[quote=Bobby Hull][quote=scrim67][quote=Dust Bunny][quote=scrim67]

I am serious.

Give me a real life scenario where a diverse portfolio 33% stocks 33% bonds and 33% cash could have a loss of 33%.

I don't find that possible.

scrim

[/quote]

Yeah. Give me the hypothetical ideal client who will adhere to your  1/3 1/3 1/3 strategy in a down market.. sounds good in theory.  Let's try it in real life.

You know....it isn't theory to our clients.  When they lose $$ they could give a rip about modern portfolio theory or any thing else.  It doesn't matter if you "find it possible". 

Again, I'm not advocating annuities for everyone. I think that they have a limited usage, but still useful  I am advocating that if you have a closed mind as an advisor.....I don't want YOU being my advisor.  You need to become a better, more educated and open minded person.

[/quote] My ideal client will stick with me as stock and bonds rise and fall.   If I set their expectations from the beginning of the relationship they realize they are going to lose money on paper some years.  That's perfectly normal and even healthy.   When stocks and bonds drop precipitiously that's when I will really earn my keep.

scrim

[/quote]

Scrim, would it be fair to say that you are convinced that your methodology is the best and that you stick to it, no matter what?

[/quote] Yes,  my thoughts are that we all offer similar, if not the same products.     My differentiator is my customer service in combination with honed communication and sales skills.

Is it working as I'm in the early years of my practice?   That's up for debate.  However, my clients, my firm and I are all comfortable at this point in this marathon.

scrim

[quote=scrim67][quote=Bobby Hull][quote=scrim67][quote=Dust Bunny][quote=scrim67]

I am serious.

Give me a real life scenario where a diverse portfolio 33% stocks 33% bonds and 33% cash could have a loss of 33%.

I don't find that possible.

scrim

[/quote]

Yeah. Give me the hypothetical ideal client who will adhere to your  1/3 1/3 1/3 strategy in a down market.. sounds good in theory.  Let's try it in real life.

You know....it isn't theory to our clients.  When they lose $$ they could give a rip about modern portfolio theory or any thing else.  It doesn't matter if you "find it possible". 

Again, I'm not advocating annuities for everyone. I think that they have a limited usage, but still useful  I am advocating that if you have a closed mind as an advisor.....I don't want YOU being my advisor.  You need to become a better, more educated and open minded person.

[/quote] My ideal client will stick with me as stock and bonds rise and fall.   If I set their expectations from the beginning of the relationship they realize they are going to lose money on paper some years.  That's perfectly normal and even healthy.   When stocks and bonds drop precipitiously that's when I will really earn my keep.

scrim

[/quote]

Scrim, would it be fair to say that you are convinced that your methodology is the best and that you stick to it, no matter what?

[/quote] Yes,  my thoughts are that we all offer similar, if not the same products.     My differentiator is my customer service in combination with honed communication and sales skills.

Is it working as I'm in the early years of my practice?   That's up for debate.  However, my clients, my firm and I are all comfortable at this point in this marathon.

scrim

[/quote]

It will work if you stick to your strategy and don't change it. What you're doing is of no interest to me, but there will be plenty of people who want what you do because you believe in it.

The biggest problem I see with your strategy is for some of your clients they have 0% chance of meeting their goals. When I run plannning scenarios most people neeed at least a 7% return on their money because they simple do not have enough. With that allocation 5.5% is likely.   JUst curious in this Bull run what have averaged?

[quote=bankrep1]The biggest problem I see with your strategy is for some of your clients they have 0% chance of meeting their goals. When I run plannning scenarios most people neeed at least a 7% return on their money because they simple do not have enough. With that allocation 5.5% is likely.   JUst curious in this Bull run what have averaged?[/quote]

What are his clients goals?

[quote=joedabrkr]

That huge commision is like a black hole that bends the ethics of anything that comes near it, and sucks many people in.

