Fixed Indexed Annuity
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I try to be open minded. But I do not see the benefit to the client here. Right now I could get a guaranteed 4% annuity for 5 years (NOT indexed), or I could go the indexed route. With a guarantee below 1% at JNL, the max after caps seems likely to be 5-6%, but could easily be 3-5%…why not save all the trouble and take the 4% fixed?
[quote=newnew]I try to be open minded. But I do not see the benefit to the client here. Right now I could get a guaranteed 4% annuity for 5 years (NOT indexed), or I could go the indexed route. With a guarantee below 1% at JNL, the max after caps seems likely to be 5-6%, but could easily be 3-5%…why not save all the trouble and take the 4% fixed? [/quote]
5 is 25% better than 4 and 6 is 50% better than 4. Show your client both of them and let him/her choose.
I think over the next 5 years, your performance in an index annuity will outperform 4% you get in a 5 year fixed annuity. Even if you think the market goes sideways for next 12 months before serious recovery, you can use a small bonus product (3-5% bonus) and go in the fixed subaccount (~3%) and lock in ~6% in year one. Then look at where the economy/S&P stand at 1 year anniversary and reallocate it to the Index. the monthly point to points can get you alot more than 5-6% annually if the markets make a steady climb.
If you have doubts but think it could be appropriate, do a split ticket with a good EIA and a 5 year fixed annuity. I haven’t sold an EIA in 3 years b/c I had the same doubt when Fixed Annuity rates are over 5% but given they are lower now, I think you can outperform them with an EIA going forward.
How can a max seem likely? Are you trying to say that your crystal ball deems that the client will get 5-6%? Is there something in the contract that will only give the client 5-6% a year if the index returns 10-15%? Let's assume that it's not possible to get higher than 6%. With the guaranteed 4%, the client will have $121,665 after 5 years assuming a beginning investment of $100,000. With the index, assuming 1% the low end and 6% the high end, the client will have between $105,101 and $133,823. Which is better? Beats me. Ask the client whether they want the guarantee or the range.I try to be open minded. But I do not see the benefit to the client here. Right now I could get a guaranteed 4% annuity for 5 years (NOT indexed), or I could go the indexed route. With a guarantee below 1% at JNL, the max after caps seems likely to be 5-6%, but could easily be 3-5%…why not save all the trouble and take the 4% fixed?
a max can “seem likely” when the current caps are b/t 5% and 6.25% depending on crediting methods. I was simplifying.
and before anyone says “but the ETFs could go down!”, remember I said a SMALL amount—so that after five years even if the market crashes you cannot end up below 105k
JFC, why are you trying to talk yourself out of a sale? Put both options on the table, and let the client decide. You don’t know what is going to outperform, so why bother trying to guess?
oh, Ive got the sale. $ is on the way. I could tell her to buy any annuity and she would-- this is typically the case
It is my experience that, even if it’s a ‘done deal’, you can still manage to talk your way out of it.
My company wholesales fixed and indexed annuities. PM me and I can have someone contact you that can answer any and all questions.