10% Penalty on Annuity

[scagnt83]

I read what you wrote. It is not correct. Annuity sales to people under 59.5, qualified or non qualified, are not fairly rare.

I guess that depends on your definition of fairly rare. Compared to qualified sales, it is a rare thing. Perhaps you personally do a lot of that business. But it makes up the minority of deferred annuity sales throughout the entire industry overall.

 

[NPCOACH]

I agree with DHK's latest take 100%. Even if her income needs changed, I find it hard to believe that AIG would take $200,000 from a 58 year old with a 9 year surrender period product UNLESS the suitability form showed a lot of additional liquid assets. And it is just for the reason to avoid this type of situation,

My best guess is either she claimed more assets then she had or the agent claimed more assets because he knew that was the only way to sneak this past suitability.

I have seen plenty of dishonest/ unethical/ untrained/ ignorant (take your pick) agents over the years. I have also come across plenty of clients that misremember/ misrepresent (take your pick) what the agent said to access funds penalty free. I think we have one or both of those here.

 

[NPCOACH]

I guess that depends on your definition of fairly rare. Compared to qualified sales, it is a rare thing. Perhaps you personally do a lot of that business. But it makes up the minority of deferred annuity sales throughout the entire industry overall.

According to a 2014 LIMRA study, half of all annuity purchasers were under age 60. Additionally, a Gallop and Committee survey of Annuity Insurers found that the average age of first time non qualified annuity purchases was 51. And 40% of those were under age 50. That Gallop survey was from 2013. Things may have changed some, but probably not much.

Like seniors, people under age 60 appreciate guaranteed safety of principle, guaranteed rates of return, tax deferral, income options and low or no management fees.

There is a difference between "fairly rare" and "the minority of deferred annuity sales throughout the insurance industry". Starting to get into straw man argument territory.

According to Beacon Research, there were about 22,700 fixed annuity sales in the 3rd quarter of 2017. There were about 20,900 variable annuity sales. Thus variable annuity sales are, in your words "the minority of deferred annuity sales throught the insurance industry". Nevertheless variable annuity sales are not "fairly rare".

I don't really want to get into a lot of back and forth on this. I think we agree on this whole situation more than we disagree. But don't underestimate the number of risk averse baby boomers and millenials.

 

[Tahoe Ray]

I agree with DHK's latest take 100%. Even if her income needs changed, I find it hard to believe that AIG would take $200,000 from a 58 year old with a 9 year surrender period product UNLESS the suitability form showed a lot of additional liquid assets. And it is just for the reason to avoid this type of situation,

My best guess is either she claimed more assets then she had or the agent claimed more assets because he knew that was the only way to sneak this past suitability.

I have seen plenty of dishonest/ unethical/ untrained/ ignorant (take your pick) agents over the years. I have also come across plenty of clients that misremember/ misrepresent (take your pick) what the agent said to access funds penalty free. I think we have one or both of those here.

Not to mention the client profile/suitability form asks when you might be accessing this money. I know that AIG's annuities specifically ask about pre-59 1/2 w/ds and mention the tax penalty.

 

[Julieolo]

I have not read all the new posts yet but it sound like I need to request from AIG all the paper work.

Submitted Paperwwork...
cover letter or explanation of the sale that was submitted by the agent and make sure it includes the Suitability form.

Is there anything else I should ask for specifically?

 

[NPCOACH]

Julie,
You should request all submitted paperwork including, but not limited to:
Entire Application
All disclosure forms
All suitability forms
Delivery receipt
Cover letters

Plus any other communications, emails or notes submitted in conjunction with this case. I would also demand this from the agent. It might make for an interesting comparison.

Not sure where in California you are located. I am located just north of Los Angeles and would be happy to answer any questions you may have. I have a few questions about the situation that need clarification, but requires information you shouldn't share on a public forum. You can send me a message if you want.

 

[scagnt83]

According to a 2014 LIMRA study, half of all annuity purchasers were under age 60. Additionally, a Gallop and Committee survey of Annuity Insurers found that the average age of first time non qualified annuity purchases was 51. And 40% of those were under age 50. That Gallop survey was from 2013. Things may have changed some, but probably not much.

Like seniors, people under age 60 appreciate guaranteed safety of principle, guaranteed rates of return, tax deferral, income options and low or no management fees.

There is a difference between "fairly rare" and "the minority of deferred annuity sales throughout the insurance industry". Starting to get into straw man argument territory.

According to Beacon Research, there were about 22,700 fixed annuity sales in the 3rd quarter of 2017. There were about 20,900 variable annuity sales. Thus variable annuity sales are, in your words "the minority of deferred annuity sales throught the insurance industry". Nevertheless variable annuity sales are not "fairly rare".

I don't really want to get into a lot of back and forth on this. I think we agree on this whole situation more than we disagree. But don't underestimate the number of risk averse baby boomers and millenials.

Funny, I read most of what LIMRA publishes on annuities and I remember them putting the average age of a Deferred Annuity Buyer in their early 60s, and the median age was mid 60s last I checked. Of course, it all depends on who and how they are polling. But I would love to see the LIMRA study you referenced. Because in my experience, and based on the industry stats I have seen, most NQ Deferred annuities are sold to people over the age of 60.

And your right, I shouldn't argue semantics, especially with someone who makes the statement that "an annuity application is only 3 or 4 pages".... LOL. I let that go and didn't really say anything. But try turning in an app with just those pages filled out... they will tell you "the application is not complete". I will let you argue with them instead.
(and of course that doesnt matter to the OP or consumer or even agent since the State decides what pages are required to be included)

And good luck trying to land Juliolo as a client. I doubt they will trust any insurance agent again. But who knows, maybe you can take her $200k away from the existing guy.

 

[scagnt83]

I have not read all the new posts yet but it sound like I need to request from AIG all the paper work.

Submitted Paperwwork...
cover letter or explanation of the sale that was submitted by the agent and make sure it includes the Suitability form.

Is there anything else I should ask for specifically?

All AG really has is the initial application and any delivery paperwork. That is all you need to start.

You can ask for all written and recorded communications related to your policy. It would certainly show that you are serious. But you also have no way of knowing if the agent actually is giving them/you everything (without a court order).

Start by giving AG a chance to make it right.

 

[scagnt83]

I agree with DHK's latest take 100%. Even if her income needs changed, I find it hard to believe that AIG would take $200,000 from a 58 year old with a 9 year surrender period product UNLESS the suitability form showed a lot of additional liquid assets. And it is just for the reason to avoid this type of situation,

My best guess is either she claimed more assets then she had or the agent claimed more assets because he knew that was the only way to sneak this past suitability.

I have seen plenty of dishonest/ unethical/ untrained/ ignorant (take your pick) agents over the years. I have also come across plenty of clients that misremember/ misrepresent (take your pick) what the agent said to access funds penalty free. I think we have one or both of those here.

This we agree on. Either the agent lied big time on the app, or the client is leaving out or forgetting parts of the situation. I've seen both over the years. The OP already forgot they were given the policy, so no telling what else might have slipped their mind.

 

[DHK]

And good luck trying to land Juliolo as a client. I doubt they will trust any insurance agent again. But who knows, maybe you can take her $200k away from the existing guy.

Based SOLELY on the content of this thread, she would be in great hands with nearly anyone on this thread, compared to her impression of her current agent/advisor. Whether it makes sense to make a change... is another matter.