Why Keep A VUL Whose CV is More Than The Original Coverage.

[James]

Health insurance companies don't put me in the situation of having me compare what I have to offer against products I can't sell and are not trained on. I can compare what my client has against what I offer since I sell what they have.

Not so, in general, with annuities where the vast majority of life agents don't hold financial licenses. True that you need a securities license to sell a variable annuity but what's touted more often is EIAs.

Now life insurance agents are in the uncomfortable postion of trying to analyize their client's current portfolio to see if an annuity is a proper sale. Just one problem - they don't know what they hell they're looking at.

You cannot say that there are not HUGE problem with the annuity industry regarding unethical sales. Just Google seach it - the results are insane.

What's the bottom line? Don't recommend anything to your client unless you're formally training on what they have. Just refer it to someone who actually knows what they're talking about.

I think we can close the case on this discussion since it's turning circular. To all watching; if you aren't formally trained then don't discuss security products or compare security products with your life clients.

Yes John everyone that sells Annuities and Cash Value Insurance are Evil, spoken upon high by John. Now in his moderator status is threatening to end the discussion. Yet John you were the first to hit the mud slinging and continue through out for the most part. You jump from one thing to the other as an expert and proclaiming the DRIP and the MF as the ultimate, okay you back off the MF after how many pages of discussion, even you know a dead horse when you see one at some point!

Yet obviously you fall back on the ole' Big Brother routine. One must have a license to recommend a product that may or may not replace another product. If your position is brought to its natural conclusion the client themselves couldn't touch their money without approval of the almighty Shephard (religious methology of some that all action must be first approved by the Shephard or Clergy in this case a person approved by the almighty shephard of the US Government). Obviously John most people do understand what they have and you know it isn't rocket science!

Once again though you fail in being able to understand the proper usage of the Annuity and decided through basically ignorance if you ask me and trash a product that has been the bedrock of financial planning throughout the history of man.

Yet what is really amazing is this, your claim of all these complaints against this annuity sales or that one whichever one. Many times once I get a link and search out the story more often then not it was base on someone with a Secuities License of one form or another. The Seven is a pretty hard test but not that hard for most I have contacted, but the others such as the 63,65,66 or quite easy. In fact from what I'm seeing not much harder then the insurance license.

 

[Crabcake Johnny]

My problems with annuities are mainly with the EIAs and how many are marketed. Postcard mailers go out and everyone invited to a seminar or dinner where the word "life insurance" is taboo. It's actually the kiss of death to state that it's life insurance. People are advised to cash in investments and in many cases their current portfolio isn't even examined.

And among most financial experts all annuities comes in dead last in anyone's financial portfolio. But then again, all these legitimate publications, authors and financial gurus are all in some big conspriacy against annuities so all the articles I'd link you to from the largest financial publications and authors stating that annuities, in general, are horrible choices are just pushed aside by you as "natually they're against them - it's a huge conspiracy!"

Here - watch:

http://www.bankrate.com/brm/news/DrDon/20020411a.asp

Here are the key sentences:

Most long-term investors don't need the insurance feature of annuity investments and would be better off in other investments

Most investors would be better off considering annuities as a last resort rather than a first choice when it comes to creating an investment portfolio.

 

[Guest]

salpro22 asked:

Would you offer the names of the companies you are talking about w/ low fees and commissions?

Vanguard mutual funds have DIRT cheap VA's. The next: Ameritas and TIAA-CREFF.

 

[Sam]

John,
1. Formal training is a big fat joke. I have no formal training in anything except psychology and economics. Many of the insurance classes I have taken have been a bunch of losers counting the minutes of monotone before they get their free lunch. I have no formal training for any product that I sell. I forcefully dispute the fact that that makes me unqualified to not only sell it, but recommend what I think is best, against other possibilities.

2. Lets say you have a couple, they are both 50 years old, and they have 3 children. Every one of them is in good health, with no pre-existing conditions and no rx. You show them an HSA and they insist on a copay plan. You explain to them that they are throwing $2,000 out the window, because they would be much better off with an HSA. They respond that they don't care, they like copays and if you want the account, then that is what they get.

Annuities, even indexed annuities, are no different. Aside from the possible tax benefits, and the as of yet unmentioned benefit that it removes the funds from the estate, and thus from probate, they bring something strong to the table. They allow someone to participate in a portion of the upsde of the market, with absolutely no downside. They can lock in their gains, and never worry that they will lose 20% of their money. Say what you want about it not being the best product for people, but you give people what they want, or a lot of other products will go down with it.

 

[Crabcake Johnny]

But that analogy doesn't work with life insurance salesmen and annuities. In your example I'm actually recommending a HSA, showing why they should have one and showing them why they shouldn't have a copay plan.