AR, you know I respect your opinions.  However, if you really want to have a "fair and balanced" discussion on this topic, you should stop using inflammatory language like "broker kickback" and "black hole" to refer to the commissions paid on the product.  After all, we all get paid in one manner, and all you're doing is giving Bobby Hull ammo to scurry around talking about how he can turn off the "broker fee meter". [/quote]

Bobby is going to talk about turning the broker meter off, but is for sure not going to talk about turning the annuity meter on.

My comment about the black hole still stands, I do think that the 6% payout on annuities does indeed "bends the ethics of anything that comes near it, and sucks many people in"

[quote]For what it's worth, one of the more successful investments I've recommended to groups of clients in the last decade(and purchased myself) was a managed futures fund in the late 90's.  Compared to a mutual fund or UIT(my primary focus at the time) it was hideously expensive and paid a pretty hefty vig to me as well.  But after much thought I decided it was a good diversifier.  Short version of the story is while internet stocks were melting down my clients doubled their money in the fund.  Guess what....nobody complained about the expenses or my compensation. [/quote]

Joe the problem with that line of thinking, is that a priori you had no clue about how the managed futures fund would perform after you bought it. Also, the managed futures fund is something unique.

In the case of an VA/EIA it is not unique. You can easly replicate the investment performance part of the total VA package.

When you break up a VA into its components, you see that most of it
doesn't add value. The insurance package may add psycological value.

1. 6% Dealer concession
2. Investment wrap services.
3. Insurance package
4. SPIA option

[quote]Annuities exploit a few holes in the tax code that predate modern IRA accounts. However given the very low tax rates on long term investments (15% QDI/15% LTCG) vs (Ordinary income rate for annuity withdrawals) this remains of questionable value.

If Nancy Pelosi gets her way, you will no longer find tax deferral of questionable value.  Consider the full scope of history.  Our current tax rates(including capital gains rates) are abnormally low right now, and if you didn't notice Democrats LOVE higher tax rates. [/quote]

The dems could just as easly close the annuity loophole and require people to be taxed on the phantom income of annuity accretions, under existing rules relating to passive income from investments.

IMHO raising taxes on investment income is unlikely b/c doing so would discourage savings/investments and harm retiree's who rely on investments for income.

[quote]Annuities often have a embedded put options in the form of guarantee minimum values. The acturaial gang at the insurco makes sure that these are overpriced relative to the real option value. The risk of being down in the market after 10 years isn't very high.

[QUOTE]

Too,
as others have mentioned the guarantees provide an additional benefit
of encouraging more rational investor behavior; they lessen the chance
that a client will hit the “eject button” at the bottom of a major
correction.  Like the credit card commercial says, for some
nervous nellies that can be “priceless”.

[/quote]



But like a VISA credit card, it can be much more expensive than paying cash/debit.



Again, if the client wants an annuity after having a full understanding
of the features, benefits, and costs, then it is fine by me. But most annuities are sold without that understanding and using deceptive/high preasure sales tactics.

[QUOTE]

There
are plenty of widows who collected some nice death benefits in
2001-02-03 who would vehemently argue your point about the “put
feature” being overpriced.

[/quote]

[QUOTE]

The end result of a VA is conversion to the SPIA or taking withdrawals from it, the main decision is the path that gets you to that point.



Choose wisely.

I do agree that I sometimes find the annuitization process to be somewhat of a “black box” subject to unfair manipulation.

[/quote]



The process of annuitisation of a given amount of money is easy to do based on actuarial tables. If you can create confusion about it, the customer is more likely to make a bad decision. Just like when you play poker.



The insurance company would like for you to choose the single life, no
remainder annuitisation since that helps to balance their book of
mortality risk. This is why life insurance companies sell annuities,
while marine insurance companies do not.



The best insurance agent is one who can sell a $500K WL policy and a $500K SPIA on the same day to the same person.

[quote=anonymous]

Scrim, I don’t get it.  If your average
client has 1/3 split equally between cash, bonds, and stocks, over a
ten year period of time, your client has close to a 0% chance of losing
money.   Your client also has close to a 100% chance of
underperforming an all equity VA.  The all equity VA also has a
100% chance of not losing money.

