Uncapped FIA's
- Thread starter WPM
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- indexed annuities
- 10,708
ANICO has an uncapped 7 & 10 year product called the value lock. Its MA crediting and you choose when to lock in the gain.
Current participation is at 50%... which is pretty crappy for MA imo
Current participation is at 50%... which is pretty crappy for MA imo
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Thanks. I know that you can lock in the gains but this one concerns me a bit bc of such a long term end-pt design. It seems like if you don't do a good job of timing the market, the client could easily end up with no gain for the term of the contract.
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In theory the monthly average feature is there to offset the long pt2pt period. There is still the aspect of "timing the market" that an advisor or client needs to track. I liked this product much more when it was a 100% participation rate.
American General had a monthly average with annual reset crediting method attached to a few of its FIA's with 100% participation, no caps, and only a 3% spread. 20 yr. historical returns were between 7% and 8% but now that spread is 8% and those products are dead in the water.
Let me ask a question...aside from the attractive sound of "uncapped" what are the benefits of any of these uncapped strategies if the participation rates are so low? After running some numbers, many of the "uncapped" strategies haven't performed as well as a some monthly pt2pt or monthly average accounts with high caps? Just curious.
P.S. SBLI(Security Benefit Life) looks like they have a new uncapped strategy based on a "proprietary index."
- 1,271
They sound very attractive (oh, wait, you already mentioned that).
- 2,455
How can you call that an uncapped product when half the money must go into a fixed account not to mention the fees? I still can't wrap my head around this products appeal.
- 10,708
The same way a 50% MF/50% treasuries portfolio does.
I like BAA.
50% in the fixed account is no different than the 50% in bonds that many peoples portfolio has...
And the fees are not much, especially when compared to what most people in the market pay. The 50/50 option is around 3.8% in fees, but that is over a 4 year period. It works out to less than 1% per year.
And fees are only assessed against gains...
Oh yeah, it has an Income rider w/ 7% rollup and the income doubles for a LTC need.
It also credits withdrawals with partial interest crediting.
And you can "lock-in" gains (I think once per crediting period), if the market jumps up.
Not bad if you ask me.
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- 2,455
I'll have to look into it further I guess. I like your explanation or analogy. Walker over at FIG has offered to get someone to give me a better explanation. I'm going to make a note of yours. Just seems that fixed portion didn't pay much. The way I figured it, the fees completely ate up what the fixed was earning. Again I need to look at it again I guess.
- 10,708
The fee comes out of the Indexed Crediting (if any), not the Fixed earnings.
I'm told that SBL only sells their fixed products through broker/dealers, and an indy life agent cannot get appointed directly (or with an FMO) to sell their fixed/indexed stuff.
Can anyone confirm/deny that?
SBL has some juicy fixed products out right now, and they don't really scare me now that Guggenheim is backing them.