But what I'm saying in some life agents are trashing all other possible investment ideas and only touting the annuity. It's not like the life agent is saying "listen, I recommend you contact a financial planner or advisor who can recommend the proper allocation for you." No. The life insurance agent is saying "cash in those stocks and CDs and buy this annuity!"

In your example I'm explaining all options and recommending the correct one. In my example the annuity salesman is not recommending anything except for the annuity.

To match your example properly the converation would have to go like this:

Life agent: "You can look at annuities if you want but there are much better investment options for you to look at before an annuity."

Client: "Nah...sell me an annuity anyway."

Lol - that doesn't happen.

In your example I'm touting the HSA which is cheaper than the PPO thereby getting me less commission. In my example the annuity salesman is blinded by huge commissions and absolutely trashes all other possibilities.

Also in your example I can sell and am trained on the HSA and PPO. What I'm saying is in most cases the life agent cannot sell stocks, mutual funds or CDs therefore he has a financial interest to trash them.

 

[Sam]

Good point.

 

[James]

But that analogy doesn't work with life insurance salesmen and annuities. In your example I'm actually recommending a HSA, showing why they should have one and showing them why they shouldn't have a copay plan.

But what I'm saying in some life agents are trashing all other possible investment ideas and only touting the annuity. It's not like the life agent is saying "listen, I recommend you contact a financial planner or advisor who can recommend the proper allocation for you." No. The life insurance agent is saying "cash in those stocks and CDs and buy this annuity!"

In your example I'm explaining all options and recommending the correct one. In my example the annuity salesman is not recommending anything except for the annuity.

To match your example properly the converation would have to go like this:

Life agent: "You can look at annuities if you want but there are much better investment options for you to look at before an annuity."

Client: "Nah...sell me an annuity anyway."

Lol - that doesn't happen.

In your example I'm touting the HSA which is cheaper than the PPO thereby getting me less commission. In my example the annuity salesman is blinded by huge commissions and absolutely trashes all other possibilities.

Also in your example I can sell and am trained on the HSA and PPO. What I'm saying is in most cases the life agent cannot sell stocks, mutual funds or CDs therefore he has a financial interest to trash them.

Once again John you are painting with that broad brush, I know you like to because it seems to be a non ending story with you. First off, sure they're some hustlers in the Annity field making hay with EIA's and Variables. Yet on the other hand you have FP'ers promoting the idea of MF funding for LTC! A really stupid idea, yet do they have knowledge of LTC Planning, I assure you they don't, they do so because their B/D pushes MF's for everything, plus not to mention Bonuses and Trips! Their training is a pathetic as anything else in this field.

Yet though you have a large segment of the population (really don't have solid numbers) that will not sit down with a financial broker if their lives depended upon it. Yet according to you if they don't then they can not purchase a annuity or anything else. How about if they want to buy Realstate as an investment or dare say Precious Metals, should the Precious Metals salesman that touts their product as a solid investment force their clients to go first to a CFP before they finalize the sale or is this just with Insurance Sales???

If you think I have disdain for the Market (which I don't) I assure you I do for a healthy portion of so called FP'ers. I know there are good ones but for the most part the field is made up of hacks that do what their B/D tells them to do. That is to sell MF's and seek out the HWC. Leaving the vast majority of people to fend for themselves, yet according to most of them and you I guess this unwanted vast majority shouldn't be allow any right to seek out differing counsel even though most FP'ers and B/D's don't want anything to do with them. Like the Radio Commercials running around here by one CFP, that touts certain funds and how much you can make, yet you need to have $$$ to invest, I assure you he isn't prospecting for anyone making less then 100 grand ayear which is what part of the population in E. TN?

 

[Crabcake Johnny]

Then you have guys who can't sell securities and get this cult-like mentality about life products - like James, who will argue even in the face of facts. He's asked me several time to show him funds that average more than 4% and I have - yet he continues to argue.

Here - do your own research on mutual funds: http://bwnt.businessweek.com/mutual_fund/

Now, there's a lot of pages to go through since it lists all the mutual funds, but I'm sure you'll agree that it's pretty hard to spot Jame's ascertain that funds average 4% over time. Not what I'm seeing at all.

And forget about the dogs anyway. That's what research is for. How 'bout all those funds that over 10 years have posted over 20% returns? Go grab youself one of 'em.

 

[Sam]

Guys, please edit to remove the personal attacks. A good argument is important, but we cannot have a flamewar.

 

[Crabcake Johnny]

Agreed. Also agreed that training in this industry is absoutely pathetic.