Annuities Objection

[jmhopkins40]

Without any moonlight philosphy lol can anyone honestly provide a direct, accurate response for each objection to close the annuity sale ie...

Client questioning a tax deferred fixed annuity, 12% bonus, 5% fixed interest rate, lifetime income rider,American Equity

1. How does the insurance company profit from an annuity sale when they offer 12% bonus and 5% fixed interest rate

2. If a customer invests $100K, how long do the annuity payments continue....

3. At time of death, the beneficiaries receive the "Full Contract Value." What exactly is this?

Example: If one invests $100K and lives for say 5 years, 10 years, 15 years, and 25 years, what is the break down for each of these scenarios by:
1) Annuity Payments to the customer
2) Death Benefit (full contract value) to the beneficiaries
3) Money that goes to American Equity

4. I assume that three above categories should somehow sum to $100K + interest earned over the years + the upfront 12% bonus.

5. How much of the proceeds go to # 1 and # 2 (the customer and the beneficiaries) and then how much goes to # 3 (American Equity).

6. I need to know how this company makes their money and how much they make versus how much the customer and beneficiearies receive.

If the customer and beneficiaries somehow receive back the full $100K plus a nice interest rate return, then that is cool. On the other hand, if they get something less because the die too soon or live too long or whatever, then this is not so cool.

This client is very suspicious of insurance companys, but currently invest 500,000 in CD;s IRA's, stocks

He is VERY UNSURE about annuities and how AMERICAN EQUITY can offer such a deal

 

[padthaiforlunch]

Mike,
Get a specimen contract.

The carrier earns money if the client stays through the contract by being able to invest the money long-term.

They will make up for the bonus over the term.

Contract value will be reset each year. That is what is payable to the heirs.

Client dies in year one? Company takes a loss and offsets that loss by hitting yo with a charge-back on commission paid.

I've done enough typing for today, so just call up Am Eq sales dept and they can answer your questions. They're a nice bunch of people.

That said, trying to roll a client out of Am Eq is a royal pain. They drag their feet and call the client to confirm they really want to do it. They are very aggressive about keeping the business that is placed with them.

 

[insuranceexec]

Mike,
Get a specimen contract.

The carrier earns money if the client stays through the contract by being able to invest the money long-term.

They will make up for the bonus over the term.

Contract value will be reset each year. That is what is payable to the heirs.

Client dies in year one? Company takes a loss and offsets that loss by hitting yo with a charge-back on commission paid.

I've done enough typing for today, so just call up Am Eq sales dept and they can answer your questions. They're a nice bunch of people.

That said, trying to roll a client out of Am Eq is a royal pain. They drag their feet and call the client to confirm they really want to do it. They are very aggressive about keeping the business that is placed with them.

Very correct statement, Pad.

Let me know if you do not have the FMO contract with American Equity, and would like one.

 

[indaville]

Calling AE and asking them directly is the best idea. I think they are lowering the bonus to 10% soon. Great company though, we do a lot of business with them and they treat their account holders more than fairly IMHO.

Matt

 

[Ruck4Life]

I have heard alot about American Equity and am thinking of placing some business through them. Anything specific I should know about them? and what is this FMO contract that your mentioning insuranceexec?

 

[dgoldenz]

Is that 12% bonus and 5% fixed on the accumulation side or the income side?

 

[Ichiban]

Is that 12% bonus and 5% fixed on the accumulation side or the income side?

It is a 12% Bonus that is vested over 14 years but is being reduced to a 10% bonus from what I understand. The 5% is the roll-up amount of their Lifetime Income Rider. (It is a lower bonus for older ages)

The way the can afford it is partly the structure of the product. The bonus is vesting over 14 years meaning you are going to have some persistency assumptions and if they surrender early they don't get all the bonus and may pay surrender charges. Income Riders add persistency assumptions and clinets tend to take less penalty free withdrawals prior to utilizing it. Meaning they expect people to hold these contracts longer which allows them to purchase higher yielding long term investments.

Basically the run a model based on past experience. They make assumptions off of that experience on how many people will die, surrender, etc.

 

[insuranceexec]

I have heard alot about American Equity and am thinking of placing some business through them. Anything specific I should know about them? and what is this FMO contract that your mentioning insuranceexec?

Field Marketing Organization contract. Give me a call if you would like more details. Thanks.

 

[InsureGuy5]

It looks like Aviva might be back in the game soon as well. You might keep them on the radar.

 

[Charpress]

It looks like Aviva might be back in the game soon as well. You might keep them on the radar.

Why would any of us deal with a company that (in effect) screwed everyone who had any pending business by pulling the rug out from FMOs with only 3 days notice to get the business in or lose it? I lost a lot of money because of them.

I mean, really, they slit the throats of some good FMOs who sent them billions in business and then had to scramble to make things up elsewhere.

Aviva has never gotten straight with exactly what they are. Are they American Investors? Are they AmerUs? Or are they one of the many other companies that they own, control, farm out to others, or whatever. Are they Multichoice Marketing? Some good products, yes. Some horrible and confusing marketing as to what product goes with what package always reminded me of the old Soviet Union.

"Sorry mate, we can't accept your annuity app because it was submitted on an American Investors form not an Amerus form."

"But you are the same company and the form is the same."

"Nope, the number on the form is different."

Yeah. I really want to keep them on my radar.