Why Bother with Fixed if Variables Have Lock-ins?

[nathan.lee]

On a separate note; there are much better Income Riders than Pru's. Mostly on Indexed Annuities.

American Equity has an 8% accumulation Income Rider, with 5%-8% lifetime payouts.

Actually, American Equity's income rider is currently at 7% compounding. They lowered the roll-up rate from 8% to 7% this past spring. They re-released the 8% LIBR for a limited time with an increased cost and a for shorter period(7yrs. as opposed to 10 yrs.). Now the rider is back to 7% for 10 yrs. with a 10 yr. restart option.

 

[scagnt83]

Actually, American Equity's income rider is currently at 7% compounding. They lowered the roll-up rate from 8% to 7% this past spring. They re-released the 8% LIBR for a limited time with an increased cost and a for shorter period(7yrs. as opposed to 10 yrs.). Now the rider is back to 7% for 10 yrs. with a 10 yr. restart option.

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Its state specific
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Yeah you might want to check again. The subaccounts are still great but the rider changed recently. Still a good product. From what I have heard some are more suitable for different reasons. For instance, for a married couple, the MetLife VA might be a better fit than a JN.

Its all about the combination of rollup % & payout % for their specific age... I dont keep up with the VAs as much anymore.


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I'll have to ask my buddy about this. He's wrote a dozen of them or so in just the last couple of months, he should know. His favorite fixed products right now are a couple of JN products and the ING PREM 3

Its true. I cant remember the %s but once income is turned on a good bit of the portfolio is forced into bond allocations.
And th last time I checked JNs subaccounts were just better imo... but the HD feature is nice.[/QUOTE]

But most agents selling them gloss over the 3%-4% in fees that come along with them.

 

[VolAgent]

Yeah you might want to check again. The subaccounts are still great but the rider changed recently. Still a good product. From what I have heard some are more suitable for different reasons. For instance, for a married couple, the MetLife VA might be a better fit than a JN.

I'm not familiar with it after the change, but before it was an awesome product.

After you got done, the fees were high. But with the income and death benefit rider, it was a pretty sweet product.

 

[dgoldenz]

I wonder what percentage of people buying VAs even have a clue how they work.

 

[0b1kanobee]

I wonder what percentage of people buying VAs even have a clue how they work.

In detail or roughly? What is your point?

Most people don't know how 99% of the shite in the world works. Are they supposed to know how a VA works? Does a VA fall in the 1% of the shite everyone should fully understand?

 

[nathan.lee]

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Its state specific

The max roll-up for the American Equity income rider is 7% or 7% with 3% increasing income in all states where the rider is approved.

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[scagnt83]

I wonder what percentage of people buying VAs even have a clue how they work.

Most people have no clue how any financial product they own works.

How many of your term clients know exactly what they have once a few years have gone bye?

They may know they have a 20y term for $500k, but other than that they probably cant tell you much.



The alternative to a VA would be mutual funds... and they are just as complicated as a VA is... if they are fully explained to the client...

 

[Norwayguy]

Most people have no clue how any financial product they own works.

How many of your term clients know exactly what they have once a few years have gone bye?

They may know they have a 20y term for $500k, but other than that they probably cant tell you much.



The alternative to a VA would be mutual funds... and they are just as complicated as a VA is... if they are fully explained to the client...

I would say Mutual Funds are a tad less complicated when compared to a VA with these living benefits...The OP thought the guarantees where always available....I hate it when I run into people with a VA with Living Benefits and they ask me why is my account value going down I'm supposed to get 5 percent or what the market does and I'm just speechless.

 

[BNTRS]

How many people remember when Pru's HD 5 was HD 7?

JNL was 7 simple with quarterly step ups, and allowed any investment in their line up with these features?

When PacLife had a product called foundations 10 (10% step up) with a 1.10 bps charge but there was no difference between single and spousal benefit and you could add the rider at any age?

Or when Massmutual had a product with any of these features?

Why look at fixed? Because if you need the guarantees, you have no business in the variable product to begin with.

 

[TRSecurity]

I wonder what percentage of people buying VAs even have a clue how they work.

I ran into a guy recently who knew exactly how hisn variable annuity worked. He even knew the fees. That was the first time that has happened to me. He was a retired CFO.

Otherwise 99% (used to be 100%) of people who I talk with regarding their currently owned Variable Annuities are surprised by one or both of these:

1. Their fees are more than the $25 annual fee. The jaws drop when they see, on average, 3% - 4% in fees

2. Thier income account is not a guaranteed 5% interest but a rollup rate. The confusion starts when I explain to them they need to take that only as an income stream. "What do you mean I am not getting 5% guaranteed interest!?"

It is the responsibility of the variable annuity agent to explain these two major concepts. However, I will gladly do that job for them and earn the business.

Another observation with these VA's - more often than not, these people have more than 90% of their nest eggs in these VA's. Talk about suitability concerns!