Help! I'm Clueless to Fixed Annuities

[Charpress]

I think the key here is finding out why she was in this annuity in the first place. I mean, jeez, she got it and just sat on it all those years.I would first want to know whether she might want to start taking income. There are plenty of good income producing annuties out there. I would be talking to her about maybe starting to have a bit of fun in her life and bump up her income to make the fun possible.

 

[padthaiforlunch]

Things to watch out for: Multi-year guarantee for, say 7 years, but surrender charge lasts 10 years.
- - - - - - - - - - - - - - - - - -
Other things to be wary of: AG has myga 7 year guarentee, 9 year surrender. Years 8 and 9 are 0%, so no surrender charges, but MVA still applies and that may hurt client if they try to move money in last two years.
- - - - - - - - - - - - - - - - - -
These things change constantly. My fave for the week is Sagicor: Six year product. 5.15% first year. Bail-out provision if rate drops more than 1% from first year, so 4.15% years 2-6. This product is being pulled from market on Friday, so this is the last week to get it in.

 

[insuranceexec]

Pad, Norway, and Charpress are absolutely right. I would complete a FNA and find out what the client is wanting to do with the money, and suggest accordingly.

MYG annuities are funny little creatures that warrant due diligence. As mentioned earlier you have to be very careful as the rates, surrender charges, MVA's, and interest rates can change unless you purchase the right annuity.

All very good points!

 

[SportsNut]

As has been stated earlier in the post, Why is she in the annuity? It seems that maybe she doesn't know, as many ppl don't, and are in the annuity because someone suggested it. Now years later she has an accumulated and untaxed 25K of gain. Both good and bad.

If she continues to hold the annuity until death, as many ppl do that have no real direction and purpose for the product, the gain at the time of death will be taxed to the beneficiary as ord income. So lets say that it is a wage earner, (adult children of decedant), what the annuity will do is end up paying way more in taxes than it has saved her, over the years. Dump an extra 30-40-50K of taxable income on top of someone earning a decent wage already, and you have a tax nightmare for the beneficiary.

You may wish to do some other advanced planning before rolling over the annuity into anything other than short-term, or an immediate annuity, which could fund other products, if the clients goal is to leave an estate. Just one of many ideas.

 

[Norwayguy]

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

no you were not reading my post wrong off the top of my head I can think of a couple companies that even after recieving a 1035 exchange request from another company will do nothing without there own surrender request completed..Great American Financial Resources is like this and I've even run into equitable that not only require there form but require the accepting company to sign a section on there form. I think in the long run this exchange is no big deal and can be accomplished in the short run I always am concerned about home office people screwing something up. Short time limits are things I deal with and can hate....that being said my quickest exchange where I have verified the money has gone out the door of the other company...not recieved mind you but was in the mail is 3 days from sitting with the client but I find this unusual when dealing with an insurance company....I love moving money from Fund families as long as paperwork is in good order check goes out the next day...with an insurance company they could still take a month to process a surrender...Once again on the Great American paperwork is an automatic 30 day consideration period that needs to be waived if you don't want it sitting there for 30 days doing nothing.

 

[insuranceexec]

no you were not reading my post wrong off the top of my head I can think of a couple companies that even after recieving a 1035 exchange request from another company will do nothing without there own surrender request completed..Great American Financial Resources is like this and I've even run into equitable that not only require there form but require the accepting company to sign a section on there form. I think in the long run this exchange is no big deal and can be accomplished in the short run I always am concerned about home office people screwing something up. Short time limits are things I deal with and can hate....that being said my quickest exchange where I have verified the money has gone out the door of the other company...not recieved mind you but was in the mail is 3 days from sitting with the client but I find this unusual when dealing with an insurance company....I love moving money from Fund families as long as paperwork is in good order check goes out the next day...with an insurance company they could still take a month to process a surrender...Once again on the Great American paperwork is an automatic 30 day consideration period that needs to be waived if you don't want it sitting there for 30 days doing nothing.

I could not agree more. I think the word you meant to use is proprietary transfer paperwork.

There are several companies that do have their own transfer paperwork, and will not process the transfer until they have their paperwork in house. Very good point!

 

[Norwayguy]

I could not agree more. I think the word you meant to use is proprietary transfer paperwork.

There are several companies that do have their own transfer paperwork, and will not process the transfer until they have their paperwork in house. Very good point!

You are right proprietary vs own is a better term....Isuranceexec do you still have a securities registration? I'd like to talk to you sometime if you do...Right now I am very frustrated and want to give it up but maybe I need to look elsewhere first.

 

[insuranceexec]

You are right proprietary vs own is a better term....Isuranceexec do you still have a securities registration? I'd like to talk to you sometime if you do...Right now I am very frustrated and want to give it up but maybe I need to look elsewhere first.

I do; and am considering the same thing. Give me a call; my direct line is in my signature. I look forward to speaking with you.

 

[InsureGuy5]

Your client simply reached her annuity date and Hartford is enforcing it which is somewhat rare. Most times annuity companies will ignore it. She would otherwise be forced into an annuitization. I would simply write a 5 year fixed account. You might need to be licensed with the company first before taking an app depending on your state.