11% Surrender Charge

[cloisbarton]

So, why not take a different spin on this contract for the client. Instead of replacing it (which you could do with a product that offer 12% bonus, would have to check state), why not leverage it. Depending on the purpose of the money you could either leverage those funds into a SPWL or SPIUL contract and move the assets from a taxable to non-taxable position for the beneficiaries and possible get some LTC benefits out of it. There might be some other planning options available that the client would consider besides just a move to another annuity.

 

[DHK]

Considering the new annuity lawsuit thread... I hope the OP is glad for the advice and recommendations given.

 

[Experienced Agent]

It is the advice I expected. I have been out of the annuity market for a couple years and wasn't quite sure what direction suitability had taken in my absence. As expected, it has progressed to be more restrictive. I was surprised in speaking to Allianz home office, they now require $84,000 liquid before they will approve any annuity. I suppose this is not so bad, but does eliminate the "Mom and Pops" that haven't done a whole lot more than fund their 401K or IRA.

 

[pfg1]

I was surprised in speaking to Allianz home office, they now require $84,000 liquid before they will approve any annuity.

I suppose this is not so bad, but does eliminate the "Mom and Pops" that haven't done a whole lot more than fund their 401K or IRA.

Wow, $84k? I didn't know that. Seems awful high to me. The reality is...most folks don't save much outside of their 401k / IRA... because that is how we are trained to think.
So if they want to roll their old 401k into an annuity to protect it and maybe provide lifetime income in the future - they can't because they haven't saved a pile of $ in addition to it? I don't do alot of annuities, but that doesn't seem like it makes alot of sense to me. I realize the need for liquidity, but that seems awful high.

Do they consider $ left in the 401k/IRA as liquid $? (like someone has $250k in 401k/IRA and wants to move $150k of it into an annuity)

 

[ScottLFB]

I know I'm late to the party but I misplaced my Forum password.. lol

Where was this written that it was a Variable Annuity with Phoenix? If it's a FIA you can absolutely drop the Income Rider that was sold on the product. It says this right in the disclosure.

If you're offering a Allianz 222 Income Account bonus of 15% to offset a surrender penalty on the cash value, you need to do some more training on the effects of how you are positioning that.. And buy a bigger E&O policy was well.

If she is only 2yrs into the contract, she should have a 12% penalty with Phoenix. If the penalty is 11% then I would assume she is right around year 4. As far the as the "significant rider charge" that you mentioned, the cost of their riders is right in line with what the competitive carriers have. If this is a "woman of principal" is sounds like she probably bought the product for the rider features and now has "forgotten" why she bought it and the only reference she has is the rider fee being charged. If she bought this Phoenix policy a few years ago she should actually have the same caps roughly as what a newly issued product would be for the most part (I don't need a list of forum members telling me about every product that has high caps now)..

If you pull her out of the Phx product to put her into something else with a premium bonus to offset the surrender penalty, what are you accomplishing if she doesn't want the rider because she doesn't like the fee. If she was 70-72yrs old at the time of original sale, her sell point was probably wanting an income stream within the next few years off that money. Instead of activating that income stream she is now letting it sit there and isn't happy about the fee.

My suggestion based on your facts given would be to figure out what she liked about the original product when she bought it. Make sure the replacement product improves those goals. If income was and still is the goal, you're going to have a hard time beating the Phx payouts now that she's had it a couple of years and is ready for the income to be activated.

Off the top of my head for a 74yr old I'm thinking about the Bonus Gold with American Equity which will give her the 10% bonus to offset most of all of the surrender charge, but now you have moved her from a surrender period of less than 10yrs to a new 16yr product. The only reason I'm thinking AmEquity is the 4% Free income rider for the client that "likes the thought of income without having to annuitize yet tends to forget what the rider is doing for her down the road when she is only seeing the fee".

Hope my ramblings help..

 

[Experienced Agent]

I know I'm late to the party but I misplaced my Forum password.. lol

Where was this written that it was a Variable Annuity with Phoenix? If it's a FIA you can absolutely drop the Income Rider that was sold on the product. It says this right in the disclosure.

If you're offering a Allianz 222 Income Account bonus of 15% to offset a surrender penalty on the cash value, you need to do some more training on the effects of how you are positioning that.. And buy a bigger E&O policy was well.

If she is only 2yrs into the contract, she should have a 12% penalty with Phoenix. If the penalty is 11% then I would assume she is right around year 4. As far the as the "significant rider charge" that you mentioned, the cost of their riders is right in line with what the competitive carriers have. If this is a "woman of principal" is sounds like she probably bought the product for the rider features and now has "forgotten" why she bought it and the only reference she has is the rider fee being charged. If she bought this Phoenix policy a few years ago she should actually have the same caps roughly as what a newly issued product would be for the most part (I don't need a list of forum members telling me about every product that has high caps now)..

If you pull her out of the Phx product to put her into something else with a premium bonus to offset the surrender penalty, what are you accomplishing if she doesn't want the rider because she doesn't like the fee. If she was 70-72yrs old at the time of original sale, her sell point was probably wanting an income stream within the next few years off that money. Instead of activating that income stream she is now letting it sit there and isn't happy about the fee.

My suggestion based on your facts given would be to figure out what she liked about the original product when she bought it. Make sure the replacement product improves those goals. If income was and still is the goal, you're going to have a hard time beating the Phx payouts now that she's had it a couple of years and is ready for the income to be activated.

Off the top of my head for a 74yr old I'm thinking about the Bonus Gold with American Equity which will give her the 10% bonus to offset most of all of the surrender charge, but now you have moved her from a surrender period of less than 10yrs to a new 16yr product. The only reason I'm thinking AmEquity is the 4% Free income rider for the client that "likes the thought of income without having to annuitize yet tends to forget what the rider is doing for her down the road when she is only seeing the fee".

Hope my ramblings help..

I do believe the agent would have clearly spelled out the rider cost (I do know the agent). Your correct in your assumption that she forgot the rider cost.

We were able to get the rider removed from the contract. For some reason the writing agent could not get this removed. It appears she is now content to keep the phoenix policy.