[QUOTE]

That really depends on the exact distribution of equity returns. If we start the 10 years on Jan 01,2001, The equity VA is going to be hard pressed to beat a 66% Fixed income 33% Equities portfolio.

The main question is risk adjusted performance, performance vs inflation, and the distribution of performance outcomes.

It's hard to say over all, but typical result will be worse in the VA by a decent amount, vs the limited risk of a really bad outcome. But a good risk managed balanced portfolio has a very low risk of a really bad outcome as well, while having a much better chance of good outcomes.

[quote] Can you name any 10 year period will 1/3, 1/3, 1/3 would outperform 100% in equities?  I can't.[/quote]

Oct 01 1929 - Oct 01 1939.

Oct 01 1929 - Oct 01 1939.

What were the returns?

[quote=AllREIT] [quote=joedabrkr]

That huge commision is like a black hole that bends the ethics of anything that comes near it, and sucks many people in.

AR, you know I respect your opinions.  However, if you really want to have a "fair and balanced" discussion on this topic, you should stop using inflammatory language like "broker kickback" and "black hole" to refer to the commissions paid on the product.  After all, we all get paid in one manner, and all you're doing is giving Bobby Hull ammo to scurry around talking about how he can turn off the "broker fee meter". [/quote]

Bobby is going to talk about turning the broker meter off, but is for sure not going to talk about turning the annuity meter on.

My comment about the black hole still stands, I do think that the 6% payout on annuities does indeed "bends the ethics of anything that comes near it, and sucks many people in"

[quote]For what it's worth, one of the more successful investments I've recommended to groups of clients in the last decade(and purchased myself) was a managed futures fund in the late 90's.  Compared to a mutual fund or UIT(my primary focus at the time) it was hideously expensive and paid a pretty hefty vig to me as well.  But after much thought I decided it was a good diversifier.  Short version of the story is while internet stocks were melting down my clients doubled their money in the fund.  Guess what....nobody complained about the expenses or my compensation. [/quote]

Joe the problem with that line of thinking, is that a priori you had no clue about how the managed futures fund would perform after you bought it. Also, the managed futures fund is something unique.

In the case of an VA/EIA it is not unique. You can easly replicate the investment performance part of the total VA package.

When you break up a VA into its components, you see that most of it
doesn't add value. The insurance package may add psycological value.

1. 6% Dealer concession
2. Investment wrap services.
3. Insurance package
4. SPIA option

[quote]Annuities exploit a few holes in the tax code that predate modern IRA accounts. However given the very low tax rates on long term investments (15% QDI/15% LTCG) vs (Ordinary income rate for annuity withdrawals) this remains of questionable value.

If Nancy Pelosi gets her way, you will no longer find tax deferral of questionable value.  Consider the full scope of history.  Our current tax rates(including capital gains rates) are abnormally low right now, and if you didn't notice Democrats LOVE higher tax rates. [/quote]

The dems could just as easly close the annuity loophole and require people to be taxed on the phantom income of annuity accretions, under existing rules relating to passive income from investments.

IMHO raising taxes on investment income is unlikely b/c doing so would discourage savings/investments and harm retiree's who rely on investments for income.

[quote]Annuities often have a embedded put options in the form of guarantee minimum values. The acturaial gang at the insurco makes sure that these are overpriced relative to the real option value. The risk of being down in the market after 10 years isn't very high.

Last time I checked, most insurance companies were in business to make a profit.  That doesn't make the protection options they sell over priced.  [/quote]

Joe, if the insurance company is to have an underwriting profit, then the insurance must be sold above its actuarial cost. The exact same thing goes on in VA's.

Since the company isn't playing with a fully deck (having given up 6% to the broker) they make their profits on the CoI and investment management fee's. Thus they tend to be much higher than alternative products.

