Rate Search Inc.

[Winter_123]

My point exactly> I think that a person that would do that for a commission check should be banned from the industry!! There are too many good descent people in this profession to allow a few bad apples to tarnish our image as a whole. There needs to be more education in annuities AND long term care before you just go out there and start selling!1

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Without agreeing or disagreeing with whatever a specific agent has done without knowing more, I would comment that he who prepares to sell annuities should have in mind that he will be confronted with scenarios where clients want their assets deferred and beyond the reach of medicaid so that they will be impoverished on paper and qualify for medicaid nursing home care. At the same time they or their family will bitch if the elderly person does not have access to their money (all while wanting to remain eligible for publicly funded care) and are equally prepared to bitch if the annuity could be immediately surrendered but would go the state rather than to the surviving family. I am not defending the aforementioned agent, I am just suggesting that as people age and position themselves for possible nursing home expenses and what that could do to their assets, there is a lot of gaming the system on the part of both clients and agents. Just a head's up anyway for those who have not thought about it. Sometimes granny and the family are not fully informed about how long their funds are tied up. Other times they know just what they are doing and are trying to implement a strategy.

Winter

 

[senior-advisor-indiana]

Winter you sound pretty knowledgable with annuities. I agree that you can't judge that situation without more info. I hope evey other agent thinks annuities are bad for older people. It will make me alot more money in the long run.

The reason people think annuities are bad is becuase all they hear are the horror stories of people who don't understand them.

 

[Crabcake Johnny]

Anytime you have high commissions combined with zero oversight you're gonna have abuse. It's not exclusive to annuities. The lack of oversight is what concerns me.

If I'm an Assurant GA and GR Key Broker do I have a responsiblity to speak with an agent who turns in 5 Right Start and 5 Copay Saver plans in a row? Should I call the clients?

Likewise, who's calling the agent or client of that 88 year old senior who bought the annuity. Should there be people checking up?

 

[Winter_123]

Anytime you have high commissions combined with zero oversight you're gonna have abuse. It's not exclusive to annuities. The lack of oversight is what concerns me.

If I'm an Assurant GA and GR Key Broker do I have a responsiblity to speak with an agent who turns in 5 Right Start and 5 Copay Saver plans in a row? Should I call the clients?

Likewise, who's calling the agent or client of that 88 year old senior who bought the annuity. Should there be people checking up?

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There actually has been some progress. Several of the major annuity companies now require (just started in the last year) the completion of various suitability questionnaries/forms and disclosures as part of the application. The agents have responsibilities but so do the home offices when they review applications.

There is actually a lot going on as far as tightening up around suitability of indexed annuities. The SEC has been threatening and continues to threaten that it may determine that indexed annuities are securities or at least variable and market driven and therefore should be regulated by the NASD. This has put the fear of God in insurance companies that offer indexed annuities so they are scrambling to try to show that they are already being sold with a suitability analysis having been done. In addition broker/dealers are responsible for supervising the fixed side of any business that their reps do even if it is not a product that the broker/dealer itself offers. Many b/d's are taking it upon themselves to start treating indexed annuities somewhat like security products even before being required to do that by the SEC/NASD. The insurance companies are hoping that increased vigilance on their part will stave off any requirements that indexed annuities must be sold by series 6 or 7 reps. On the other hand many of the broker/dealers are hoping that the increased suitability determination and oversight requirements will result in all of that business eventually being forced deeper into the securities world and cut off from insurance agents. A lot of politicking going on. I think the consumer wins a little along the way. Pain in the butt for everyone else.

Winter

 

[James]

In another thread I mentioned that SPIA's are often the best type of annuity for seniors who are on Social Security. It complements the SS income and they cannot outlive it. Also, it does not require underwriting so unhealthy seniors can purchase it. There are instances where it may be advisable to recommend SPDA's , but there should be a shorter surrender period and suitability should be taken into consideration to avoid problems down the road. Due diligence should be done on the insurance company. Annuities are just the opposite of a life insurance contract, but make sure the client knows the implications of tax-deferred vs. tax-free.
The great market for annuities IMHo starts around age 55.

