Appropriate to roll over entire 401k to FIA?

[tikibarrister]

That’s great! I google mapped the address for these people, and the closest actual city is about an hour away. I couldn’t imagine being that far away from a city.

Maybe they need Marty Raney instead of an annuity...

 

[titeye]

Just wanted to get some opinions on this. Have a prospect (husband and wife) who both are adamant they don't want any stock market risk. He is retired, she is retiring in a month.They lost $60k in her 401k a couple of years ago and still hasnt returned, and are very salty about that still, so they dont want any risk. They are kind of pushy because they want to “get out of the stock market” so

They have 60k cash savings outside of the 401, and their social security covers all their bills. They want income in a few months. Is it appropriate to roll over their full 401k into a FIA?

Everybody wants the gains of the stock market, but no one wants to experience losses. That's the same as everyone wanting to go to Heaven, but no one wants to die.
I don't think an FIA would work, because they want the money in a few months. If anything, maybe an Immediate Annuity, since they need income.
Rate of return is irrelevant, when you need the money now. That's why checking and savings accounts can't pay high rates.

 

[Allen Trent]

Everybody wants the gains of the stock market, but no one wants to experience losses. That's the same as everyone wanting to go to Heaven, but no one wants to die.
I don't think an FIA would work, because they want the money in a few months. If anything, maybe an Immediate Annuity, since they need income.
Rate of return is irrelevant, when you need the money now. That's why checking and savings accounts can't pay high rates.

Guessing some FIA lifetime income riders may be as much as or more than immediate annuity. And if income need is less than entire assets would generate, could choose FIA with a lifetime income rider that doesn't start for 5 years or so..

 

[Tahoe Ray]

Guessing some FIA lifetime income riders may be as much as or more than immediate annuity. And if income need is less than entire assets would generate, could choose FIA with a lifetime income rider that doesn't start for 5 years or so..

Exactly. Most FIA lifetime income riders allow for immediate income and in some cases generate similar or more income than a SPIA w/ a refund option.

This case is literally what these products were made for.

 

[Allen Trent]

Exactly. Most FIA lifetime income riders allow for immediate income and in some cases generate similar or more income than a SPIA w/ a refund option.

This case is literally what these products were made for.

Agree, just starting to see a lot of inexperienced agents get into annuity (MYGA & annuity) now that rates are improving & seeing some square pegs in round hole. Saw a person that bought FIA with single life income rider because it paid more, but surviving spouse will need that income for life, especially when they lose the smaller of the 2 SS checks. If index does well, it may not matter, but if income rider not based on joint life & index flat or less than income withdrawn, could be devastating for surviving spouse to lose the FIA income at same time losing 1 of 2 SS checks

 

[bill3173]

You guys are missing the point. You should be locking up high rates (or potential gains) NOW.

Rates are already going down in MYGA and CD land.

The rate locks are a benefit, not a detriment.

Clients who buy short paper are short sighted, and will get shorted.

FIA is the way to go for a 401k alternative if the client doesn't want risk.

I've never seen such interest in short term Annuities, as I have lately. I've had two in the last week; both came from higher interest short term CDs, and both wanted a 3 year fixed annuity and both were $250K.

I had one the week before, but his situation was too messy, so I directed him to his bank, and they sold him an annuity.

 

[Patrick Flammia]

FIA is the way to go for a 401k alternative if the client doesn't want risk.

What indexes/companies are you typically writing for? I only write a few FIA's a year as they pop up with my Medicare sales, but I feel like for the last 4-5 years now these newer indexes just don't perform. Do you prefer straight S&P allocations or have you had success with some of the company specific indexes?

 

[Tahoe Ray]

What indexes/companies are you typically writing for? I only write a few FIA's a year as they pop up with my Medicare sales, but I feel like for the last 4-5 years now these newer indexes just don't perform. Do you prefer straight S&P allocations or have you had success with some of the company specific indexes?

Largely depends on objective.

For income, performance is less important (but still a component to evaluate).

For accumulation, I personally like S&P 500 triggers. They're very easy to explain to a client and in some cases (like with Lincoln), it's really close to their annual p2p cap.

4 or 5 years ago, they had to have those indices because interest rates were terrible. Now, S&P crediting strategies are viable again.

 

[Tahoe Ray]

I've never seen such interest in short term Annuities, as I have lately. I've had two in the last week; both came from higher interest short term CDs, and both wanted a 3 year fixed annuity and both were $250K.

I had one the week before, but his situation was too messy, so I directed him to his bank, and they sold him an annuity.

I was referencing 6-12 month CDs as "short". I agree with what you're saying, 3-year products have become very popular.

 

[bill3173]

I was referencing 6-12 month CDs as "short". I agree with what you're saying, 3-year products have become very popular.

I knew that, and I realized that my post may have been a little nebulous. It was a coincidence that both of these guys were independent businessmen, and had taken advantage of 90 day high yield cd's and both of them wanted to quickly get the money out of the cd at the end of the 90 and into an annuity, rather than get the lower fixed rate longer term cd.

Completely unrelated cases in different States. Probably never have that happen again. It's a shame you have to work in a bank to get to make that steady 9-5 living as an annuity writer, instead of the desperate battle of health and life sales. It would be like a dream.