Re: rate search inc
I doubt very seriously this is an annuity. It sounds like a Variable Universal Life policy (VUL). As far as what the guy made that sold it to you, that depends on the payout from his broker dealer and what the commissionable premium is. Just because you're paying $200 per month doesn't mean the entire amount is commissionable.
For example, a VUL with another carrier for a male age 20, would have a commissionable premium of about $1,100 for the first year. Assuming Hartford pays the broker dealer about 80% or so for the first year, your rep would have participated in $880 in commissions. Keep in mind, no broker dealer pays the full commission to the rep. He could be getting somewhere between 40%-90% of that $880. Again, that's only for the first year. After that, he gets a small servicing commission of probably 2%-4% of your premium ($4-$8 per month - of which goes to the broker dealer first and then he gets his cut of 40%-90%).
As you can see, it's not a ton of commission. The better question is why does a 20 year old purchase a VUL? Have you maxed out your 401k contributions along with Roth IRA contributions if you are eligible? If you haven't, then you shouldn't be contributing to a VUL. If he sold it to you claiming the ability to get tax-free income in the future, that's exactly what a Roth IRA is for.
I don't know your financial situation, but I'm willing to bet you aren't maxing out 401k and Roth contributions. If you are, congratulations! You are ahead of 99.99% of people your age.
I doubt very seriously this is an annuity. It sounds like a Variable Universal Life policy (VUL). As far as what the guy made that sold it to you, that depends on the payout from his broker dealer and what the commissionable premium is. Just because you're paying $200 per month doesn't mean the entire amount is commissionable.
For example, a VUL with another carrier for a male age 20, would have a commissionable premium of about $1,100 for the first year. Assuming Hartford pays the broker dealer about 80% or so for the first year, your rep would have participated in $880 in commissions. Keep in mind, no broker dealer pays the full commission to the rep. He could be getting somewhere between 40%-90% of that $880. Again, that's only for the first year. After that, he gets a small servicing commission of probably 2%-4% of your premium ($4-$8 per month - of which goes to the broker dealer first and then he gets his cut of 40%-90%).
As you can see, it's not a ton of commission. The better question is why does a 20 year old purchase a VUL? Have you maxed out your 401k contributions along with Roth IRA contributions if you are eligible? If you haven't, then you shouldn't be contributing to a VUL. If he sold it to you claiming the ability to get tax-free income in the future, that's exactly what a Roth IRA is for.
I don't know your financial situation, but I'm willing to bet you aren't maxing out 401k and Roth contributions. If you are, congratulations! You are ahead of 99.99% of people your age.