Anyone can buy an Annuity, think about it, if your prospect wants a SPIA and isn't healthy you want them to submit a physical. Think about it for awhile.

Best sources for Annuities is Jack Marrian at http://www.indexannuity.org/

Or go to the Financial Boards and look up John Olsen, I believe him a few others wrote a book all about Annuities, rather technical but very good in details. Go to http://www.financial-planning.com/phorum/index.php, simply ask for good technical aspects of Annuities and simply ask John Olsen.

 

[RolloverCoach]

You could also look into Everbank advisor if you are with a BD.
They have similar bank marketing programs, but allow you to sell checking accounts, loans, among a number of other products.

A friend of mine in NY has done very well mailing their 6% checking account postcard.

 

[kingedgars]

I've heard of this CD tactic

The "bait and switch" from CDs to annuities is not new. I came into this business working for a company that did the same thing with Allianz and a few other companies. It was mostly seniors that responded to advertising and the company just wanted sales. My bosses told me they have been working this technique for at least 15 years. I felt uncomfortable with the gig even though it was lucrative. I sought a more professional opportunity as soon as I could find one.

 

[Newby]

No. What's unethical is not telling them it's life insurance, .

I've just recently gotten into annuities and one of the first things I tell them is that it is through a life insurance company. Many seniors (including my mother) think they are buying a bank investment because they have bought annuities at their local bank.

So that is one of the first points I make. You may have bought your annuity in a bank building, but it is NOT a bank product. It is an insurance product. And you bought it from an insurance agency not a bank...even if you were sitting inside a bank.

Forethought annuities are available with 3 and 6 year terms. The 3-pays VERY low commissions but if that is what is stopping some people from selling them...now you can start.

 

[padthaiforlunch]

Re: rate search inc

Originally Posted by senior-advisor-indiana
It earned 10%. Most annual pt. to pt. contracts have a 7% cap, so the client would get 7% the ins. co. gets 3%.

Not true. Just because the IA has a cap on it doesn't mean the company makes the difference when the crediting strategy exceeds the cap. They, the insurance company, issue the caps as a way to minimize the cost structure of the options they have to purchase. The insurance company pretty much knows what their profit is on any IA contract they issue regardless of what the market does.

Originally Posted by senior-advisor-indiana
I was just explaining what the caps mean. I know the company makes more than what it seems.

I don't think the mechanics have been fully explained. For each $1 of premium, the insurance company will allocate it between expenses, guarantees and options. So, let's say .09 of every dollar goes to overhead and profit for the insurance company. Now the carrier needs to buy bonds which will cover the return principal plus guaranteed minimum. The lower the guaranteed minimum, the less expensive the bonds and the more left over to buy options. If the bonds cost .65, then there is .26 for options.

The crediting amounts are determined by how much of the dollar is available to buy options. Options with a 7% cap are less expensive than options with no cap. The insurance company does NOT make a profit on the difference between cap and return.

As for which credit methods to use -- if you take your .26 and buy options, they are all priced to give the same return over time. While you may not be able to predict the market, each crediting method is designed for different markets.

Averaging drives numbers to the middle. Not great for a rising market, but minimizes losses.

Point-to-point with a 6 or 7% cap works in a volatile market. As long as the annual return is under the cap, you get 100%.

Participation rate with no cap helps maximize returns in a rising market.

Fixed rate in a bear market gets you better than the min. guaranteed return.

 

[on1sony]

Re: rate search inc

How much did my guy make off me when he set up my harford variable life annuity? I gave him $1000.00 to open it up and it takes just $200.00 out of my checking every month. It started with a 250k death benefit and it grows a little each month. I believe there is a 7-10 year surrender charge. Please advise. I am currently 22.5 years old. It was opened up almost 2 years ago.
When i get my securities license in 6 months or so, should i look into changing it?
Thanks.