[QUOTE]
Too, as others have mentioned the guarantees provide an additional benefit of encouraging more rational investor behavior; they lessen the chance that a client will hit the "eject button" at the bottom of a major correction.  Like the credit card commercial says, for some nervous nellies that can be "priceless".
[/quote]

But like a VISA credit card, it can be much more expensive than paying cash/debit.

Again, if the client wants an annuity after having a full understanding of the features, benefits, and costs, then it is fine by me. But most annuities are sold without that understanding and using deceptive/high preasure sales tactics.

[QUOTE]
There are plenty of widows who collected some nice death benefits in 2001-02-03 who would vehemently argue your point about the "put feature" being overpriced. [/quote]

Life insurance is always worth it when you collect the death benefit.

That doesn't mean you that you didn't pay too much for the protection.

[QUOTE]
The end result of a VA is conversion to the SPIA or taking withdrawals from it, the main decision is the path that gets you to that point.

Choose wisely.

I do agree that I sometimes find the annuitization process to be somewhat of a "black box" subject to unfair manipulation.
[/quote]

The process of annuitisation of a given amount of money is easy to do based on actuarial tables. If you can create confusion about it, the customer is more likely to make a bad decision. Just like when you play poker.

The insurance company would like for you to choose the single life, no remainder annuitisation since that helps to balance their book of mortality risk. This is why life insurance companies sell annuities, while marine insurance companies do not.

The best insurance agent is one who can sell a $500K WL policy and a $500K SPIA on the same day to the same person.

[/quote]

I was Pro-Life until I read the first few lines of this malarkey.

[quote=AllREIT] 

My comment about the black hole still stands, I do think that the 6% payout on annuities does indeed "bends the ethics of anything that comes near it, and sucks many people in"

Then perhaps you are a little too cynical about the ethics of the better advisors in our industry.  I’m not saying, btw, that we couldn’t use some improvement on this front.

FWIW I use annuities from time to time, and I’ve never felt like my ethics were being ‘bent’, nor my inner child being bruised.

[quote]For what it's worth, one of the more successful investments I've recommended to groups of clients in the last decade(and purchased myself) was a managed futures fund in the late 90's.  Compared to a mutual fund or UIT(my primary focus at the time) it was hideously expensive and paid a pretty hefty vig to me as well.  But after much thought I decided it was a good diversifier.  Short version of the story is while internet stocks were melting down my clients doubled their money in the fund.  Guess what....nobody complained about the expenses or my compensation. [/quote]

Joe the problem with that line of thinking, is that a priori you had no clue about how the managed futures fund would perform after you bought it. Also, the managed futures fund is something unique.

After more than a year of due diligence and contemplation, I did in fact have certain expectations about how the managed futures fund would perform.

I would argue, too, that annuities are unique when you consider the death benefits and living guarantees, and their ability to mitigate the tendency of some clients to panic, or to invest far too conservatively.  You cannot "replicate" those features cheaply, to my knowledge.

In the case of an VA/EIA it is not unique. You can easly replicate the investment performance part of the total VA package.

[quote]Annuities exploit a few holes in the tax code that predate modern IRA accounts. However given the very low tax rates on long term investments (15% QDI/15% LTCG) vs (Ordinary income rate for annuity withdrawals) this remains of questionable value.

If Nancy Pelosi gets her way, you will no longer find tax deferral of questionable value.  Consider the full scope of history.  Our current tax rates(including capital gains rates) are abnormally low right now, and if you didn't notice Democrats LOVE higher tax rates. [/quote]

The dems could just as easly close the annuity loophole and require people to be taxed on the phantom income of annuity accretions, under existing rules relating to passive income from investments.

IMHO raising taxes on investment income is unlikely b/c doing so would discourage savings/investments and harm retiree's who rely on investments for income.

Be careful about underestimating how greedy and economically unsophisticated politicians can be, especially the Democrats.

Having said that, it is unlikely that they would change tax deferral on annuities, since they are traditionally so closely tied to pension arrangements, and it has been accepted practice that insurance 'cash values' of any sort are not taxed as long as they are within the product.  Between the strength of the insurance company lobbies and the political uproar it would create as folks faced potentially enormous tax liabilities, I just don't see how it could happen.

