Fixed Index Annuities

[webprez]

I agree, they ARE very often misunderstood. Both by agents, as well as by prospects and clients. Here's a good way of explaining the benefits of FIA's in a relevant context:

Ask them this question:
Did You Double Your Money Over the Last 10 Years?

Then explain to them how the compound annual growth rate or annualized return for the S&P 500 Stock Index over the ten year period from 1999 to 2009 - was a negative -1.47%. Which means that $10,000 invested on the first day of 1999 would be worth only $8,600 on the first day of 2009.


That's because in 4 of those 10 years, the S&P index lost value:
losing -09.11% in 2000
losing -11.98% in 2001
losing -22.27% in 2002
losing -37.22% in 2008


However, if they had eliminated those losses, and their money had simply earned nothing (zero) during those four years - the annualized rate of return would have been better than 7% (instead of -1.47%) and their money would have doubled over that same 10 year period (instead of losing 14% of it's original value).


This type of direct, specific and factual information has been proven to pique the interest of the target market for fixed index annuities.

 

[crimsontideagent]

I agree, they ARE very often misunderstood. Both by agents, as well as by prospects and clients. Here's a good way of explaining the benefits of FIA's in a relevant context:

Ask them this question:
Did You Double Your Money Over the Last 10 Years?

Then explain to them how the compound annual growth rate or annualized return for the S&P 500 Stock Index over the ten year period from 1999 to 2009 - was a negative -1.47%. Which means that $10,000 invested on the first day of 1999 would be worth only $8,600 on the first day of 2009.


That's because in 4 of those 10 years, the S&P index lost value:
losing -09.11% in 2000
losing -11.98% in 2001
losing -22.27% in 2002
losing -37.22% in 2008


However, if they had eliminated those losses, and their money had simply earned nothing (zero) during those four years - the annualized rate of return would have been better than 7% (instead of -1.47%) and their money would have doubled over that same 10 year period (instead of losing 14% of it's original value).


This type of direct, specific and factual information has been proven to pique the interest of the target market for fixed index annuities.

Very nice.

 

[crimsontideagent]

I just looked it was the OPTI-Point series and it was cut in half.

I stand corrected. You are correct.

The Opti-Point series has been cut in HALF. Ouch.

 

[scagnt83]

I stand corrected. You are correct.

The Opti-Point series has been cut in HALF. Ouch.

Yeah, Im not sure of the exact reasoning on this one.
It was their highest comped Annuity in the first place, maybe that had something to do with it.

Also, its their only bonus product and its always had good rates associated with it.

Plus they have the performance triggered account option, which is often chosen; its definitely one of the riskier allocations for the company.

 

[VolAgent]

Yeah, Im not sure of the exact reasoning on this one.
It was their highest comped Annuity in the first place, maybe that had something to do with it.

Also, its their only bonus product and its always had good rates associated with it.

Plus they have the performance triggered account option, which is often chosen; its definitely one of the riskier allocations for the company.

I'd wager it has to do with low interest rates. It is hard to properly reserve, give good rates AND good comp. Something has to give, and LFG decided to cut comp.

 

[Norwayguy]

The biggest problem I see with EIAs is not just the complexity of some;
but the general ambiguity of where rate caps might be in the future & in relation to future positive markets.
(like right now, EIA rates suck bad. a VA looks much more attractive in the current rate environment, but the market very well could have just capped too. so you have to plan long term, but rate caps like what we have now make it really hard to think that way...)

Have you looked at some of the no moving parts FIAs out there with 100% Participation no spreads or caps long term point to point?

 

[scagnt83]

Have you looked at some of the no moving parts FIAs out there with 100% Participation no spreads or caps long term point to point?

Who offers them?
Do you have any marketing material?

 

[Norwayguy]

Who offers them?
Do you have any marketing material?

Anico has the Value lock 7 and the Value lock 10...


Simple explanation of the Value lock 10.

10 year annuity say a 100K investment and in year 7 client locks in index gains of 100K the policy will immediatly have 70K applied and the remaining 30K will be applied over the yearly over the remaining 3 years plus the 2% minimum interest at that point....Minimums are 4K Qual and 5K NQ.

 

[scagnt83]

Anico has the Value lock 7 and the Value lock 10...


Simple explanation of the Value lock 10.

10 year annuity say a 100K investment and in year 7 client locks in index gains of 100K the policy will immediatly have 70K applied and the remaining 30K will be applied over the yearly over the remaining 3 years plus the 2% minimum interest at that point....Minimums are 4K Qual and 5K NQ.

So your saying that the 10 year product looks at year 7, locks in 70% of the gain, credits the rest (30%) over 3 years and gives you 2% on top of the 30% distribution?

Is that right?


How does the 7 year product work?

 

[Norwayguy]

So your saying that the 10 year product looks at year 7, locks in 70% of the gain, credits the rest (30%) over 3 years and gives you 2% on top of the 30% distribution?

Is that right?


How does the 7 year product work?

Not exactly...they can lock in any year after year one and they will get 10,20,30,40,50,60,70,80,90 or 100% immediatly depending on when they lock in then the remaining amount over the remaing years plus 2% minimum interest...

Not a product for anyone needing income but good for those looking for conservative growth.