Help! I'm Clueless to Fixed Annuities

[Delta76]

Never written a fixed annuity in my life. Ten minutes ago, got a referral asking if I could help move her $35,000 fixed annuity to another option. I said sure, she wants to meet tomorrow morning to get it taken care of. I'm going to call an FMO in the morning, but looking for some quick advice on the board. Any suggestions for a 5 to 7 year surrender FPDA annuity?

 

[insuranceexec]

Never written a fixed annuity in my life. Ten minutes ago, got a referral asking if I could help move her $35,000 fixed annuity to another option. I said sure, she wants to meet tomorrow morning to get it taken care of. I'm going to call an FMO in the morning, but looking for some quick advice on the board. Any suggestions for a 5 to 7 year surrender FPDA annuity?

There are so many options. Give me a call in the morning and I will walk you through it. Just ask for insuranceexec.....LOL

 

[Norwayguy]

Never written a fixed annuity in my life. Ten minutes ago, got a referral asking if I could help move her $35,000 fixed annuity to another option. I said sure, she wants to meet tomorrow morning to get it taken care of. I'm going to call an FMO in the morning, but looking for some quick advice on the board. Any suggestions for a 5 to 7 year surrender FPDA annuity?

A couple of things to keep in mind. You did not mention wether this is Qualified or Non-qualified money and you did not mention what state you are in. In Some States like Maine non-qualified annuities has a 2% premium tax...sometimes it is covered by a carrier sometimes it is not...Does the existing annuity have a remaining surrender charges? What is the existing annuities Guaranteed Minimum interest rate....If the client has an old product with a 4% guarantee you might not be doing them a favor if you move them to a new produt with a 3%,2% and yes I've seen as low as 1% Guarantee these days...Some carriers will ignore transfer forms if not accompanied by the existing carriers own surrender forms. Just some things to be aware of you mentioned 35K but asked about flexible premium annuities is the client going to be adding to the account and if so how...automatic monthly draft? Some policies will accept as little as $50 more others are called flexible premium but require as much as an additional 2K per deposit. I know I haven't answered your question because I assume you will recommend an annuity through a carrier you are already appointed with if your meeting with the client tomorrw. But those are some of the items to be aware of. Also if you are going to ask the existing carrier questions about the product call the home office and do not call the existing agent have, you be on the line first explaining you are there with there policyholder and then hand the phone to the client to only verify they want to authorize you to ask questions. If you need forms ask if they can be emailed faxed etc, ASK IF THE CARRIER REQUIRES THE ORIGINAL FORM...I ran into a carrier that faxed me there form but called it not in good order because it didn't have 2 words in Red print (they new all along when the faxed the form they would not accept it)

 

[Delta76]

This was a referral from a banker friend. The prospect has had the same annuity for 25 years with Hartford and now Hartford told her she needs to move it into a new contract (don't know the specifics). She has until June 10th to avoid the gains (only a $10,000 basis) from being taxed. It's non-qualified, doesn't need to touch the money, and no further contributions are going in.

 

[Norwayguy]

This was a referral from a banker friend. The prospect has had the same annuity for 25 years with Hartford and now Hartford told her she needs to move it into a new contract (don't know the specifics). She has until June 10th to avoid the gains (only a $10,000 basis) from being taxed. It's non-qualified, doesn't need to touch the money, and no further contributions are going in.

Well I guess if you live long enough you see everything...I have never seen a company throw out a policy holder...I will bet the policy has a guaranteed minimum above what they are able to profit on...Wish I can The Hartford throwing clients away like that over here. If she only has till June 10th I would be on the phone with the hartford and make sure I have all the forms they need ask if they need signature guarantee or notorized signatures and if they will accept a fax copy and get everything faxed to your carrier tomorrow...9 days isn't a lot of time.

 

[Delta76]

Thanks for the help. I appreciate it. I know the health and life business well, just not the annuity business.

 

[insuranceexec]

Well I guess if you live long enough you see everything...I have never seen a company throw out a policy holder...I will bet the policy has a guaranteed minimum above what they are able to profit on...Wish I can The Hartford throwing clients away like that over here. If she only has till June 10th I would be on the phone with the hartford and make sure I have all the forms they need ask if they need signature guarantee or notorized signatures and if they will accept a fax copy and get everything faxed to your carrier tomorrow...9 days isn't a lot of time.

Typically the "deadline" is the timeframe in which you need to have paperwork in house.

I have seen this numerous times with companies; and as you say the companies are not profiting anymore.

I actually had one company that told the customer they would be implementing a 5% spread to offset the guaranteed 9% interest the client was getting........LOL.

This was 14 years after the surrender charges had expired, and they were giving her the boot..............

 

[Norwayguy]

Typically the "deadline" is the timeframe in which you need to have paperwork in house.

I have seen this numerous times with companies; and as you say the companies are not profiting anymore.

I actually had one company that told the customer they would be implementing a 5% spread to offset the guaranteed 9% interest the client was getting........LOL.

This was 14 years after the surrender charges had expired, and they were giving her the boot..............

I know but 9 days still is not a lot of time if they require original paperwork or if there surrender request form requires the accepting company to sign off..Like Equitable does...

 

[insuranceexec]

I know but 9 days still is not a lot of time if they require original paperwork or if there surrender request form requires the accepting company to sign off..Like Equitable does...

With a 1035 exchange the accepting company will issue a LOA (letter of Acceptance) within 48 hours of receiving the paperwork. All this is saying is that they (The accepting company) agree to hold harmless the releasing company, and that they acknowledge the tax treatment of the annuity.

The 1035 is necessary to carry forward the cost-basis. I have read many of your posts, and find you to be very intelligent with respect to annuities.

With that being said why would you mention a surrender request? I am sure I must be reading it wrong.........

This is of course unless you are dealing with Aviva; which I have had cash-in-hand annuities that have not been issued since March.........LOL

 

[padthaiforlunch]

Delta, A couple points to consider if client does not want an indexed annuity: Do not use an annuity that only guarantees first year, unless they have a bail-out provision. Some mutli-year guarantees have catches.
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A number of rates reset today, but a quick look has ING with a true 7-year guarantee/surrender. 3.75% That's about as good as you'll get with an AA- or better company.
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***ARGGHH**** Lost much of last post. Seems the forum is killing my formatting. Won't let me break up text into paragraphs.