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Oct 26, 2008 1:40 am

ChrisVarick

Joined: 2008-09-05Offline

Be careful about the GMIBs vs the GMWBs. If you THINK the contract will hit zero one of these days, then the GMIB will be better off for the client because it’s annuitizing off the highest income base at the client’s age/gender/life expectantcy rates (no matter how conservative the insurance companies set them).

  However with the GMWBs, let's say it's a 7% growth for 10 years and 5% withdraw for life rider. Well IF the contract ever hits zero, then all you will get is a 5% for life off the income base. However, the GMIB it might be 7...8...9% withdraws off the income base because we're automatically annuitizing the contract.   If you don't think the contract will ever hit zero, then the GMWB would be better in my humble opinion. Anyways, this board has changed my outlook on VAs and I do believe they have more of a fit in more clients (not all) portfolios now. For that, I thank you guys.
Oct 26, 2008 5:30 pm

snaggletooth

Joined: 2007-07-13Offline

[quote=ChrisVarick]Be careful about the GMIBs vs the GMWBs. If you THINK the contract will hit zero one of these days, then the GMIB will be better off for the client because it’s annuitizing off the highest income base at the client’s age/gender/life expectantcy rates (no matter how conservative the insurance companies set them).

  However with the GMWBs, let's say it's a 7% growth for 10 years and 5% withdraw for life rider. Well IF the contract ever hits zero, then all you will get is a 5% for life off the income base. However, the GMIB it might be 7...8...9% withdraws off the income base because we're automatically annuitizing the contract.   If you don't think the contract will ever hit zero, then the GMWB would be better in my humble opinion. Anyways, this board has changed my outlook on VAs and I do believe they have more of a fit in more clients (not all) portfolios now. For that, I thank you guys. [/quote]   WOW!  Having an open mind can lead you to much success.  Welcome to a new world.
Oct 26, 2008 8:36 pm

ChrisVarick

Joined: 2008-09-05Offline

Haha well I have always tried to keep an open mind, but I overanalyzed the product too much by objectifying it with straight numbers.

  I tend to forget that the psychology AND reality of investing is much different, people/clients behave irrationally.
Oct 27, 2008 12:05 am

anonymous

Joined: 2005-09-29Offline
I tend to forget that the psychology AND reality of investing is much different, people/clients behave irrationally.   Everyone who is not in the industry forgets this.  Investment performance gets confused with investor performance.   Even if they behave rationally, there can be a big difference.     For instance, I can take someone who is investing into very cheap Vanguard funds and almost guaranty that they will do better with me even if we are talking about "A" shares with a 5.75% load.  Do you know how?    
Aug 13, 2013 7:05 am

Penelope

Joined: 2013-08-13Offline

this money is only really good for the rent. And unless you have fully understood the guarantees of income are net then the costs will leave most of its cash value or the value of income PMI-001 sample questions