[quote=joedabrkr]

Joe the problem with that line of thinking, is that a priori you had
no clue about how the managed futures fund would perform after you
bought it. Also, the managed futures fund is something unique.

After
more than a year of due diligence and contemplation, I did in fact have
certain expectations about how the managed futures fund would perform.
[/quote]

We all have expections, but if you ask what the value of the fund will be on date X, you can't know. So its not like a bond or annuitity in that respect.

However the futures fund is special and thus worth paying for. Same thing with certain externally managed finance companies. The external fee's would be excessive for a typical investment. But for a complete financial platform they are very much worth it.

IMHO the underlying investments of most annuities aren't worth paying the 6% commision and high ongoing expenses for.

What would be very interesting is if some company offered an equity linked term life policy. E.g the worse the equity markets performance the better the death benefit.

[QUOTE]I would argue, too, that annuities are unique when you consider the death benefits and living guarantees, and their ability to mitigate the tendency of some clients to panic, or to invest far too conservatively.  You cannot "replicate" those features cheaply, to my knowledge.[/quote]

Right, although IMHO client education goes a long way. I and other   insurco shareholders will tend to think that the economic cost of the protection exceeds its value. However it could be very psychologically valuable.

Your annuity, my dividends.

Be careful about underestimating how greedy and economically unsophisticated politicians can be, especially the Democrats.

Having said that, it is unlikely that they would change tax deferral on annuities, since they are traditionally so closely tied to pension arrangements, and it has been accepted practice that insurance 'cash values' of any sort are not taxed as long as they are within the product.  Between the strength of the insurance company lobbies and the political uproar it would create as folks faced potentially enormous tax liabilities, I just don't see how it could happen.

[/quote]

Thus I have the exact same thinking about QDI and LTCG being taxed at 15% vs annuities at ordinary income. It's too important to retiree's, and the shareholder/ICI lobby is huge.

The total tax drag inside/outside the annuitisation wrapper isn't as much as is commonly thought. In fact clients/advisors often fail to do tax arbitrage. Annuities should be full of investments in tax-disadvantaged things like junk bonds/REITs/BDCs/Preferred stock etc and not straight up equities.

A 50% increase in the value of an equity investment gets taxed at full income rates upon exit in an annuity, but only 15% in a taxable account.

IMHO the underlying investments of most annuities aren't worth paying the 6% commision and high ongoing expenses for.

Be anti-annuity if you choose, but please get your facts straight.  The client is not paying both a 6% commission and high expenses.  Feel free to make an argument that the 6% commission leads to higher expenses.  If a paraticular annuity pays one broker 7%, but another broker only 4% and the annual expenses are 1.8%, the client is paying 1.8% regardless of the commission earned by the broker.

Right, although IMHO client education goes a long way.

This is one of those things that is much more true in a bull market than a bear market.  Clients classify themselves as being much more aggressive during bull markets.  When the market goes up for a few years in a row, everyone thinks that they can stomach volatility.  The perception often changes once the market declines.  I agree that client education goes a long way, but just not far enough for many clients during bull markets.

I agree with your tax comments.  This is why I'm a much bigger fan of qualified annuities.

[quote=AllREIT] [quote=joedabrkr]

Joe the problem with that line of thinking, is that a priori you had no clue about how the managed futures fund would perform after you bought it. Also, the managed futures fund is something unique.

After more than a year of due diligence and contemplation, I did in fact have certain expectations about how the managed futures fund would perform. [/quote]

We all have expections, but if you ask what the value of the fund will be on date X, you can't know. So its not like a bond or annuitity in that respect.

However the futures fund is special and thus worth paying for. Same thing with certain externally managed finance companies. The external fee's would be excessive for a typical investment. But for a complete financial platform they are very much worth it.

IMHO the underlying investments of most annuities aren't worth paying the 6% commision and high ongoing expenses for.

