10% Bonus Annuity ?

[Norwayguy]

Re: 10% Bonus Annuity??????

Thanks for the reply. Kindly explain how a 10% bonus is analogous to taking a 10% cut-in-pay-and-then-paid-back. Are you saying it's because of less-beneficial caps/participation or what?

I believe that is what Franz meant...If you can ever compare apples to apples a product that maybe allows you to add the bonus as an option and what it does to caps..I showed a client once the bonus he was getting on a flexible product which the bonus was for years 1-7 of a 14 year product and he was taking 1.5 to 2 % cap hit for life of the policy.

Now I do use bonus products but one of the first things out of my mouth to the client is that the insurance company can not make 10% appear from thin air and the client will in essence pay the bonus back over time, they are happy to do it because we are typically using it as an exit strategy from a poorer product.

 

[Franz Kafka]

Re: 10% Bonus Annuity??????

Thanks for the reply. Kindly explain how a 10% bonus is analogous to taking a 10% cut-in-pay-and-then-paid-back. Are you saying it's because of less-beneficial caps/participation or what?

Yes. IMO bonus was designed to encourage replacement of policies with surrender charges. Dare I say it was designed to mislead? I dare not.

 

[Charpress]

I've always considered bonuses as just an advance payment of interest. In essence, that is exactly what they are.

The concept was originally designed to encourage people to get out of CDs. If a CD had a loss of interest penalty, then the bonus -which originally was in the same range as the CD penalty, made up for the. Or it was at least designed that way.

I have people that I have sold annuities to in the past who ask first off "What is the bonus?" For some, it is a big deal. Not so much for others. I always throw it in as an afterthought and take the lead from the degree of interest the client has.

 

[Justin Bilyj]

Any bonus comes off the top. Want all those extra perk programs for your auto insurance? Get ready for a higher premium. How bout nice reward miles and % back for purchases with a certain Visa card, end up paying higher interest.
No such thing as a bonus, ya boner!

 

[Guest]

Annuities are dangerous ground to tread on. Read the fine print. Surrender charges can wipe someone out and companies can change interest rates as they see fit.
- - - - - - - - - - - - - - - - - -
Index annuities are poison for your pocketbook
<*Prev*Next*>
RIP-OFF ALERT:*For years, I have warned people about something known as index annuities. They're one of the hottest products in the investment and insurance landscape, but they're poison for your pocketbook.
Index annuities really took off after the stock market got decimated a few years ago and marketers saw the opportunity to take advantage of people who were worried about outliving their money.
Of all the things you could for your wallet, buying an index annuity at any age is just about the*worst*thought possible.
Money*magazine recently ran a long-form feature about all the problems that have befallen those people who are sold these things. The story also dug into why index annuities are pushed so hard to the great detriment of buyers. The simple reason is a massive commission goes to the insurance salesperson who sells it!
Index annuities are sold with the promise that you can earn a return based on the stock market in good years, along with the guarantee that you'll*lose no money in bad years. That's very attractive to someone who is 65 and worried about having enough money for the rest of their life. It's a lure that makes people think, "Hey, I can play the market with no risk on the downside? What could be wrong with that?!" Actually, so much is wrong here, though chiefly 2 things come to mind:
These plans come with massive fees. There's what's called a "surrender charge" that can hang with you for 15 years. If you buy in and then need to get out before 15 years, that surrender charge can be tens of thousands of dollars or more.
In most of the convoluted contracts for index annuities, the insurance company can decide to change how much these policies earn each year. So they can offer you upfront a great deal and pull a sucker move on you by changing the payout. Then you're stuck unless you want to pay that huge surrender charge.
The number of complaints filed with state insurance regulators about people who sell index annuities around the country is huge. But state regulators often cannot or will not do anything to help those who were sold on false promises.
Here's a final word of warning: The pitch for index annuities often starts with an invite to a free lunch or dinner seminar to learn more. Believe you me, that is the most expensive meal you will ever eat. If you are past 60, index annuities are a danger to your financial health, your financial security and your long term ability to live independently. Kick that insurance person who tries to sell you that junk straight to the curb! *

From clarkhoward.com

 

[Fisher]

Mobini, your knowledge level is frightening.

 

[HarryRenard]

Dumbo7 do you have an original thought in your body or is it all cut and paste with you, please stop its terribly annoying.

 

[0b1kanobee]

I've always considered bonuses as just an advance payment of interest. In essence, that is exactly what they are.

The concept was originally designed to encourage people to get out of CDs. If a CD had a loss of interest penalty, then the bonus -which originally was in the same range as the CD penalty, made up for the. Or it was at least designed that way.

I have people that I have sold annuities to in the past who ask first off "What is the bonus?" For some, it is a big deal. Not so much for others. I always throw it in as an afterthought and take the lead from the degree of interest the client has.

You are smarter than the average bear.

 

[lakeloveroktx]

Is htere a 10% bonus annuity out there that also has a guarantee of 8% earnings????

There used to be some contracts that would give you a guarantee at the end of the contract. For instance a variable that would give you the either the amount of the earnings during the contract or a 7% guarantee at the end of the contract.

On the fixed side most of these contracts had to be annuitized to realize the guaranteed earnings.

I am not aware of any contracts being sold like this today. I do not sell variable annuities so there might be one that does.

 

[lbritt]

This sounds like the North American products - 10% bonus, 8% rollup. That's one of our top carriers, we write alot of the Charter series, but never call the 8% guaranteed earnings.