First time and hopefully last

Jul 31, 2019

  1. bill3173
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    bill3173 Guru

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    I have never had a client surrender an annuity, and like most people here, am very careful about "knowing my client". However, for the first time, I have an annuity client surrendering a spia, after six years. He's actually getting more out of it, than I would have expected, but still..it is a lesson to me to really think twice about selling these, as opposed to other types of fixed annuities, unless they demonstrate that an immediate income is preferable/necessary.

    I'm glad that I didn't sell him the second one that he requested a few years ago, simply because it didn't feel right. I told him to sleep on it, and he decided not to move forward, and he wasn't the first one to whom I offered that advice.
     
    bill3173, Jul 31, 2019
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  2. fed up
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    fed up Guru

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    A SPIA is a great tool for people to make a little bit of interest on a lump sum of money and have guaranteed monthly income which is higher than a CD. Life throws curveballs and some times there is a need to surrender. It is not your fault and I can't see a reason to swear off selling a valuable product. You made money from it and a t 6 years should not have much of a chargeback. Would you swear off selling life insurance because someone cancelled a policy and you had a chargeback? Annuities are paying 4% or less on the lump sum, Life is paying 100-120% on first year premium. Things happen
     
    fed up, Aug 1, 2019
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  3. Life Hawk
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    Life Hawk Guru

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    Hmm... does this client seem like someone who would do laundry?
     
  4. bill3173
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    bill3173 Guru

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    Spias typically don't pay much commission, and there is no charge back. This wasn't sold because I was itching for a big commission, hah maybe some of these guys that selll them all the time look at em that way, this was more of a service to an existing client.

    Fortunately in this case, he did understand that he was relinquishing control of the money, and how the spia worked, and was actually going to get a second one. He didn't blame me and was just letting me know apologetically that he was canceling it. I'm not against selling them, but in cases like this, where they're under 65 and still working, I'm not likely to do it.
     
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