The whole annuity business stinks

[Tahoe Ray]

So taki


Taking the 5 grandma example, each put in $100. Then they each put in another $100 to invest somehow. Then they pay 10% bonus to their agent immediately & of course insurance company makes some money & agent makes some more money over time.... & then they say each of their families gets their $100 i mean $90-expenses..... So really nothing involving getting any of the other dead grandma's money at all?

How would say to structure the 5 grandma scenario above & in the video?

SPIAs normally pay a 1 time commission of 3%.

SPIAs and life insurance numbers are very closely correlated (a life payout from a SPIA normally pays close to what the premium would be for a permanent face amount life policy equal to the SPIA premium)...of course.

Your term carrier likely issues these policies too. Guess where a lot of your term premiums go? Same general account.

 

[entrep1776]

The "grandma" example applies primarily for SPIAs. After the money is gone, the income still continues. Why? Because SOME die and some keep living. Those that pass away, their lump sums are surrendered to the insurance company as it's a "life only" payout.

But even for LIBRs, once they've ran out of money, they still didn't run out of income.

Now, if that person didn't like that idea, then do a split between the SPIA and a SPWL policy. Life a long time, and you can still get the income and the liquidity from the SPWL. If you pass away too soon, the beneficiaries still get the DB of the SPWL.

Hypothetically. So what would the numbers look like?

Each 90 year old puts in $200. $1,000 total.

One 90 year old dies each of the 1st 4 years.

Last one dies at 100.

About how much the agent get. About how much insurance company get. & about how much does grandma 1-5 get.

 

[DHK]

I'm done. I have a lot less tolerance for bull**** than I used to. Just not worth it.

 

[Allen Trent]

Only annuities provide mortality or longevity credits.

Listen, I love Hegna materials. However, I think a graph showing his increased popularity & his own revenues will be in direct opposite trajectory of SPIA sales nationally. I don't blame him, it is just horrible timing as both the horibly low interest rates & the improved longevity have caused monthly payout rates of new SPIA to be really low in exchange for losing accesss to your money.

We as agents could do our existing clients & their death claim beneficiaries a huge service if we helped them elect a payout on their existing old policies & death claims. Many of those not only have payout annuity tables with 2.5-4% guarantees, but also have outdated life expectancy tables with shorter life expectancy, Factors that both equal higher monthly checks to the client. Compared to new money SPIA, I have seen payouts 20-35% higher. But few, if any, agents seem to offer this to existing clients or death claim beneficiaries. Funny thing is many carriers pay the same commission on an internal payout as they do a new sale

 

[entrep1776]

I'm done. I have a lot less tolerance for bull**** than I used to. Just not worth it.

The 90 year olds was from your video.

 

[KRobby]

Couldn't annuity buyers, buy a financial product? Like bonds or real estate investments through stock market that would maybe pay them better?

I don't think I would buy an annuity after seeing this. So I wouldn't sell them either.

That's exactly what happens (although not sure what you mean by "stock market"). Which is why there's so much more activity in those securities, particularly municipal bonds, than annuities. But with the guarantees and other features that come with annuities, they'll appeal and be a much better fit to a much larger spectrum of the population. Do you have the bankroll like insurance companies to diversify and hedge default and other risks? Annuities allow the consumer to take that off the table. In other words, like most comparisons, there is no better/worse.

http://www.msrb.org/~/media/Files/Resources/MSRB-Fact-Book-2018.ashx?la=en

 

[NIAMAN]

Does the insured have recourse towards the agent in a case like this, when the CEO of an Insurance company commits wire fraud and attempted bribery ? I have a policy in place through Bankers Life, sister company to Colorado Life. It has done exactly as the contract stated for 4.5 years, but now that the guarantee period is ending, client cannot receive funds due to rehabilitation. Where does E & O come into play on this ? Client is obviously very upset.

 

[shooter]

The policy holders attorney will let you know where your E&O
comes into play.
Why did you select a company like Colorado Bankers?
I'm sorry for your problem, but next time don;t believe everything
a Marketing company tells you.

 

[Allen Trent]

The policy holders attorney will let you know where your E&O
comes into play.
Why did you select a company like Colorado Bankers?
I'm sorry for your problem, but next time don;t believe everything
a Marketing company tells you.

why would a plaintiffs attorney decide when an E&O policy comes into play or if it will provide coverage?

I would doubt an E&O carrier would provide legal defense to an agent in a case where the agent could not have known a CEO was committing fraud. I am not saying a plaintiff couldn't win a judgment in court or that an E&O carrier wouldn't settle a small case, just not sure why I would wait or get advice from a plaintiffs attorney of a disgruntled client

 

[JazzInk]

Couldn't annuity buyers, buy a financial product? Like bonds or real estate investments through stock market that would maybe pay them better?

Sure, but then you're doing your own analysis and taking all the risk. Not everyone has the financial talent to manage a portfolio. Also, not all investments are available to small investors...e.g., you've either got the millions to lend out on a commercial mortgage or you don't, and are you qualified to evaluate the mortgage? How do you spread risk? etc.

There are more conservative mutual funds, bond funds, etc. but of course they are not making promises to pay for life - you're really moving into a DIY situation.

I don't think I would buy an annuity after seeing this. So I wouldn't sell them either.

It all depends on your investment goals. They're right for some, wrong for others.