Equity Index Annuity the best ?

Sep 6, 2008

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  1. smithgroup82
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    smithgroup82 New Member

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    Hello everyone. I am working witha marketing company that is pushing for the associates to REALLY offer the EIA as a soulution to clients who has investments with mutual funds. They have devloped the philosophy that Mutual have VERY negative features during this season, and the client would be better off with moving their investments into an EIA. However there is numerous financial experts and gurus who go against this exclusive philosophy. I know there is no way it can be a "One size fits all" product or vehicle. Can anyone help by giving the pros and cons about this, by offering some simulated circumstances?

    Thease are the features that they till us to really zero in on when trying to help the client:

    A. No loss of princpal
    B. postive probate aspects
    C. Heirs to don't have to liquidate as in a mutual fund
    D. No expensive manger fees etc etc.

    What is your thoughts? Is this a could philosophy to endorse during this economy???? Thanks
     
  2. Obamamama
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    Obamamama New Member

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    Re: Equity Index Annuity the best??????????

    Gotta hate those Manger fees!
     
  3. JMO Fan
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    JMO Fan Guru

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    manger scene, seen, seine

    creche inflation? ;)
     
    JMO Fan, Sep 8, 2008
    #3
  4. psrayburn
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    psrayburn Expert

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    Re: Equity Index Annuity the best??????????

    Annuities have their place.

    1. EIA are Fixed and have guarantees not associated with Mutual funds

    2. Annuities are good for the "Safe Money" part of their asset allocation.

    3. Annuities are good almost only for Long Term commitments. (Retirement)

    4. Annuities are usually not very liquid (10%free Withdrawl) and steep early surrender charges.

    5. The EIA is awesom for Retirement Money with a long term horizon.

    Hope this helps.
     
  5. Brokers Alliance
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    Brokers Alliance Guru

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    Re: Equity Index Annuity the best??????????

    I respect your opinion, but I prefer Fixed Indexed Annuities over EIAs. Anyway, I am not arguing, but just discussing below.

    Your point #3: Actually, there are excellent SPIAs that offer immediate income.

    Your point #4: Saying FIAs are not very liquid is really a moot point if the agent is responsible. However, there are good and not-so-good Surrender charges for early withdrawal. Early withdrawal is never a deal-breaker for me, because clients usually commit for long-term and do not solely invest in annuities. Therefore they have other monies for living, emergencies, etc.

    Lastly, why have an EIA when you can invest in a mutual fund with higher risk money and with lower fees? Clients invest in FIAs as a portion of their total investment portfolio. That portion or percentage would be the conservative portion.
     
  6. bluemarlin08
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    bluemarlin08 Guru

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    Re: Equity Index Annuity the best??????????

    A. No loss of princpal
    Unless you surrender early

    B. postive probate aspects
    But negative IRD tax

    C. Heirs to don't have to liquidate as in a mutual fund
    Heirs don't have to liquidate mutual funds

    D. No expensive manger fees etc etc.
    Just unpredictable cap rates and participation limits

    In addition, all gains taxed as ordinary income versus cap gains

    No step up in basis at death

    Not something I would put friends or family in!
     
  7. JMO Fan
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    JMO Fan Guru

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    Re: Equity Index Annuity the best??????????

    Hope y'all are ready for Rule 151A. Got your Series 6? Register early. ;)
     
    JMO Fan, Sep 9, 2008
    #7
  8. Third Joker
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    Third Joker Expert

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    Re: Equity Index Annuity the best??????????


    What is the status of this? I can't imagine that it will really happen, and that if it does, insurance companies will just introduce products that fall outside of 151A's definition.

    Thoughts?
     
  9. padthaiforlunch
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    padthaiforlunch Guru

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    Eh, you probably got a year before 151 takes place.

    Certain fia's have no surrender charge, or have a withdrawal of premium rider.

    Key is whther client is more concerned with return of premium or return on premium. How conservative are they?

    No risk, some gain. Would def. use for my mother.
     
  10. dgoldenz
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    dgoldenz Moderator Moderator

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    I'll bet all of the people who shunned the ELIA's in the past couple years wish they hadn't left all that money in stocks now....we just had a client tell us he lost over half his retirement in the past couple months and that he wished he had done the ELIA sooner. October 2007 - Dow at 14k, October 2008 - Dow at 8k. Loss on ELIA from 10/07 - 10/08 - $0
     
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