Meaning ? Modified Single Premium for Indexed Annuities ?

[Tahoe Ray]

When the carriers set an additional premium cap on a modified single premium product, do they scale the cap expressed in the final contract to the initial premium of the contract or do the just dump in a standard "low ball" number as a future protection for them.

i.e. would they set the same future premium cap for the x months of the additional premium period for a $20K annuity and a $200K annuity?

Here is the language from the agent guide for an actual "modern" FPDA.

 

[walthamny]

NYL has some outstanding VA contracts out there that pay 7% minimum forever. When I was an agent I was assigned a lead. It turns out the client had an old NYL annuity and I suggested she put 200k into it. I asked her to sign the change of Agent of Record and I figured I would make money when she dies from beneficiaries. I was pissed that I would not make any money on that sale. To my surprise NYL paid her 7% a year and they also paid me 4% commission.

 

[Allen Trent]

NYL has some outstanding VA contracts out there that pay 7% minimum forever. When I was an agent I was assigned a lead. It turns out the client had an old NYL annuity and I suggested she put 200k into it. I asked her to sign the change of Agent of Record and I figured I would make money when she dies from beneficiaries. I was pissed that I would not make any money on that sale. To my surprise NYL paid her 7% a year and they also paid me 4% commission.

income rider or 7% credited to actual cash account

 

[walthamny]

7% on GIC option. Basically paying 7% on their cash or they could put into variable sub accounts and earn possibly more. Its a Variable Annuity so they must have figured no one would ever invest on the guarenteed side. No surrender charge because the annuity is already vested per NYL rules.

 

[Allen Trent]

7% on GIC option. Basically paying 7% on their cash or they could put into variable sub accounts and earn possibly more. Its a Variable Annuity so they must have figured no one would ever invest on the guarenteed side. No surrender charge because the annuity is already vested per NYL rules.

Guessing the annual fees have to be fairly steep on that contract as the last 15 years would have been impossible for a carrier to credit a guaranteed 7% net when they were investing the money & making 4-5%. Even today 7% would be a loss for carrier unless they are charging heavily for GIC, etc

A lot of carriers tried to buy consumers out of their outdated higher income rider contracts. was shocked SEC/FINRA would allow it because it seemed to be a conflict of interest to try to pay off policholders to forfeit existing contracts the carrier couldnt afford to offer any longer

 

[Tahoe Ray]

Guessing the annual fees have to be fairly steep on that contract as the last 15 years would have been impossible for a carrier to credit a guaranteed 7% net when they were investing the money & making 4-5%. Even today 7% would be a loss for carrier unless they are charging heavily for GIC, etc

A lot of carriers tried to buy consumers out of their outdated higher income rider contracts. was shocked SEC/FINRA would allow it because it seemed to be a conflict of interest to try to pay off policholders to forfeit existing contracts the carrier couldnt afford to offer any longer

No fees in the fixed bucket.

The NYC 403B had a 7% fixed bucket forever (no idea if it's still there). I have no idea how they managed those assets but it made them impossible to move (because why would you?)

 

[Sheryl J Moore]

Placing caps on subsequent premiums is typically more common with variable annuities. However, many fixed/indexed contracts give the carrier the right to stop accepting subsequent premiums, should they decide to do so because of the market environment. These experts are dead-on; read the specimen contract. ;-) sjm

 

[Sheryl J Moore]

AND- the variable annuity carriers absolutely do place limits on subsequent premiums at times. sjm

 

[LostDollar]

Again, I would comment,

I was NOT asking about variable annuities. I was not asking about annuities that allow contributions for an unlimited future period of time. (Also note, I am a consumer, NOT an agent, and I knew nothing about annuities when I started the stuff below.)

I was asking specifically about MODIFIED single premium fixed indexed annuities (with an income rider). A followup to the thread starting question. I have asked agent questions (including ruining 2 forum relationships), read forum threads here, read sales literature, read product applications and looked at online quotes from 2 different online vendors. I saw no indication anywhere that flexible premiums in the allowable premium period for a modified single premium could or would be capped. If I was told about sample contracts in the process, the comments did not stick and I did not realize I should also have asked for those.

Hence my questions about whether it was a standard practice for modified single premium annuities to have a final contract that capped additional contributions and whether or not the carriers made a flexible amount that related to the premium paid in or whether they just lowballed every contract's cap in order to protect themselves.

 

[LostDollar]

@Tahoe Ray - agent manual - I did attempt to get to agent training materials but RegEd requires an NPN for access to those.