10% Penalty on Annuity

[scagnt83]

SC,
I sent you the Gallop survey and Limra study info 36 hours ago.
Here is the site for everyone:

www.annuity-insurers.org

Not sure what more you want.

You never sent me a Private Message. Thank you for the link.

 

[scagnt83]

The study makes for interesting reading. Thank you again for the link.

LIMRA still puts the average age of fixed deferred annuity buyers in their 60s. And there is a key issue with that study in how it relates to the current thread.

We are talking about Fixed Annuities here. 75% of that study is based on Variable Annuity Owners.

I would definitely agree that the average age of a VA Owner is a good 10 years younger than that of a Fixed Annuity Owner.


Also, that study is a 2-month study of 1008 Annuity Owners. LIMRA studies are based on over 1,000,000 consumer records per year.

----

I am not discounting the study with those comments. Just putting my perspective on it. Its an interesting study and one Ive never seen before. Have they stopped doing it? The most recent year I found was 2013.

 

[NPCOACH]

Sc,
Actually we were talking about qualified and non qualified annuities. The 2013 study I referenced is about non qualified annuities. It states clearly that the average age of a first time non qualified annuity buyer is 51 years of age. The median sge is 52. Ergo, your insistence that non qualified sales to people under age 59.5 is "fairly rare" is wrong.

The survey I referenced involved 12 insurers that represented 80% if the annuity business in the United States. The margin if error on the survey was plus or minus 3%.

Maybe you can provide a link to the Limra annuity survey that was "based on over 1,000,000 consumer records". It would be very useful. The most recent Limra survey I found on this topic was based on 1200 buyers done in 2011. It indicated that 20% of all annuity buyers were under age 50. I don't think it distinguished between qualified and non qualified. That is why I did not cite it initially.

Nice try though.

 

[scagnt83]

Sc,
Actually we were talking about qualified and non qualified annuities. The 2013 study I referenced is about non qualified annuities. It states clearly that the average age of a first time non qualified annuity buyer is 51 years of age. The median sge is 52. Ergo, your insistence that non qualified sales to people under age 59.5 is "fairly rare" is wrong.

The survey I referenced involved 12 insurers that represented 80% if the annuity business in the United States. The margin if error on the survey was plus or minus 3%.

Maybe you can provide a link to the Limra annuity survey that was "based on over 1,000,000 consumer records". It would be very useful. The most recent Limra survey I found on this topic was based on 1200 buyers done in 2011. It indicated that 20% of all annuity buyers were under age 50. I don't think it distinguished between qualified and non qualified. That is why I did not cite it initially.

Nice try though.

Obviously, your ego needs to hear that you are correct. I tried to make nice with the last 2 posts.... now its obvious you are here just to argue in addition to an attempt to drum up biz from the OP.

It was never my intent to create an argument out of this. It seems you came here to "win an argument" instead of having an actual professional discussion and exchange of info. Im not interested in a "gotcha" tit for tat argument. You can go play in the FE section if that is how you get your kicks.

I thanked you for the link to the study, even said it was interesting. I was being sincere with those comments. I always welcome new industry info and statistics. And I even made sure to say that my comments on the study were not an attempt to discredit it. But you have ignored every effort I made.

So, since you obviously need a win for some reason..... I was wrong you were right, its not rare it happens all the time.

Happy Sunday my friend.

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This entire thread is about fixed annuities. This section of the forum is 99% about fixed annuities. It is almost always assumed in this section that the convo is about fixed annuities unless otherwise stated. Since you have read the forum for years I would have assumed you knew that.


The average age of a VA client is and always has been younger than FA clients.
And in my opinion, a study comprised 70% of VA owners, is not very reflective of the subject we are talking about in this thread. If you think it is, great, you have a right to that opinion.


And I was not referring to any single specific LIMRA study. For years now many different LIMRA studies have put the average annuity owner in their mid 60s. But that age has slowly been getting younger and younger. They did a really good presentation to the US Treasury back in 2014, if I remember correctly, it was based on more than just a subset of their records.

-----

Out of curiosity, what % of your annuity business does the early 50s crowd account for? Is all this because that makes up a significant amount of your book? Are you selling them VAs or FAs mostly?

(not trying to "call you out", just curious because I think you mentioned you do a decent amount of biz in that age range)

 

[Julieolo]

I just wanted to update where I am with this. I received an email today from AIG.


They indicated that the insurance agent said he told me about the 10% penalty fees. So basically, they made their decision on it being his word against mine. Of course he said he told me. Surely, they did not expect him to say he intentionally left that information out?


I thought they would consider that the policy did not make since.


I did write to the State of California Department of Insurance and they did try to help. I feel like AIG was not responsive until the Insurance Department got involved. Unfortunately, from what I have read on the Ca. Dept of Ins. Website, they do not have the authority to really do anything to help an individual like myself. They are there to regulate the industry.


