What Would You Do?

[SWM]

Met with an 85 year old female client today. I have managed her money for about 12 years and had not seen her in about 12 months. In 2008, She had 200k of NQ money free up and we put her in an Equitrsut EIA with a minimum guaranteed rate of 3%. Client had no need for income and simply wanted to accumulate wealth for death benefit. When Equitrust was bought by Guggenheim, I lost contact on the contract. Today, I was prepared to make a call with the client to Equitrust to check values, etc.. Client stated she no longer had that contract, that her health insurance agent tried to roll it into a life policy (not permitted) and when it was declined, he 1035 exchanged the policy into anothe EIA with Americo. There was still 7 years of surrender on the existing policy. I had her show me the new contract which showed a 2% minimum guarantee. In 17 years I have only recommended a client file a complaint one time against a broker who I discovered was churning money. He lost and she recovered. I do not want to be one of "those guys", but this was an unethical move. This agent did not even have the education to know you can not 1035 annuity money into a life contract. The client lost money and started another 10 year surrender. We all know why the agent did it, but what would you do in my position. I did not say anything other than "You understand you paid surrender charges". This one has really gotten under my skin. I am considering writing Americo first and give them 30 days to review the origional case. This is a clear case of the elderly being preyed upon and this type of agent gives us all a bad name. Your thoughts would be appreciated as I am having a moral dilema on how to proceed.

 

[pcbinsurance]

Sounds (to me) like your conscious is guiding you well on this. See what Americo has to say first and then proceed if necessary.

 

[WinoBlues]

Met with an 85 year old female client today. I have managed her money for about 12 years and had not seen her in about 12 months. In 2008, She had 200k of NQ money free up and we put her in an Equitrsut EIA with a minimum guaranteed rate of 3%. Client had no need for income and simply wanted to accumulate wealth for death benefit. When Equitrust was bought by Guggenheim, I lost contact on the contract. Today, I was prepared to make a call with the client to Equitrust to check values, etc.. Client stated she no longer had that contract, that her health insurance agent tried to roll it into a life policy (not permitted) and when it was declined, he 1035 exchanged the policy into anothe EIA with Americo. There was still 7 years of surrender on the existing policy. I had her show me the new contract which showed a 2% minimum guarantee. In 17 years I have only recommended a client file a complaint one time against a broker who I discovered was churning money. He lost and she recovered. I do not want to be one of "those guys", but this was an unethical move. This agent did not even have the education to know you can not 1035 annuity money into a life contract. The client lost money and started another 10 year surrender. We all know why the agent did it, but what would you do in my position. I did say anything other than "You understand you paid surrender charges". This one has really gotten under my skin. I am considering writing Americo first and give them 30 days to review the origional case. This is a clear case of the elderly being preyed upon and this type of agent gives us all a bad name. Your thoughts would be appreciated as I am having a moral dilema on how to proceed.

I have run into this also. He thought it was in her interest to get out of the old plan and into a SPWL policy then it became better to put her in a new EIA?

I would write Americo. Not sure how they will unwind it now though. Why would the old company take her back to 3% minimum?

 

[Todd King]

Actually, there is a way to do this, but it's not a direct rollover from an annuity to life (which you can't do).

Baltimore life has theri Generation Legacy policy which is basically a SPIA which pays to a life policy, which is a SPWL policy.

 

[Tahoe Ray]

Actually, there is a way to do this, but it's not a direct rollover from an annuity to life (which you can't do).

Baltimore life has theri Generation Legacy policy which is basically a SPIA which pays to a life policy, which is a SPWL policy.

Couldn't she just have annuitized the original product and bought a life policy if she wanted to do that?

OneAmerica has something similar where they also accept IRAs.

All three strategies have tax implications so aren't true 1035s though.

 

[SWM]

From the way she spoke, she was convinced she was moving the money to a life policy. The agent called her and told her she was approved, then called later and said she was declined. I am thinking the life company discovered the 1035 was an annuity and slammed the door on his origional plan. She further related the agent told her this was the next best thing since she was not approved for the life. I am looking for some fellow experienced agents to say, "Yep, that guy needs a reality check". I know what the right thing to do is, I just hate pounding another agent, regardless of how dumb he is as this will get bad before it's over and may cost him his profession, but if this is a trend of how he operates, he needs to go.

 

[Tahoe Ray]

From the way she spoke, she was convinced she was moving the money to a life policy. The agent called her and told her she was approved, then called later and said she was declined. I am thinking the life company discovered the 1035 was an annuity and slammed the door on his origional plan. She further related the agent told her this was the next best thing since she was not approved for the life. I am looking for some fellow experienced agents to say, "Yep, that guy needs a reality check". I know what the right thing to do is, I just hate pounding another agent, regardless of how dumb he is as this will get bad before it's over and may cost him his profession, but if this is a trend of how he operates, he needs to go.

I agree. Approved on the underwriting and declined on the 1035....

 

[WinoBlues]

From the way she spoke, she was convinced she was moving the money to a life policy. The agent called her and told her she was approved, then called later and said she was declined. I am thinking the life company discovered the 1035 was an annuity and slammed the door on his origional plan. She further related the agent told her this was the next best thing since she was not approved for the life. I am looking for some fellow experienced agents to say, "Yep, that guy needs a reality check". I know what the right thing to do is, I just hate pounding another agent, regardless of how dumb he is as this will get bad before it's over and may cost him his profession, but if this is a trend of how he operates, he needs to go.

I have very little tolerance for this type of stuff. I have made more than one three way call to an agent and their home office from a clients home.

 

[SWM]

Update: I could not take it anymore. I drove to the office and grabbed the file. That 1035 cost the client 33,000 in surrender charges. I called her just now and explained the situation to her. Needless to say, she was not happy and was not aware of that surrender charge. She gave me the go ahead to pursue reconcilliation.

 

[timcomp]

Please keep us updated on the situation.