CD’s to annuity

[Tim Lumbao]

Hey guys. I got a client that have $360k in CD’s. She said she cannot pull the money until next year. Is there any surrender charges in CD’s if we decided to pull it out?

 

[scagnt83]

Hey guys. I got a client that have $360k in CD’s. She said she cannot pull the money until next year. Is there any surrender charges in CD’s if we decided to pull it out?

Usually, they lose the accumulated interest for the current year.

Depending on the rate, the lose can be justified. Sometimes it cant. If a bonus is involved it often can be justified.

 

[DHK]

There is no surrender charge on a bank "Certificate of Depreciation" that impacts the principal balance (unlike surrendering existing annuity contracts).

 

[adjusterjack]

Hey guys. I got a client that have $360k in CD’s. She said she cannot pull the money until next year. Is there any surrender charges in CD’s if we decided to pull it out?

The interest penalty could be anywhere from 3 months to 12 months depending on the CD duration.

If she bought the CDs within the last 4 months or so she may be earning well over 4%. To lose a year's interest at 4% on $360,000 is $14,400. To lose 3 month's interest at 4% is $3600.

She would be wise to wait until they mature before deciding on an annuity. And you would be wise to encourage her to wait until they mature.

 

[LostDollar]

Hey guys. I got a client that have $360k in CD’s. She said she cannot pull the money until next year. Is there any surrender charges in CD’s if we decided to pull it out?

The place to ask that question is (are) the financial institution(s) where the CD's are. I would expect to see at least a 6 month early withdrawal penalty.

 

[Tim Lumbao]

The interest penalty could be anywhere from 3 months to 12 months depending on the CD duration.

If she bought the CDs within the last 4 months or so she may be earning well over 4%. To lose a year's interest at 4% on $360,000 is $14,400. To lose 3 month's interest at 4% is $3600.

She would be wise to wait until they mature before deciding on an annuity. And you would be wise to encourage her to wait until they mature.

it’s been in CD’s for 3 months. She’s interested in putting it in an index annuity that will give her 16% bonus on the move. I’m just thinking about the consequences of pulling the $$ out before maturity.

 

[Tim Lumbao]

The place to ask that question is (are) the financial institution(s) where the CD's are. I would expect to see at least a 6 month early withdrawal penalty.

And what are the penalties?

 

[goillini52]

And what are the penalties?

Check with the bank. It'll vary from bank to bank.

 

[adjusterjack]

it’s been in CD’s for 3 months. She’s interested in putting it in an index annuity that will give her 16% bonus on the move. I’m just thinking about the consequences of pulling the $$ out before maturity.

16% of $360,000 is $57,600. Is that an up front bonus, cash in her pocket, no gimmicks, no strings attached?

(Where can I get one of those?)

Figure out the penalties and get her understanding and agreement in writing, in large, easy to read print, witnessed an notarized.

 

[Deborah Armstrong]

Hey guys. I got a client that have $360k in CD’s. She said she cannot pull the money until next year. Is there any surrender charges in CD’s if we decided to pull it out?

The interest penalty could be anywhere from 3 months to 12 months depending on the CD duration.

If she bought the CDs within the last 4 months or so she may be earning well over 4%. To lose a year's interest at 4% on $360,000 is $14,400. To lose 3 months' interest at 4% is $3600.

Tim, you got a lot of good input here, especially the comment from Adjusterjack. You need to be thinking about what is in the best interest of the client. Find out what the cost to the client would be if they moved their money. Where are their interests best served? If you show the potential client that you care about their best interest, then you have built a relationship of trust. People do business with whom they know, like, and trust. Look at the big picture and play the long game.