I understand the same could be said with an A+ carriers, but it lessens the associated risk. Even if there is no negligence, you can still get dragged into court to have to point that out. Some E&O companies won't even cover A- carriers. Everyone is free to use whatever carriers they want, that's just my personal preference. Same reason I'd never use some of these crappy FE and GI life insurance companies.
Best Indexed Annuity?
- Thread starter InsureGuy5
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- 1,802
Everyone is entitled to their own opinion. But to make a blanket statement like "but I'd be pretty careful of selling annuities from A or A- rated carriers. I'd rather not test out that E&O insurance in the future if possible" is not warranted.
The next time you make a statement of opinion that carries no substance preface it by saying so.
Also I am curous what E&O company will not cover A- companies?
Isn't any answer to the OP's original question going to be a statement of opinion? There is no "best" indexed annuity, only highest paying or highest caps.....doesn't necessarily make it the "best".
If you ask me, the statement does carry substance - with all the financial turmoil, agents need to be more careful than ever in what companies they deal with. I would say that it's just as bold of a blanket statement to say that all A and A- rated carriers are ok to sell. How about a carrier that was just downgraded from A to A-? What happens when your A- carrier gets downgraded to B+?
On the E&O question - I'm not sure off the top of my head. I know when discussing certain carriers with our case manager in the past (due to more favorable underwriting, etc) they stated that some of the E&O carriers will not cover products sold by A- companies and to make sure that our E&O would cover it if we did sell the product.
If you ask me, the statement does carry substance - with all the financial turmoil, agents need to be more careful than ever in what companies they deal with. I would say that it's just as bold of a blanket statement to say that all A and A- rated carriers are ok to sell. How about a carrier that was just downgraded from A to A-? What happens when your A- carrier gets downgraded to B+?
On the E&O question - I'm not sure off the top of my head. I know when discussing certain carriers with our case manager in the past (due to more favorable underwriting, etc) they stated that some of the E&O carriers will not cover products sold by A- companies and to make sure that our E&O would cover it if we did sell the product.
- 1,802
Those are not statements of opinion because they can be substantiated with facts. A statement like "Which one has the highest caps?" can be found by searching all of the companies that offer that particular product. Likewise for the highest paying in commission.
It would be a stretch to say; and to have validated, that you are under more scrutiny by writing an A or A- company. How can this be validated?
E&O has its aggregate limits, and would never claim to be an expert in the E&O arena.
I would definitely agree; which is why I would never make a blanket statement eluding to the fact that all A- or better companies are exempt from financial scrutiny and E&O claims. Due diligence is and should always be used when selling any type of insurance product.
I would suggest to anyone that sells annuities to make sure that a FNA is completed prior to the recommendation of any product. I would also make sure that a record is kept, which is required for 7 years, for as long as you are in the business; but again this is my opinion.
I would also like to know the name of the E&O carrier when you get a chance.
Great debate. I hope this helps.....
Ichiban
Expert
- 62
To answer the question about E&O coverage a little. Some E&O policies will not pay on a carrier rated A- or less if you are being seud because the carrier became insolvent. They will cover you for any of the normal stuff regardless of the rating of the carrier.
I would like to point out AIG's rating before it had problems and it's current rating. A rating is not everything in my personal opinion. I agree some research on the company is prudent.
As far as the question of best product. I agree with the above. It depends on what the client needs. There is no one product that fits everyone. IT is good to have several arrows in your quiver. I suggest doing some good research picking around 3 carriers and 5 products and learn them inside and out.
Allianz
Investors Insurance Company / Legacy
RBC
ING
OM Financial
Midland National
Lincoln National
Lincoln Benefit...
I would like to point out AIG's rating before it had problems and it's current rating. A rating is not everything in my personal opinion. I agree some research on the company is prudent.
As far as the question of best product. I agree with the above. It depends on what the client needs. There is no one product that fits everyone. IT is good to have several arrows in your quiver. I suggest doing some good research picking around 3 carriers and 5 products and learn them inside and out.
Allianz
Investors Insurance Company / Legacy
RBC
ING
OM Financial
Midland National
Lincoln National
Lincoln Benefit...
Last edited:
This may answer your question:
Evaluating the riskiness of a carrier's financial condition | Insurance > Insurance Policies & Claims from AllBusiness.com
Most people can probably skate through things without ever having to use their E&O even if they sell A, A-, B+ companies....but I don't want to be the guy that gets a letter from someone's lawyer wanting to know why I recommended a product from a carrier going downhill or teetering on the edge and now their client can't access their $250k/$500k/$1 mil/etc
Evaluating the riskiness of a carrier's financial condition | Insurance > Insurance Policies & Claims from AllBusiness.com
Most people can probably skate through things without ever having to use their E&O even if they sell A, A-, B+ companies....but I don't want to be the guy that gets a letter from someone's lawyer wanting to know why I recommended a product from a carrier going downhill or teetering on the edge and now their client can't access their $250k/$500k/$1 mil/etc
- 924
Caps, spreads and participation rates don't mean beans unless you thoroughly understand how a particular company uses them and unless you understand how a particular market that you are indexed to will perform. Don't know how a market is going to do this coming year? Welcome to the club.
You can do this much: in a volatile market you probably are going to want to recommend an annual point-to-point rather than a monthly average type of strategy. Why? Because there will be a cap or spread upward, but no limit downward. Consequently, monthly volatility will kill the yearly result.
That is not to say that monthly averages are not "good" depending on your best guesswork. I had a client get an actual 21% gain in an indexed annuity because his particular 12 month period really shined because the S&P drifted up each month just the right amount for him to cash in.
So, how high a particular company's cap is doesn't mean anything because ALL companies get their profits by manipulating some part of the equation. Generous cap? Fine, look for where the money is coming from in some other portion of the equation --because it will definitely be there somewhere.
I prefer companies that treat customers decently across the board. I don't like MVAs and I don't like less than a 100% participation rate. I also don't like companies that play the moving cap or spread game on existing contracts. Sometimes it has to be done, but there are a couple of companies that play this to an extreme.
You can do this much: in a volatile market you probably are going to want to recommend an annual point-to-point rather than a monthly average type of strategy. Why? Because there will be a cap or spread upward, but no limit downward. Consequently, monthly volatility will kill the yearly result.
That is not to say that monthly averages are not "good" depending on your best guesswork. I had a client get an actual 21% gain in an indexed annuity because his particular 12 month period really shined because the S&P drifted up each month just the right amount for him to cash in.
So, how high a particular company's cap is doesn't mean anything because ALL companies get their profits by manipulating some part of the equation. Generous cap? Fine, look for where the money is coming from in some other portion of the equation --because it will definitely be there somewhere.
I prefer companies that treat customers decently across the board. I don't like MVAs and I don't like less than a 100% participation rate. I also don't like companies that play the moving cap or spread game on existing contracts. Sometimes it has to be done, but there are a couple of companies that play this to an extreme.
- Thread starter
- #18
- 313
So which companies manipulate their caps and spreads less than others? That is really the crux of the question. Aviva was doing well for a while, but with the recent volatility and their hiatus - who has taken the baton?
- 428
Again I'll state AE is my favorite company!!!
- 924
Actually, I had Aviva in mind as one of the companies that plays games with existing contracts.
Allianz, on the other hand, actually has published their record on changes to caps and spreads. They have changed very little. I am not an Allianz shill by any means, but they have this much right: always 100% participation, never any MVA, and they have not historically screwed their customers with changes to caps and spreads.
You can argue all you want about other faults of Allianz, with some validity, but they have the rest pretty well put together.
