EIUL and Mortgages

[Crabcake Johnny]

I agree that most don't do well in the equity market. Also agreed that seniors should not have any significant amount of money (if any) in equity investments. Saying that, I'm not too sure what the huge problem is if a senior has CDs returning 5.25% with no sales charges and no fees. If you talk to someone who sells a lot of annuities apparantly it's the kiss of death for seniors to have CDs. I still don't get it - honestly. At 7% with 1.5% in fees (which are average annuity fees) it's a 5.5% return. Compare to 5.25% for CDs I'm not sure where the sales pitch is for annuities.

All I can say if if the market crashes and you're locked in at 5.25% for a CD then you get 5.25. If the market crashes with a EIA or EIUL then you're at 1.5% or 2.5%. Seems annuities have more downside risk then a CD.

 

[James]

I agree that most don't do well in the equity market. Also agreed that seniors should not have any significant amount of money (if any) in equity investments. Saying that, I'm not too sure what the huge problem is if a senior has CDs returning 5.25% with no sales charges and no fees. If you talk to someone who sells a lot of annuities apparantly it's the kiss of death for seniors to have CDs. I still don't get it - honestly. At 7% with 1.5% in fees (which are average annuity fees) it's a 5.5% return. Compare to 5.25% for CDs I'm not sure where the sales pitch is for annuities.

All I can say if if the market crashes and you're locked in at 5.25% for a CD then you get 5.25. If the market crashes with a EIA or EIUL then you're at 1.5% or 2.5%. Seems annuities have more downside risk then a CD.

First thing that comes to mind is the tax advantage of the Annuity, keep in mind most Annuity money is unneeded money for some time or really not needed at all since most Annuities Monies will sit in the vehicle till death of the annuitant. Yet if they need a future income it is there and has grown without taxes which can be anywhere from 10-35% savings that the CD doesn't offer, well of course you have the CD Annuity.

 

[Guest]

Seems annuities have more downside risk then a CD.

You can't annuitize a CD. I think there is a place in everyone's portfolio for a product that will pay-out at least mortgage/tax or rent money, or best case... 'nursing home' money for the rest of one's life. Think of it not so much as an investment, but as a safety net.

True, LTCI is availalbe, but I don't see those policies having as much flexibility... but I'm not that familiar with the LTC sector of the industry.

Al

 

[Crabcake Johnny]

Depends on when it kicks in. What if a senior buys an annuity and need nursing home care the next year?

 

[senior-advisor-indiana]

THey can usually get most of it out for nursing home care. I sell annuities based on the ta advantages and on the fact that they bypass probate. You can get fixed annuities now that are 5.1% for 5 yrs. 5.1% tax deferred vs. beats 5.25% in a CD.

 

[senior-advisor-indiana]

None of the annuites I sell have fees. They go by participation rates, caps, and averaging. If the moey doesnt perform an a givin year there are no fees or caps ect.

 

[Crabcake Johnny]

5.1% fixed tax deferred with no fees and the money's available immediately for nursing home care sounds like a very good deal.

 

[senior-advisor-indiana]

I'm not sure what the nursing home waiver is on that, but you can get all yoour money out in 5 yrs just like a CD.

 

[Crabcake Johnny]

I wouldn't recommend 5 year CDs for seniors. My father has a lot of 1 year CDs since he's in his mid-70's he understands he might be in a postion soon where he'll need that money.

 

[senior-advisor-indiana]

I would never recomend a 5yr CD either. The shrter term CDs are paying more now. I wouldn't recomend those either. I would recomend an annuity though)