Annuity Linked TVI Index by Security Benefit

[Justin Bilyj]

The good the bad and the ugly.
I like how its a commodity based index strategy, I think it will hedge against the inflation about to roll in.

My worry is the 5 year point to point and the fact that they only compare the last 11 years of the S&P500 to it. I think there should be a longer monte carlo simulation even though there's nothing to compare it to since the index hasn't been around as long.

Anyone have any feedback on this annuity?
Thanks!

 

[annuityexpertguy]

Emptyeternity -

I agree with you that the 5 year point to point is a bit scary to say the least. In fact I was looking at some charts (Annuity Linked TVI Index (USD) Chart - ALTVI - Bloomberg). This index is down 7% the last 5 years, 19% the last 3 years and 15% over the last 12 months. That means that anyone that has purchased this annuity in the last year has a lot of losses to recover from to make a positive return over the next 5 years. It would take a significant bull market in the commodities to make that up.

Also, there are some goofy fees and long short plays that can be done inside the annuity by some sort of asset manager. Longterm, I believe we are in for some inflation and this product will help when that happens, but we could still be a in a deflationary period for another 5-10 years, maybe more if we are another Japan.

Not to mention if your client ever asks how they are doing, you will never really know a good answer until their 5th anniversary.

If yield is what you are chasing with FIAs, there are still some other traditional indexed annuity with annual reset that have over 6% annual caps.

 

[Justin Bilyj]

Great answer! Had similar sentiments.
As far as the index annuity with +6% cap I think the baa by annexus is my pick. Any other products you recommend?

 

[cloisbarton]

Here is a blog on TVA
Security Benefit Life TVA (Total Value Annuity) Explained | Annuity Think Tank: Blog

 

[annuityexpertguy]

I'll send you a PM on some more details.

 

[Chad.C.O]

I am pretty sure the Annuity Income Illustrator from Annuity Innovation Systems has the Security Benefit TVA product and compares it to other carrier products in their illustration