Fixed Index Annuities

[Charpress]

It looks like the trend is going to be to simplify FIAs -even some of the companies are saying so.

So look for products that have income riders as part of the chassis, not as a rider that has to be elected and paid for separately -and explained as "this other thing" that has to be added on for a cost. Jeez, some people look at me like I'm trying to sell under body coating with a new car.

When Allianz added a Website feature that allowed folks to see on a day by day basis how their FIA was doing, I would get calls every month from a guy who was pissed because his value went down another $80 because of the rider charge. "You said I would never lose money!"

I told him time and time again that the charge didn't matter and to wait for the end of the year when they added in whatever he made for the year. He finally got his annual statement and is now a happy camper.

The same simplified trend should be operating for spreads, caps, MVAs etc etc. People want simple, and simple sells.

 

[0b1kanobee]

You probably always throw a little money in the fixed side to make sure you have some gains I assume.

 

[Charpress]

You probably always throw a little money in the fixed side to make sure you have some gains I assume.

Good point. And that is what I did, but the fixed gains aren't credited until the end of the year either. I knew he was going to have a net plus, but the monthly debit was driving him (and me) nuts. Now I know why Allianz resisted having a live site for so long.

 

[crimsontideagent]

More on the Value Lock product/feature....

On a regular FIA - worst you can do is ZERO, correct? If you gain, your account gets credited - if you get zero the next you haven't "lost" money --- Sooooooo, don't you in essence lock in gains every year?

What make the value lock special...?

 

[Fisher]

As elsewhere, I await the answer, Tide.

 

[Norwayguy]

More on the Value Lock product/feature....

On a regular FIA - worst you can do is ZERO, correct? If you gain, your account gets credited - if you get zero the next you haven't "lost" money --- Sooooooo, don't you in essence lock in gains every year?

What make the value lock special...?

For the client that wants this type of product they prefer no moving parts ie there are no caps,spreads or participation rates that the carrier can change at anytime to the detriment of the client....If a person was to purchase a value lock 10 today yes they do not have an annual reset design and only lock in their gains when they execute the lock-in or the tenth year at the same time they have a contractual 100% participation rate with no spreads or fees...

 

[VolAgent]

For the client that wants this type of product they prefer no moving parts ie there are no caps,spreads or participation rates that the carrier can change at anytime to the detriment of the client....If a person was to purchase a value lock 10 today yes they do not have an annual reset design and only lock in their gains when they execute the lock-in or the tenth year at the same time they have a contractual 100% participation rate with no spreads or fees...

So basically, they charge the price of admission in a different manner? Instead of making their money through caps, spreads, etc. they get to recoup some of the gains if you have a down year? Can it go negative? If you only have bad years, can you end up with less than the principle?

 

[Norwayguy]

So basically, they charge the price of admission in a different manner? Instead of making their money through caps, spreads, etc. they get to recoup some of the gains if you have a down year? Can it go negative? If you only have bad years, can you end up with less than the principle?

The cost of long term pt2pt contracts cost much less to the insurance company than an annual pt2pt contracts which is why you can get 100% participation over what we are currently being offered by carriers for caps ie 3- maybe 5%.

Your also missing the point clients that will take a product like this don't want to rely on carrier the carrier "Trust me". Who hasn't seen a carrier lower interest on a closed block of business while offering higher interest to new contracts.

Volagent if all years where negative you would end up with initial premium or guaranteed minimum values which ever is greater.

 

[VolAgent]

The cost of long term pt2pt contracts cost much less to the insurance company than an annual pt2pt contracts which is why you can get 100% participation over what we are currently being offered by carriers for caps ie 3- maybe 5%.

Your also missing the point clients that will take a product like this don't want to rely on carrier the carrier "Trust me". Who hasn't seen a carrier lower interest on a closed block of business while offering higher interest to new contracts.

Volagent if all years where negative you would end up with initial premium or guaranteed minimum values which ever is greater.

I'm not saying its good or bad, just that it is different. I don't personally care for losing gains from previous years. Perhaps some don't mind, but it just turns the whole idea of a FIA on its head for me.

 

[Norwayguy]

I'm not saying its good or bad, just that it is different. I don't personally care for losing gains from previous years. Perhaps some don't mind, but it just turns the whole idea of a FIA on its head for me.

I am not disagreeing with you, If I am going to present Value lock product I am going to have an annual reset or in my case I've got a 2 year pt2pt product right now and I'm hearing word on a 4 year pt2pt...These all offer trade offs...With annual resets I'm seeing caps as low as 3% with the valuelock 10 its 100% participation for the contract with no caps, spreads or fees...I like to present it to someone coming out of a mutual fund it doesn't lock in gains every year but neither does the mutual fund and if I had this product (wasn't aware of it then) back when the dow hit 14,000 you can bet a client would have loved to lock in those gains and take 2% for the rest of the 10 years...I see offering multiple annuities to my clients to create a portfolio because different strategies will work better in different environments.