4.05% for 5 year Fixed Annuity

[IsaacA]

Rate special starting 9/1/18 will be 4.05% for 5 years
Companies are really competing at the 5yr rate.
Please be aware this is an AM Best: B Rated company.

What are y'alls thought on B rated companies?
Thoughts on this rate?

 

[Tahoe Ray]

Rate special starting 9/1/18 will be 4.05% for 5 years
Companies are really competing at the 5yr rate.
Please be aware this is an AM Best: B Rated company.

What are y'alls thought on B rated companies?
Thoughts on this rate?

Atlantic Coast life already has rates higher than that and is B++.

On short term stuff, more people are open to it. On the longer term (living bene riders), it is a tougher sell (for me).

Also, you'll want to make sure that your E&O covers carriers with that rating.

 

[nugget1tau]

With that rating, of course you’re going to get a percentage like that. It’s almost like buying a high yield bond.

Be careful, they’re a B rating for a reason I’m sure.

 

[IsaacA]

Atlantic Coast life already has rates higher than that and is B++.

On short term stuff, more people are open to it. On the longer term (living bene riders), it is a tougher sell (for me).

Also, you'll want to make sure that your E&O covers carriers with that rating.

ACL yield is 4.0% and that's not counting the Death Benefit rider of 0.25% which eats into your interest. Same with Sentinel 4%, but not including the riders.
And, those are some key riders in my opinion.
So, as far as true rates I think this is the best. I believe they do not allow for free withdraws.

 

[IsaacA]

Just stay under the state Guarantee's limit and the client should be fine.

I agree.
Depends on what that particular client is wanting.

 

[Tahoe Ray]

ACL yield is 4.0% and that's not counting the Death Benefit rider of 0.25% which eats into your interest. Same with Sentinel 4%, but not including the riders.
And, those are some key riders in my opinion.
So, as far as true rates I think this is the best. I believe they do not allow for free withdraws.

You can buy the free w/ds if you like as well. DB is included in the state of FL, where I normally write them but you make a good point.

 

[Stephen]

Rate special starting 9/1/18 will be 4.05% for 5 years
Companies are really competing at the 5yr rate.
Please be aware this is an AM Best: B Rated company.

What are y'alls thought on B rated companies?
Thoughts on this rate?

I haven't done a fixed rate product in a couple of years, the last time that I did one Liberty Bankers was a B rated carrier that had a pretty decent rate. It's good to have a carrier like that in your hip pocket, but when it comes down to it , my clients and I both have felt more comfortable with A rated carriers.

One thing that hasn't been mentioned yet about state guarantee funds is that you aren't just handed a check when the carrier becomes insolvent. The process has to go through the courts , and sometimes even the state legislature to hash everything out.

 

[Stephen]

Just stay under the state Guarantee's limit and the client should be fine.

The client should be fine. If the carrier that you sell them goes into receivership , your relationship with them probably won't be.

 

[Allen Trent]

Just stay under the state Guarantee's limit and the client should be fine.

That is true & good advice, but my understanding is that the Guaranty Associations are not pre-funded for potential claims, meaning surviving carriers of the state would get assessed for their share after the liquidation of the defaulted carrier happens. I would only imagine all the surviving strong carriers will drag their feet to pony up the funds for a carrier that had bad practices leading up to the failure. I am sure they will get paid, but it may take awhile & that is after waiting for the liquidation/receivorship to occur

Also, my understanding is the claim is paid by the state the customer resides in at time of liquidation, not the state they made the original purchase in. IF the defaulting carrier was not licensed in the state you reside, the Guaranty Association for the state the carrier was domiciled would be responsible.

I know Michigan has $250k per annuitant, not owner, for Annuity contracts. So, it could be possible to have someone own 2 or more annuities & put their spouse or others on as annuitant to get the greater protection. But, putting someone different as annuitant, even a spouse can have varying issues later at maturity or claim time depending on the specific carriers language in the annuity contract (owner or annuitant driven) & how the treat a spousal assumption in terms of letting them keep the exact contract at the full interest rate or if it pays a much lower death claim rate if kept.

Lastly, the laws state you cannot discuss or promote Guaranty Associations existence to clients & prospects unless they ask.

 

[IsaacA]

That is true & good advice, but my understanding is that the Guaranty Associations are not pre-funded for potential claims, meaning surviving carriers of the state would get assessed for their share after the liquidation of the defaulted carrier happens. I would only imagine all the surviving strong carriers will drag their feet to pony up the funds for a carrier that had bad practices leading up to the failure. I am sure they will get paid, but it may take awhile & that is after waiting for the liquidation/receivorship to occur

Also, my understanding is the claim is paid by the state the customer resides in at time of liquidation, not the state they made the original purchase in. IF the defaulting carrier was not licensed in the state you reside, the Guaranty Association for the state the carrier was domiciled would be responsible.

I know Michigan has $250k per annuitant, not owner, for Annuity contracts. So, it could be possible to have someone own 2 or more annuities & put their spouse or others on as annuitant to get the greater protection. But, putting someone different as annuitant, even a spouse can have varying issues later at maturity or claim time depending on the specific carriers language in the annuity contract (owner or annuitant driven) & how the treat a spousal assumption in terms of letting them keep the exact contract at the full interest rate or if it pays a much lower death claim rate if kept.

Lastly, the laws state you cannot discuss or promote Guaranty Associations existence to clients & prospects unless they ask.

Lots of info. I'll try and double check it if I have free time. It would be nice to double check and have a final word. To use as a reference.
Does anyone know when the last time an insurance carrier went belly up?
2008?
From my understanding another insurance company will step up to the plate and buy the assets for pennies on the dollar. They just have to honor previous contracts.