Monthly Average Vs Point-to-Point Cap

[nstargazer]

This reply is based on my own personal experience. I purchased a 10 year ING "Secure Index Opportunities Plus" Annuity in 2006 using month to month averaging. When I received my statement in March, I was up about 56%. Of course, that includes the upfront premium bonus of 5%, so you need to take that into consideration. I'm also not including my commission! lol

Still, I'm very happy with 51% over 4 years.

 

[Franz Kafka]

This reply is based on my own personal experience. I purchased a 10 year ING "Secure Index Opportunities Plus" Annuity in 2006 using month to month averaging. When I received my statement in March, I was up about 56%. Of course, that includes the upfront premium bonus of 5%, so you need to take that into consideration. I'm also not including my commission! lol

Still, I'm very happy with 51% over 4 years.

Clap clap .. and some still think that we're out to screw them ..

 

[dgoldenz]

Clap clap .. and some still think that we're out to screw them ..

Wonder how many people returned 51% over the last 4 years from the starting point. Probably not many.

 

[Freddie]

Wonder how many people returned 51% over the last 4 years from the starting point. Probably not many.

I laugh at that hit piece NBC's did on equity index annuities. The salesman they exposed were idiots but the story was done pre 2008. If the old folks had bought that "horrible" annuity - they would not have lost a penny.

I think the first poster has a great point of sale piece with his own statement. Indexed annuities are not perfect but they are a lot better than losing 40+% in the market.

 

[ChristianFSFP]

I totally agree with going with an annual point to point on a FIA.

The markets are so bad right now. I predict a year from now they will be a little better. but I would always allocate monies to the fixed account as well. Hek, some of them even have a pretty good interest rate right now.

 

[nstargazer]

Just to follow up on my last post, in March 2011 my statement showed zero interest. I'm not sure I understand monthly averaging, but I assume whatever interest I've earned can't be reduced. I need to call ING to ask a few questions. When I was trained by a marketing company in 2006, I was given the impression that the annuity would earn at least 3% a year, but that's not true. 3% is the guarantee over the entire 10 year period, although I've earned over 50% to date. March is my anniversary, so I need to wait to see if the value has increased again. The way the EIA design was presented to me was that it should double in 10 years which would be about an 8% average. To be honest, I'll be happy if it averages 5 or 6%, the way things are going. Psychologically, it's depressing to see zero interest on your annual statement.

 

[scagnt83]

Psychologically, it's depressing to see zero interest on your annual statement.

Not as depressing as a negative number!!!

 

[iceco1d]

American National has a good short term performance triggered annuity with ROP.

For the most part rates have dropped on performance triggered annuities, and all index annuities for that matter.

Rates were higher at the first of the year when the outlook was bleak for the majority of the indices. Now that the majority of them are turning around; rates are going down.

This is how the annuity companies hedge against paying the client too much. I hope this helps.......

FIA rates are actually tied more to interest rates and implied volatility on the options market (for the index options on the FIA indicies).

When volatility is high, so are option prices, which means it is more costly for insurers to hedge FIAs.

When interest rates are low, it means they have to dedicate more money to bonds in the general account (and have less available to buy call options) to maintain the MGR, pay the agent, and make a profit.

Implied volatility of option prices is measure by Vega in the Black & Scholes options pricing model.

 

[nstargazer]

Maybe I should have listened to the agents here who recommended point-to-point. 2 consecutive years without any interest at all. It's very confusing. I went online and checked my current statement and then called ING. I think I would have made a lot more in the past few years had I chosen a different strategy, but it's difficult to tell with all the spreads and caps listed.

I just want to add that there is a market adjustment of about 10%. That's a really nice chunk of change, but it isn't part of the accumulated balance and can change. However, it does significantly increase my cash surrender value. I admit, I'm a little confused. Funny - I just noticed "expert" under my user name. Don't believe everything you read. LOL

 

[scagnt83]

Maybe I should have listened to the agents here who recommended point-to-point. 2 consecutive years without any interest at all. It's very confusing. I went online and checked my current statement and then called ING. I think I would have made a lot more in the past few years had I chosen a different strategy, but it's difficult to tell with all the spreads and caps listed.

I just want to add that there is a market adjustment of about 10%. That's a really nice chunk of change, but it isn't part of the accumulated balance and can change. However, it does significantly increase my cash surrender value. I admit, I'm a little confused. Funny - I just noticed "expert" under my user name. Don't believe everything you read. LOL

Where is the agent who sold this to you?

Yearly Point to Point is the most reliable and consistent strategy.

The monthly strategies are much more inconsistent, especially Monthly Point to Point.

The Two Year Point to Point Looks at the gain in a two year period. You are credited gains up to the Cap.
If there are no gains or a loss for that two year period, you are credited 0%.