Oh btw, I have been trying to get a copy of the cover letter and other various documents that the insurance agent submitted. AIG has a standard response to this question...Please give us 7 days to process the request and another 7 days to receive the documents in the mail. I have called and asked for these documents twice and they have told me the same thing both times and the documents never come.


I am trying to decide if I should hire a lawyer or recover the money by paying even more penalty fees. The penalty fees will be $13,614, and we all know lawyer fees are not cheap.


Up to now I have made $7600 minus 760 in penalty fees. I do not know what the regular taxes have cost so I will leave that figure out.


200,000 principal

-13,614 early withdrawal

-760 10% penalty fees

--------

185,626 What I would be able to recover

7,600 interests earned

--------

193,226 Total with recoverable and interest earned


Of course that does not take into consideration that I would have had this money invested elsewhere all this time earning money, so I am not sure if I should consider the interest earned in my calculation.


Would I be better off waiting another 1 1/2 years until the interest rate on the annuity drops down to 1% and then take the money out?


There is also the risk that if I remove this money from the account that I will be paying an extra 10% fee on everything that I get back.


I could just let this all go but it is hard to sleep at night knowing that someone has lied and taken advantage of you and you have to live with the reminder for another 5 ½ years while they continue to make money off you.


I would love to hear what some of you would do at this point in my situation.


Thanks

 

[Life Hawk]

I just wanted to update where I am with this. I received an email today from AIG.


They indicated that the insurance agent said he told me about the 10% penalty fees. So basically, they made their decision on it being his word against mine. Of course he said he told me. Surely, they did not expect him to say he intentionally left that information out?


I thought they would consider that the policy did not make since.


I did write to the State of California Department of Insurance and they did try to help. I feel like AIG was not responsive until the Insurance Department got involved. Unfortunately, from what I have read on the Ca. Dept of Ins. Website, they do not have the authority to really do anything to help an individual like myself. They are there to regulate the industry.


Oh btw, I have been trying to get a copy of the cover letter and other various documents that the insurance agent submitted. AIG has a standard response to this question...Please give us 7 days to process the request and another 7 days to receive the documents in the mail. I have called and asked for these documents twice and they have told me the same thing both times and the documents never come.


I am trying to decide if I should hire a lawyer or recover the money by paying even more penalty fees. The penalty fees will be $13,614, and we all know lawyer fees are not cheap.


Up to now I have made $7600 minus 760 in penalty fees. I do not know what the regular taxes have cost so I will leave that figure out.


200,000 principal

-13,614 early withdrawal

-760 10% penalty fees

--------

185,626 What I would be able to recover

7,600 interests earned

--------

193,226 Total with recoverable and interest earned


Of course that does not take into consideration that I would have had this money invested elsewhere all this time earning money, so I am not sure if I should consider the interest earned in my calculation.


Would I be better off waiting another 1 1/2 years until the interest rate on the annuity drops down to 1% and then take the money out?


There is also the risk that if I remove this money from the account that I will be paying an extra 10% fee on everything that I get back.


I could just let this all go but it is hard to sleep at night knowing that someone has lied and taken advantage of you and you have to live with the reminder for another 5 ½ years while they continue to make money off you.


I would love to hear what some of you would do at this point in my situation.


Thanks

I guess my question would be this, if the market wasn't where it is, would you feel the same? Let's say you jut took the annuity out and the market drops 14%... would that change how you feel at the moment?

 

[Julieolo]

No, not at all. I don't follow the market. I know it goes up and down. I have seen in the news that it has been going down lately but I'm sure it will go back up again.

I guess my main problem with this whole thing has been more emotional. I feel stupid, embarrassed, mislead and lied to. I don't think it is fair that AIG and the insurance agent are making money off of my money and I am paying penalty fees that I was not told about.

I don't care if the interest rate is good or bad. I care that I was mislead. Maybe if I could get past the emotional part I could make a better decision on what to do.

 

[Life Hawk]

California put a man in jail for what you are talking about... and unfairly as it turns out. It is just difficult for me to understand how you are where your at and no one is willing to help.

Most companies would give back the money just not to have Dept. of Ins. on their case... somethings aren't adding up.

 

[DHK]

I'd still send a complaint to FINRA: Have a Problem? | FINRA.org

Firms are truly afraid of FINRA.

 

[Julieolo]

California put a man in jail for what you are talking about... and unfairly as it turns out. It is just difficult for me to understand how you are where your at and no one is willing to help.

If he says he told me about it and I say he did not tell me, how can I possibly when this case?

AIG also mentioned that I signed a contract that that had the penalty information in it, which is true.

The way they see it, he is covered.