Need help with variable annuity purchased in 2002

Oct 15, 2018

  1. breakfaststout
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    breakfaststout Expert

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    *****Annuity Specialists, PLEASE HELP!!!

    This particular case study is on my dear 87 year old grandfather-

    Facts:

    Hartford Variable Annuity bought in 2002 (flexible premium). Non qualified.

    71 years old at the time of purchase.

    $120,000 initial deposit

    $40,000 was taken out (under total surrenders)

    Current Death Benefit is $285,487!

    Now 87 years old. (Will be 88 in Feb 2019) Was told that the max he can withdraw from this annuity is $16,840 a year.

    When he is 90 year’s old he loses ALL of his money aka Death Benefit minus the $16,840 a year he can withdraw. 16,840 x 4 = 67,360 which would be the MAX he could withdraw before age 90. $285,487 death benefit minus 67,840 = 217,647 the insurance company gets to KEEP!

    Does this even sound LEGAL? I can’t imagine funding an annuity all of these years only to lose it all at age 90. He’s hired an attorney and some ‘financial advisor’ at Edward Jones to look into this to see what his options are. In the meantime, I told I would see what I could do.

    Any help or advice would be very much appreciated. Could he roll over the funds into another annuity with a guaranteed death benefit maybe? I don't know anything about annuities other that the bare minimum.

    Thank you !
     
  2. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    Sounds like an enhanced death benefit rider chosen. Look it up in the prospectus (generally a big thick telephone-book sized document).

    I bet the rider expires by a certain age.

    Note: An variable annuity death benefit will always be the remaining value in the annuity at the time of death. You won't lose the entire variable annuity balance at his death if there's a remaining value to be paid out.
     
    DHK, Oct 15, 2018
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  3. jasperjohns
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    jasperjohns Super Genius

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    What is the contract value? It is not normal for VAs to have a restricted payout you should have access to the full account value at this point. Who told you at that at age 90 he losses all of the money? Do you mean it matures at that date? I would call the carrier or his or your financial advisor too many facts here do not make sense. Sounds like someone gave you misinformation.
     
  4. jasperjohns
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    jasperjohns Super Genius

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    You should be able to do a 1035 BUT some of these old VAs with a Death Benefit had a too good to be true (but it was) feature in which the Death Benefit was fully payable as long as the contract had a min. balance. So if the value was 200k and the db was 300k you could move 150k and still have the db through a certain age. I have seen several of these BUT again call the carrier first and then once you get more info you can investigate the complex stuff as referenced here.
     
  5. breakfaststout
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    breakfaststout Expert

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    Excuse my ignorance, I'm not experienced with annuities ..

    What is the difference between the value and the db? Wouldn't the account value be the death benefit? thank you
     
  6. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    The remaining account value is always the death benefit (except in SPIAs) unless there is an enhanced death benefit rider chosen for an additional charge.
     
    DHK, Oct 15, 2018
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  7. jasperjohns
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    jasperjohns Super Genius

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    Like DHK said. Account value should be the death benefit by default. Unless the client had a enhanced death benefit rider. The death benefit would be the deposit, plus "interest earned" (I use this loosely since it is a VA but for simplicity sake), minus withdrawals and any rider fees. Many VAs also locked the highest the value had ever been in as a death benefit OR the death benefit went up by a fixed percentage annually regardless of market performance. Some did the first part as part of the M&E fee some for an additional fee did/do the later. Call the company or this will get really messy.
     
  8. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    DHK, Oct 15, 2018
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  9. breakfaststout
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    breakfaststout Expert

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    Thanks, i'll take a look at that info. Its . Hartford Variable Annuity. Non Qualified, Flexible Premium is the product name. I have the policy and most recent statement..
     
  10. Stephen
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    Stephen Guru

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    A lot of good info posted so far. I would sit down with your grandfather and call The Hartford together to ask them to go over the policy with you. Ask plenty of questions and take good notes. I do this with every client or prospect that has previously purchased a VA because each product has it's own features and quirks that aren't always easily spotted on the illustration.
     
    Stephen, Oct 15, 2018
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