premium VL, if he makes it to age 105 policy vanished. That was a bet he was willing to take. I told him I hoped every penny he put into it was toal loss :) was issued through John Hancock.
The variable annuity is probably charging m and e charges usually about 1 to 2% per annum for the death benefit rider…so keeping the VA is not a good option in my opinion. This cost tranlates to $1300yr at a minimum and you are probably losing money to boot the way the market has been
The Allianz annuity is a two tiered annuity and has limited access. If you are at the cost basis now there will be no tax to pay. Forgo the death benefit cause chances are you will live but keep the money liquid. You can 1035 exchange this contract into a 4 yr index annuity for potential market gains without risk to principle and eliminate inside annuity charges or just deposit it into a CD at the bank if you want full access with as little penalty as possibleMaybe I am missing something in this post…but if the contract is dollar-for-dollar death benefit reduction and not pro-rata, why not do a partial withdrawal or partial 10-35 exchange and keep the death benefit intact?
[quote=rankstocks]Maybe I am missing something in this post…but if the contract is dollar-for-dollar death benefit reduction and not pro-rata, why not do a partial withdrawal or partial 10-35 exchange and keep the death benefit intact?[/quote]
THere is no good reason. If you don’t switch, the death benefit won’t increase until the market value grows beyond the current DB. If you switch, the DB grows right away.
Made a mistake in one of the earlier posts…
Contract is pro-rata, not dollar-for-dollarBefore you take ol' Hank's advice, read this report: http://www.guardingyourwealth.com/SpecialReports/Allianz.htm I don't even know who you work for, but I doubt your broker/dealer will let you sell this crap. [/quote][quote=moneyguy][quote=Hank Moody] [quote=moneyguy][quote=Hank Moody] [quote=Borker Boy][quote=Hank Moody]She’s not uninsurable, though the she will be graded. If this money is to be left behind, why would she be unhappy about the current contract not having living benefits? If the money is DEFINITELY earmarked for the kids and she doesn’t want the LI, put her in the Allianz Master Dex 10. If it were me, I’d shop around for a single premium whole life policy and give her some options.
I know the author. He's a very nice guy. He used to be a registered rep and it didn't work out too well for him. We've spoken on the phone several times and I gave him some tips on how to do business.
He is now a CFP and he has a financial interest in hating indexed annuities. CFP's are like democrats. They don't have useful ideas to offer, so, instead, they blast the competition to try to get clients.
I have never sold a Master Dex 10. The only time it would be right, in my mind, is when all of the money will be left behind. Before I would do that I would exhaust all other options, first. In my opinion, it is a last resort product, not a go-to product.
[/quote] Hank, are you at all familiar with the product you are recommending? It is a terrible solution for the situation you suggest. The only way to EVER gain access to the funds without penalty is through some sort of annuitization. It handcuffs the purchasor of the product, but really handcuffs the heirs. The heirs will be given a choice of a lump sum with hefty penalties (even outside of surrender) vs. annutizing the value. 2 great options there. [/quote]
I'm familiar enough to know that since the money is to be left to his heirs, that annuitization will not be an issue. Are you familiar with ALL of my posts on this thread or did you just make yourself look foolish by not gathering all of the facts before you chimed in?
[/quote] I'm referring to how the product works, or isn't that important? The heirs will have to annuitize the contract, or pay significant penalties for taking a lump sum, even after surrender. You don't find that important? Well, let me rephrase that; you don't think the client would find that to be important? I don't see anything in this thread that you posted that changes the facts as I see them. I think your recommendation would be a poor choice. I didn't expect you to agree with me, but it certainly doesn't make me a fool for disagreeing with you. [/quote]
What part of "last resort" product do you not understand? You're lying about having to pay "significant penalties" to take a lump sum.
[/quote] Yes, last resort, the step right before outright burning of the money. Are you recommending it or not? Masterdex is miserable. It is a terrible for most scenarios, but most especially wealth transfer. Lying? You have no clue how this works, that is certainly clear. Heirs will who take a lump sum forgo the bonus and ALL index credits. Mistakes happen, be a man and own up to not knowing what you are talking about instead of slinging shit. I hope you spend more time on your own clients recommendations, for their sake. You are paid to know these things.
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