What would be very interesting is if some company offered an equity linked term life policy. E.g the worse the equity markets performance the better the death benefit.

[QUOTE]I would argue, too, that annuities are unique when you consider the death benefits and living guarantees, and their ability to mitigate the tendency of some clients to panic, or to invest far too conservatively.  You cannot "replicate" those features cheaply, to my knowledge.[/quote]

Right, although IMHO client education goes a long way. I and other   insurco shareholders will tend to think that the economic cost of the protection exceeds its value. However it could be very psychologically valuable.

Your annuity, my dividends.

Be careful about underestimating how greedy and economically unsophisticated politicians can be, especially the Democrats.

Having said that, it is unlikely that they would change tax deferral on annuities, since they are traditionally so closely tied to pension arrangements, and it has been accepted practice that insurance 'cash values' of any sort are not taxed as long as they are within the product.  Between the strength of the insurance company lobbies and the political uproar it would create as folks faced potentially enormous tax liabilities, I just don't see how it could happen.

[/quote]

Thus I have the exact same thinking about QDI and LTCG being taxed at 15% vs annuities at ordinary income. It's too important to retiree's, and the shareholder/ICI lobby is huge.

The total tax drag inside/outside the annuitisation wrapper isn't as much as is commonly thought. In fact clients/advisors often fail to do tax arbitrage. Annuities should be full of investments in tax-disadvantaged things like junk bonds/REITs/BDCs/Preferred stock etc and not straight up equities.

A 50% increase in the value of an equity investment gets taxed at full income rates upon exit in an annuity, but only 15% in a taxable account.

[/quote]

Hey Big Boy, you can hate annuities all you want. Just remember...your clients and prospects like them and there's NOTHING you can do about it. I'm an expert at presenting them and I'm an expert at coming between brokers and their clients. And there's lots and lots and lots of guys just like me. You wouldn't know about this but when you've earned people in excess of 24% avg annual over the course of 4 years, all you have to do is tape a note to the back of a dog and it sells itself.

Sleep well. I know I will.

[quote=EDJ to RIA]

I've never seen a situation where a VA works well.

Ok, let's hear it from the annuity gang...

[/quote]

Maybe your eyes are closed.

[quote=hoopfan][quote=EDJ to RIA]

I've never seen a situation where a VA works well.

Ok, let's hear it from the annuity gang...

[/quote]

Maybe your eyes are closed.

[quote=AllREIT]

[quote=hoopfan][quote=EDJ to RIA]

I’ve never seen a situation where a VA works well.

Ok, let’s hear it from the annuity gang…

[/quote]

Maybe your eyes are closed.

[quote=AllREIT]

[quote=hoopfan][quote=EDJ to RIA]

I’ve never seen a situation where a VA works well.

Ok, let’s hear it from the annuity gang…

[/quote]

Maybe your eyes are closed.

[quote=AllREIT] [quote=hoopfan][quote=EDJ to RIA]I’ve never seen a situation where a VA works well.

Ok, let's hear it from the annuity gang...[/quote]

Maybe your eyes are closed.[/quote]

Maybe no one has ever showed that VA's work well in the real world, for most real investors?[/quote]

Wow.  Now I'm really curious...I think you have pretty good book intelligence...but how long have you been paid to manage money for other people?  I'm genuinely curious...care to divulge?

[quote=AllREIT] [quote=joedabrkr]

That huge commision is like a black hole that bends the ethics of anything that comes near it, and sucks many people in.

AR, you know I respect your opinions.  However, if you really want to have a "fair and balanced" discussion on this topic, you should stop using inflammatory language like "broker kickback" and "black hole" to refer to the commissions paid on the product.  After all, we all get paid in one manner, and all you're doing is giving Bobby Hull ammo to scurry around talking about how he can turn off the "broker fee meter". [/quote]

Bobby is going to talk about turning the broker meter off, but is for sure not going to talk about turning the annuity meter on.

