Allianz Pro V1 Annuity

[scagnt83]

@Josh,

The ING Interest Rate Benchmark Strategy is available as a crediting method on many of ING's FIA products.

The strategy contains a Cap and a Multiplier.

Here is a Brainshark presentation from ING about this particular strategy. You shouldn't need a username and password for ING to get to it.

Interest Rate Benchmark & Trigger Strategy | ING Content Portal

So whats your opinion on it Nathan?

As of today the 10yTbill has a 1 year % change of 71bps. And that is the Fed "not doing anything".
When they start to unwind next year (god please let them start to unwind next year), it could easily be double that imo... so I am a bit torn... obviously politics will dictate a lot...

----------

Thanks for the input. Going back to the webinar's
And listen intensely. Thanks

To be brutally honest, after looking at the product I cant think of a single reason to sell it...

I have never been a fan of Allianz in general. There is usually a product thats equal or more competitive, plus more simple and consumer friendly.


This product is definitely their most simple IA. But it only gives you the Bond Indexes to choose from. Plus it currently has a 1.7% spread.

Those indexes just dont look well positioned to do well over the next few years with rising rates.

The 10yT is up for the year, especially over the past 6 months. And during that time bond yields have been decreasing.


Out of curiosity, why are you interested in this product? Was it recommended to you by an upline?


Also, from the info I found, it showed no Income Riders available.

 

[nathan.lee]

So whats your opinion on it Nathan?

As of today the 10yTbill has a 1 year % change of 71bps. And that is the Fed "not doing anything".
When they start to unwind next year (god please let them start to unwind next year), it could easily be double that imo... so I am a bit torn... obviously politics will dictate a lot...

----------

Well...first, the ING Interest Rate Benchmark isn't tied to the US 10yr. TBill but rather the 3 month LIBOR. The 3M LIBOR has been steadily decreasing since March 2012 (0.47) to today's rate of 0.24.

Will it continue to slide? Possibly but it can only drop by 0.24 at this point. It is currently at its 5 yr. low.

Given the way that this strategy works, I believe it could be a strong performer assuming ING doesn't significantly alter its caps or multiplier and the 3M LIBOR rises significantly.

The strategy is a simple annual point to point with a cap and a multiplier.

(Ending 3M LIBOR - Beginning 3M LIBOR) X Multiplier = Credited Rate (Subject to Cap)

On the ING Secure Index Seven the Cap is 10% and the Multiplier is 400% on this strategy as of today for the low band <75K. (11/13/2013) On the high band the cap is the same but the multiplier is 550%.

Let's assume that 11/12/2013 is the issue date and 11/12/2014 is the anniversary date. Let's also assume that the 3M LIBOR moved from 0.24 (today's rate) to 0.58 by the anniversary date.

I choose 0.58 because that represents the 3M LIBOR's 3 yr high.

Using the formula and rates at issue this is what will be credited to the account.

(0.58 - 0.24) X 4 (represented by 400%) = 1.36

So the question is IF you believe that the 3M LIBOR will MEET or EXCEED its 3 yr. high in the next 1 yr. AND you believe that you cannot match 1.36 or greater using other crediting strategies then this seems to be a good strategy for your clients.

We just have to remember that carriers are all buying the same dollar and most crediting strategies are designed to beat traditional fixed rates by 2-3% over time.

 

[RedKite]

Great breakdown Nate. The cap and the multiplier are adjustable in the contract. So if your clients are a fan of the gains Nate mentioned along with a rate volitility strategy and oh, if ING feels its underwater they will adjust the crediting limits, then this is for your client.

There really is nothing on the fixed side that, for me, is ever really enticing. We always have more on the investment side whether its VAs or equity strategies.

I currently really like the yield plus covered call strategy. If your clients can bear the idea of an option strategy, its a great income investment strategy that spits out a 8-10% (13% YTD, 7.98% over last 15 years) with some losses since each call is an independent transaction so it works well for its diversification, income and tax advantage.

 

[chriswford]

The ProV1 is tied to a bond INDEX fund. Not to be confused with a straight bond fund.

Interest is based on bond allocations. Even though bond values typically go down where rates rise that is NOT the case with bond indexes. When rates go up and bonds go down as long as the value of the underlying bonds doesn't decrease more than the interest being paid on the bonds the index will have a positive return.

Over the last 20 years your clients would have seen annualized returns of 5.66%. 5.15% over the last 10 years. 4.75% in the last 5. It returned 5.33% in 2012.

Commission is decent. You can take out a loan up to 50% of the value and it offers a nursing home, assisted living and hospitalization waivers for a small fee.