Silac Downgrade and Hate

[scagnt83]

One of my largest regrets as a young agent is putting a client in a 14 year annuity.

I've apologized for that on an annual basis now for the past 11 years. Ever since they cut the participation rates by 50%.

Now, I know that carrier uses teaser rates. No way Silac is not using teaser rates. Time will tell... but it's a risk I would never take with someone else's money.

 

[DHK]

If they are younger, they would be hit with a 10% tax penalty. So they are basically stuck if that is the case.

If the policy happens to be non-qualified (basically not a traditional IRA or rollover IRA), there would still be a 10% tax penalty, but only on the interest earned. All interest comes out first, then principal. The principal (basis) would have no tax implication. Interest is taxed as ordinary income.

Just throwing that out there if it might help.

 

[Allen Trent]

If the policy happens to be non-qualified (basically not a traditional IRA or rollover IRA), there would still be a 10% tax penalty, but only on the interest earned. All interest comes out first, then principal. The principal (basis) would have no tax implication. Interest is taxed as ordinary income.

Just throwing that out there if it might help.

Plus, you can do partial 1035 exchanges to avoid tax reporting. Likely not as important if the SILAC was funded recently with cash as likely not much gains yet. But if funded by a 1035 exchange of an older NQ annuity, could be sizeable deferred gains in contract

 

[Millwood]

If SILAC is being downgraded is it because of their legacy LTC block of business?
They had a too good to be true option after 10 years of paying premiums policy is paid up at death for surviving spouse. Couple could take a 10% couple discount or the paid up survivor option.
Lifetime benefits with inflation rider were what most people took because it wasn't that much more than 5yr benefit.
The real kicker if you didn't take a Tax qualified plan with ADL triggers or cognitive impairment. Your Non Qualified plan used your Doctors orders to receive benefits.
Holy Cow everyone qualifies for care. SILAC has tried very hard to circumvent this , but if the agent or policyholder is aware of this game over pay the claim!
My guess is this is eating their lunch......
And for you that don't know this...... SILAC is a rehash of all the old Conseco management and ownership. For giggles and grins look up Stephen Hilbert.

 

[Allen Trent]

If SILAC is being downgraded is it because of their legacy LTC block of business?
They had a too good to be true option after 10 years of paying premiums policy is paid up at death for surviving spouse. Couple could take a 10% couple discount or the paid up survivor option.
Lifetime benefits with inflation rider were what most people took because it wasn't that much more than 5yr benefit.
The real kicker if you didn't take a Tax qualified plan with ADL triggers or cognitive impairment. Your Non Qualified plan used your Doctors orders to receive benefits.
Holy Cow everyone qualifies for care. SILAC has tried very hard to circumvent this , but if the agent or policyholder is aware of this game over pay the claim!
My guess is this is eating their lunch......
And for you that don't know this...... SILAC is a rehash of all the old Conseco management and ownership. For giggles and grins look up Stephen Hilbert.

Downgraded because of high reinsurance leverage due to capital strain.......plus, the reinsurance leverage being used is with unrated reinsurance.

Hopefully SILAC didn't go big in mobile home lending like Conseco did when current SILAC CEO founded Conseco, took it public & took subsidiaries into Bankruptcy

 

[Millwood]

Downgraded because of high reinsurance leverage due to capital strain.......plus, the reinsurance leverage being used is with unrated reinsurance.

Hopefully SILAC didn't go big in mobile home lending like Conseco did when current SILAC CEO founded Conseco, took it public & took subsidiaries into Bankruptcy

The perfect storm then. Getting hit from 2 directions.
Never could figure why anyone one would write their annuity with that checkered past ,and low rating. Better have some special E&O insurance that will cover B rated products.

 

[Patrick Flammia]

I just got an email for a clients annual statement on a Denali 10 I wrote a few years ago as a new agent. I sold 6 SILAC policies during my time with them, and none of them have performed. I've completely written off annuities because of how I was trained on them, and the outcome I have seen. I feel awful because these products were pushed so heavily by my FMO, sounded great, but haven't done anything. My personal outlook at the moment is I do not believe in them, but I'm still very ignorant of them. I left that brokerage, and haven't mentioned annuities to clients since. I want to though, and I'd like to do it better. What companies, tools, and information can I be looking at to help me understand annuities better and set my clients up properly?

 

[Allen Trent]

none of them have performed

Can you clarify what you mean by this?

In what regard have they not performed compared to what you illustrated or sold the client on?

 

[scagnt83]

I just got an email for a clients annual statement on a Denali 10 I wrote a few years ago as a new agent. I sold 6 SILAC policies during my time with them, and none of them have performed. I've completely written off annuities because of how I was trained on them, and the outcome I have seen. I feel awful because these products were pushed so heavily by my FMO, sounded great, but haven't done anything. My personal outlook at the moment is I do not believe in them, but I'm still very ignorant of them. I left that brokerage, and haven't mentioned annuities to clients since. I want to though, and I'd like to do it better. What companies, tools, and information can I be looking at to help me understand annuities better and set my clients up properly?

Base your decisions on the S&P 500 Annual Point to Point Index.

Stop using Hybrid indexes that have risk/volatility control mechanisms that actually limit returns.

The S&P YP2P is usually the Benchmark index. And is the best indicator of how much the carrier is willing to give up to the client within that contract.

 

[Patrick Flammia]

Can you clarify what you mean by this?

In what regard have they not performed compared to what you illustrated or sold the client on?

Both. The illustrations on their FIA products were showing insane growth 7-12%. Out of the little business I did write I never told clients that was realistic just a best case scenario, I sold it on the premise of around 3-5% per year. 3-4 years ago when interest rates were 0 they were pleased with that. Out of the 6 policies I wrote with them 4 have gained no interest, the other 2 gained interest only one year of around 1.5%. Again, I was very green when I wrote these and take the full blame on them. I am not well versed in what is the best way to reallocate them either. I went off of the illustrations and recommendations I got from using the annuities genius tool through my old FMO. After reading the previous comment it seems the S&P indexes are the most reliable? All of these policies were blended between the different hybrid ones like Ravenpack, Barclay, etc.