Equity Indexed Annuities: Are they the real deal or junk products?

[senior-advisor-indiana]

Salpro, I think you will definetly want to use a FMO for Annuities. Most will give you the top contracts anyway and help with case design.

 

[elliottmarks]

Thanks for the welcome, Salpro! Try the NAVA and NAFA's websites at first. I'll also post book titles for you but I can't remember them off the top of my head, have to check the ol' book shelf in my office. The best way to gain credibility and knowledge quickly, however, would be a designation... the Certified Annuity Specialist from IBF is the best i've seen.

The annuity appointment process is usually faster than the life and health side. You absolutely want to deal with an IMO. try Welcome!, these guys are good. I'm NASD registerd and my firm requires that all index annuity business be submitted through them... if you have a securities license you will experience the same thing. Also, i've you're looking for an FIA friendly broker dealer check out Fortune Financial Services - Broker Dealer

 

[J.R.]

Thanks for the welcome, Salpro! Try the NAVA and NAFA's websites at first. I'll also post book titles for you but I can't remember them off the top of my head, have to check the ol' book shelf in my office. The best way to gain credibility and knowledge quickly, however, would be a designation... the Certified Annuity Specialist from IBF is the best i've seen.

The annuity appointment process is usually faster than the life and health side. You absolutely want to deal with an IMO. try Welcome!, these guys are good. I'm NASD registerd and my firm requires that all index annuity business be submitted through them... if you have a securities license you will experience the same thing. Also, i've you're looking for an FIA friendly broker dealer check out Fortune Financial Services - Broker Dealer

I appreciate links and information.

 

[elliottmarks]

Salpro,

Try finding any thing by John Huggard... here is one title:
[SIZE=-1]John Huggard's variable annuity book: Investing with Variable Annuities: Fifty Reasons Why Variable Annuities May be Better Long Term Investments[/SIZE]

I'll post some more shortly

 

[elliottmarks]

if you're serious about selling annuities you may to sign up on this website also:

Annuity, Annuity Advice, variable annuity, living benefit variable annuity

 

[James]

The Annuity Advisor - National Underwriter Store

Written by, John Olsen, CLU, ChFC, AEP and Michael E. Kitces, MSFS, CFP®, CLU, ChFC

Hey, you can even talk to these guys on various of forums, maybe here? They come with a lot of experience and they are not out to sell anything, well maybe their book.

Ps, this book is basically the nuts and bolts behind Annuities, it has really nothing to do with selling Annuities.

 

[Ahnuld]

I have a lot of annuity experience and I'll try to share a little knowledge that I have about the index side. They are called FIXED index annuities for a reason and that is because the client's investment is not placed in a sub account which is the variable annuity equivalent to a mutual fund but rather it is invested in the companies general account. The Insurance company mainly invests in bonds which are laddered... a very small percentage is allocated to options. The options portion is where the insurance company makes money... or tries to, the margins are actually quite slim. Their risk is controlled by establishing cap's, limiting participation percentages and what can, in my opinion, be described as some pretty shady crediting methods.

The best index annuity i have ever seen was the Key index offered by Keyport in the late '90s.... there was no cap and the client locked in gains annually and did not participate in losses.... That product isn't around anymore and Keyport took a bath on it. Actually, the failure of that product financially for keyport is what many in the annuity world believe may have led to the "smoke and mirrors" that we see today by combining caps, participation rates and different crediting methods.... oh, and not to mention that the company reserves the right to lower the cap at anytime.

I'm not saying that I'm not a fan of Index annuity's... I believe they have their place and client. I only wish the companies were a little more transparent with how the client will be credited their INTEREST... not market gains.

Well said. I remember Keyport, too. Weren't they purchased by Sun Life? But I digress. EIA's have been touted as excellent investments for investors wanting to participate in market returns without bearing market risk. Well, maybe.

They do offer safety, but head-to-head with the market, they do not perform as well. Again, without going into arguments for/against, graphs, charts, ledgers, hypothetical performance, etc. over the long haul, the market out-performs EIA's.

EIA's were introduced in 1995, and since then they have had their up's and down's and their share of detractors, most notably those agencies from the securities sector, the SEC and NASD; proponents of EIA's are viewed as the competition. Maybe so.

The bone of contention is that the SEC et al view EIA's as a security to be sold by reps with security licenses. The insurance industry holds a different position and views EIA's as exempt from registration as securities under Section 3(a)8 of the 1933 Securities Act and Rule 151 adopted in 1986 as a safe harbor definition.

EIA's are complicated and the client deserves an explanation of the mechanics of EIA's. I've agents who've spent the time explaining EIA's to suitable prospects and have used them effectively with results much to their client's pleasure. Today's market volatility may well be an example with safety winning out over market losses.

So...elliotmarks' closing remark, "I only wish the companies were a little more transparent with how the client will be credited their INTEREST... not market gains" is right on the money (Hey. I heard that groan. Please forgive the pun).

Stay tuned.

 

[JS17]

I agree with all things said about annuities. If you are going head to head though, the Allianz MasterDex 5 PLUS (new and improved) out performs the Aviva/Amerus, expecially for lifetime income.

 

[Winter_123]

They do offer safety, but head-to-head with the market, they do not perform as well.
.

Or as poorly either.

Winter

 

[elliottmarks]

Allianz offers some interesting products... it's a shame their name is mud currently.