Looking for Opinions...

[Life Hawk]

Otherwise, I would just position the client in

Hmm... I think that is what I just said, "propose" or "position" much of the same don't you agree?

 

[Tahoe Ray]

He is taking immediate withdrawals due to income issues. He went with this product with hopes of beating inflation. I'm not happy with 3.5 for him - but don't want a 0% either. My gut says the market will do better than that. I'm just searching for insight and opinions. It's not my policy, but I want to at least give him an educated guess that makes sense.

Unless this is your friend, I wouldn't recommend anything. You're not the agent of record and only have liability at this point.

 

[Tahoe Ray]

Hmm... I think that is what I just said, "propose" or "position" much of the same don't you agree?

Sorry if I misunderstood.

It sounded like you were placing your own bias into the situation. I feel that a lot of these cases are cut and dry and that the agents make things a lot more complicated than they need to be.

 

[Tahoe Ray]

Correct . Go look at stocks like Gm, ge , even Cisco , Intel the last 23 yrs . Stagnation and really have gone nowhere . I think the mkts in for that type action . In 1990 the Dow hit 1600 . It's up 20 fold in 33 yrs. Time for 10-15 yrs of sideways to down .

Sideways markets still work for a lot of the increasing income products. They ratchet on good years and stay flat on bad.

The income can still increase in a flat market over a decade.

 

[Life Hawk]

Sorry if I misunderstood.

It sounded like you were placing your own bias into the situation. I feel that a lot of these cases are cut and dry and that the agents make things a lot more complicated than they need to be.

Very much agree with you on this one. Seems like agents are always looking to preform brain surgery when they just need to change a tier.

 

[Tahoe Ray]

Ray your correct a recession is a lagging indicator. But no mkt has ever bottomed before a recession has even started . No recession has started yet . #2 10 yr bonds rose 10 fold off the bottom yet equity valuations never contracted . Stocks have massive competition with 5% cd's . This time something feels funny . Stocks never capitulated ( after an 11 yr bull mkt we never even gave back 1 years of gains . We never even took out 2020's all time highs . Japan is down 40% from 1989 highs because of massive debt loads . We got massive debt loads too which impedes future growth . I'm leaning toward yrs of stagnation ahead after 43 yrs of 90% up . Time will tell .

You could be right but money can be made in any market.

There are perennial "doomers" like Roubini who have predicted some form of collapse forever.

In an FIA, you almost want a crash the first year that you buy it (because in theory youve exited your 401k or something otherwise exposed to substantial loss) so that you can ride the slow grind back up.

 

[Allen Trent]

Those are great products, but they also tie that money down

Actually, with some single premium life products, the money is less tied down than NQ Annuity. At best, most annuity(FIA/MYGA/VA) only have 10% access during surrender charge period & majority of MYGA today have no access in 1st year & possibly only interest access after that. Plus, most re-up the surrender charge fully after interest rate lock on MYGA. If it is leave on money, not live on money, many could be better served with a tax deferred while alive, tax free at death product, especially if it has tax free access for chronic illness, etc. I see a lot of our NQ annuity clients in 0% or low tax bracket suddenly in higher tax brackets & paying medicare surcharges when they have to use the NQ annuity money to pay for home health care, assisted living or nursing home care. Distributions from NQ Annuity are taxable & not usually tax deductible either because they don't itemize or only medical care is deductible, not entire cost of care/costs

 

[scagnt83]

He went with this product with hopes of beating inflation. I'm not happy with 3.5 for him - but don't want a 0% either.

For that reason I'm leaning towards recommending taking the 3.5 lock- I fear a lasting recession. But if I'm wrong- that really sucks

He's really just about income - hoping it will increase over the next 3 to 4 decades- he's a very healthy 66 year old.

Does this product increase the income at the rate lock percentage?

Or just increase the income base?

We are talking about Rider Income, correct?

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You couldnt have dreamed better timing than having funds go to work 30 days ago.

I had it happen to an IUL client by a complete mistake where premium had to be refunded and then put back into the policy. He lost 11 months that would have been a 0% year..... and now the funds went to work at the start of a 7% run...

Sure it could tank again. It probably will. But Id take 30 days ago vs. 100 days ago without question.

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And Rays point got a bit lost in the exchanges.... but a sideways market will make money in a FIA... its literally the type of market FIAs excel in vs. being directly invested.

 

[Life Hawk]

Actually, with some single premium life products, the money is less tied down than NQ Annuity.

You assume much when you plan for a "chronic illness" in my book. Too many other issues could create a need for liquidity not health related. I do see your point though regarding surrender charges, that's why it is so important to have that discussion up front.

To be honest, beyond our initial fact finding with our client (taking into account the current market conditions), we find ourselves looking into the proverbial crystal ball at an unknown future both in market conditions and client needs.

You work to do your best, and that really takes a keen sense of asking key questions, some that may be uncomfortable for the client, especially as it relates to family relationships.

 

[Tahoe Ray]

You assume much when you plan for a "chronic illness" in my book. Too many other issues could create a need for liquidity not health related. I do see your point though regarding surrender charges, that's why it is so important to have that discussion up front.

To be honest, beyond our initial fact finding with our client (taking into account the current market conditions), we find ourselves looking into the proverbial crystal ball at an unknown future both in market conditions and client needs.

You work to do your best, and that really takes a keen sense of asking key questions, some that may be uncomfortable for the client, especially as it relates to family relationships.

Fwiw, there are plenty of single-pay life products with 100% liquidity at any time (return of premium). There are also hybrid LTC products w/ 80-100% liquidity.

Yes, you'd lose your DB or LTC benefit but in a true emergency, you still have that money liquid.

And I completely agree with your last point, you can follow best practices but when you're dealing with health and markets, you need to have some luck with your timing to make everything perfect. Trying to cut out the worst-case scenarios and working "up" normally makes people feel better than hopes, dreams, and rainbows at the end of the day.