Questioned for Registered Reps?

[VolAgent]

I have a three different securities licensed professionals who handle various investments... each has a different "specialty" or "orientation" if you will... one is a stock-bond gal, one is a funds guy and the third preaches limited partnerships and more esoteric types of investments for people with assets.

My funds gay is always telling me about the "new" VAs and how terrific they are... especially one by Met. Well, the frickin' prospectus (yeah, I read them... I really do) is like 500 pages. [editorial]My feeling is that IF it takes a small book to explain and disclose a financial product it is "all FOR" the company and NOT "in the interest" of the client!!! [/editorial]

Can you explain in a couple of paragraphs for the compete *** why these new VAs are really "blue smoke and mirrors." I don't have one, don't plan to have one, but I'd like to know the major downsides of these new products so that I can "ask quesitons" to people who DO have them. Legally we agents can't really "talk" about VAs... but we can say "You should ask your broker about ...... and listen to what she says and let me know."


Thanks.

Actually, I really liked the Met VA, although I understand it is undergoing some changes and won't be as good. And the reason it takes 500 pages is because of regulators and lawyers.

But basically, don't put money into the Met VA with the GMIB unless you are willing to "annuitize" it. You'll never see that money again as a lump sum, until you die. What is nice is the death benefit rider that you could add to it. Basically leave your spouse the amount of the benefit base and not the contract value. When it was all said and done, the Met VA B share had about 3% in fees. Very unlikely you'd get many market step-ups.

 

[HealthGuy]

John that is hilarious, Al is going to claim now you are a homophobe for his misspelling

 

[Guest]

But basically, don't put money into the Met VA with the GMIB unless you are willing to "annuitize" it. You'll never see that money again as a lump sum, until you die. What is nice is the death benefit rider that you could add to it. Basically leave your spouse the amount of the benefit base and not the contract value. When it was all said and done, the Met VA B share had about 3% in fees. Very unlikely you'd get many market step-ups.

This is why I only buy stocks, bonds, a few funds (not a big funds fan) and whole life. They are simple to buy, SIMPLE TO UNDERSTAND, and simple to sell.

I'm a simple person.

Can you maybe explain in "*** language" what you said above? I didn't understand more than 10 words of it! Maybe give an example? What's a GMIB? Sounds to me more like a new smart-phone model!! ("Buy the brand new Android GMIB from BestBuy today!")

And John... none of my brokers are gay... "not that there is anything wrong with that." (someone out there has to be a Sienfeld fan!) My tax guy is gay... major prom-queen.

 

[DHK]

GMIB - Guaranteed Minimum Income Benefit

To benefit from the GMIB, one must annuitize the lump sum for the income benefit to be 'triggered'.

I really liked the Metlife VA when they had their 6-6-6 program.

6% bonus
6% minimum guarantee step up (or higher market gain)
6% income benefit for life

Sold quite a few of those back in the day.

 

[Icando]

I'd like to thank everyone for commenting on my thread question. The commentators have been thoughtful and insightful with their reasoning. However, I've just learned that my registration has already lapsed. So the decision to become sponsored has been made for me unless I want to sit for the 7 & 66 again. From the responses in this forum, it certainly seems that being registered isn't all what it's cracked up to be.

Cheers,
CB
aka Icando

 

[0b1kanobee]

This is why I only buy stocks, bonds, a few funds (not a big funds fan) and whole life. They are simple to buy, SIMPLE TO UNDERSTAND, and simple to sell.

I'm a simple person.

Can you maybe explain in "*** language" what you said above? I didn't understand more than 10 words of it! Maybe give an example? What's a GMIB? Sounds to me more like a new smart-phone model!! ("Buy the brand new Android GMIB from BestBuy today!")

Al, as opposed to what your doing and how the V/A works, this it what I gathered:
1) Income Income Income (growing tax deferred too)
2) Income for life no matter how long client lives (with COLA 'raises')
3) Death benefit option of initial contract value as long as you stay with defined perameters (otherwise I think death benefit changes)
4) Safety of the insurance product
5)GARAUNTEES (this is a biggy IMO)
6) The ability to out-perform a fixed product.
7) About 100 different fund options INCLUDING the Blackstone Group (I don't think just anyone can invest in Blackstone but I could be wrong about that. I think you have to have quite a bit to invest). Different amounts of fees for different funds. Blackstone I think was over 3% but has a YTD of I think 22% and 8% already this year.
8) 'Profit participation'. This was a new one for me but basically this product states that if the company does better than (I don't remember the number) expected with the investments you have picked for you portfolio within the account, they will pay above and beyond like up to 40% more than the garauntee payment.
9) Option choice of interest from 5 to 8 % I believe on the income rider. I don't remember why but my partner doesn't recommend higher than 6% I believe. But one could choose 8% if they wanted or if the advisor wanted with clients permission.

The client I just sat in with last week was pitched the V/A from Metlife and was totally blown away with this product and Frankly I was too. For the right client, a V/A is spectacular. By 'right' client, I mean right on a few different levels including mindset and expectations for sure.

I don't know if I have missed anything but I'm sure your stocks, bonds and funds can't do those things all at the same time. With that said, a V/A or an annuity of any kind might not be for you. Based on what you have said or your comments, I don't think you have ever been properly explained by any of your guys how an annuity might work for you. In fact, I can say with certainty that it never has been fully explained to you and custom tailored to you but then again whoever handles your monies might already know how you are or how your mindset works (just a guess).

I deal and one of my partners deal in annuities exclusively. When I started in insurance, I only did annuities. Until lately, I have never touched another insurance product with the exception to a handful of term policies. We have always referred everything to someone in the office that did other products as needed. Now after a few years in just annuities, we are branching into other products like life, med sups and FE. I couldn't even begin to sell a health policy and frankly don't ever want to.

I do find it silly though that you wouldn't get one simply because it has 500 pages of crap with it. Heck, I have seen old life policies 10 pages long and now they are like 100 but that doesn't mean I wouldn't buy life insurance. Kind of a dumb argument coming from someone who has been in the insurance business as long as you. I think it is just more of a waste of trees myself and nothing more but what do I know.

 

[Full Throttle]

The ironic thing with VA's is the better the benefits, the more likely that's all you will get. That's not all bad if someone is looking for guarantees, it just means that you will likely need to annuitize it to get them and if it comes to that, you would have been better off with a SPIA.

I sell very few VA's, but the few I've sold over the last two years have been with a GMAB. This was for clients with a long term horizon who needed growth, but were scared to put money in the market. Putting a guarantee that they would not lose a penny if they held it for 10 years allowed them to invest more agressively than they otherwise would have.

 

[VolAgent]

GMIB - Guaranteed Minimum Income Benefit

To benefit from the GMIB, one must annuitize the lump sum for the income benefit to be 'triggered'.

I really liked the Metlife VA when they had their 6-6-6 program.

6% bonus
6% minimum guarantee step up (or higher market gain)
6% income benefit for life

Sold quite a few of those back in the day.

Actually, you don't have to annuitize, you just turn on the income. So instead of a 5% roll-up, you get 5% as income. You only have to annuitize when the contract runs out of money.

 

[DHK]

You're right. It has been a while. It was a strange combination between a GMIB and a GMWB. (Just to confuse al3.)

 

[VolAgent]

You're right. It has been a while. It was a strange combination between a GMIB and a GMWB. (Just to confuse al3.)

Its a really nice contract. ONFS had a mini-Regional in town recently. The wholesaler assigned to ONESCO was there. He said they are watering it down. The annuitization tables for when the money runs out won't be as nice. He said a few other things as well, but I really don't care as much now that I'm not registered.