My comment about the black hole still stands, I do think that the 6% payout on annuities does indeed "bends the ethics of anything that comes near it, and sucks many people in"

[quote]For what it's worth, one of the more successful investments I've recommended to groups of clients in the last decade(and purchased myself) was a managed futures fund in the late 90's.  Compared to a mutual fund or UIT(my primary focus at the time) it was hideously expensive and paid a pretty hefty vig to me as well.  But after much thought I decided it was a good diversifier.  Short version of the story is while internet stocks were melting down my clients doubled their money in the fund.  Guess what....nobody complained about the expenses or my compensation. [/quote]

Joe the problem with that line of thinking, is that a priori you had no clue about how the managed futures fund would perform after you bought it. Also, the managed futures fund is something unique.

In the case of an VA/EIA it is not unique. You can easly replicate the investment performance part of the total VA package.

When you break up a VA into its components, you see that most of it
doesn't add value. The insurance package may add psycological value.

1. 6% Dealer concession
2. Investment wrap services.
3. Insurance package
4. SPIA option

[quote]Annuities exploit a few holes in the tax code that predate modern IRA accounts. However given the very low tax rates on long term investments (15% QDI/15% LTCG) vs (Ordinary income rate for annuity withdrawals) this remains of questionable value.

If Nancy Pelosi gets her way, you will no longer find tax deferral of questionable value.  Consider the full scope of history.  Our current tax rates(including capital gains rates) are abnormally low right now, and if you didn't notice Democrats LOVE higher tax rates. [/quote]

The dems could just as easly close the annuity loophole and require people to be taxed on the phantom income of annuity accretions, under existing rules relating to passive income from investments.

IMHO raising taxes on investment income is unlikely b/c doing so would discourage savings/investments and harm retiree's who rely on investments for income.

[quote]Annuities often have a embedded put options in the form of guarantee minimum values. The acturaial gang at the insurco makes sure that these are overpriced relative to the real option value. The risk of being down in the market after 10 years isn't very high.

Last time I checked, most insurance companies were in business to make a profit.  That doesn't make the protection options they sell over priced.  [/quote]

Joe, if the insurance company is to have an underwriting profit, then the insurance must be sold above its actuarial cost. The exact same thing goes on in VA's.

Since the company isn't playing with a fully deck (having given up 6% to the broker) they make their profits on the CoI and investment management fee's. Thus they tend to be much higher than alternative products.

[QUOTE]
Too, as others have mentioned the guarantees provide an additional benefit of encouraging more rational investor behavior; they lessen the chance that a client will hit the "eject button" at the bottom of a major correction.  Like the credit card commercial says, for some nervous nellies that can be "priceless".
[/quote]

But like a VISA credit card, it can be much more expensive than paying cash/debit.

Again, if the client wants an annuity after having a full understanding of the features, benefits, and costs, then it is fine by me. But most annuities are sold without that understanding and using deceptive/high preasure sales tactics.

[QUOTE]
There are plenty of widows who collected some nice death benefits in 2001-02-03 who would vehemently argue your point about the "put feature" being overpriced. [/quote]

Life insurance is always worth it when you collect the death benefit.

That doesn't mean you that you didn't pay too much for the protection.

[QUOTE]
The end result of a VA is conversion to the SPIA or taking withdrawals from it, the main decision is the path that gets you to that point.

Choose wisely.

I do agree that I sometimes find the annuitization process to be somewhat of a "black box" subject to unfair manipulation.
[/quote]

The process of annuitisation of a given amount of money is easy to do based on actuarial tables. If you can create confusion about it, the customer is more likely to make a bad decision. Just like when you play poker.

The insurance company would like for you to choose the single life, no remainder annuitisation since that helps to balance their book of mortality risk. This is why life insurance companies sell annuities, while marine insurance companies do not.

The best insurance agent is one who can sell a $500K WL policy and a $500K SPIA on the same day to the same person.

[/quote]

Nothing to add really, aside from the blue font, which I think the exchange lacked.