Annuity 10% bailout, 6% guaranteed Income Account.

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PostPosted: Fri Oct 03, 2008 11:10 am   Post subject: Annuity 10% bailout, 6% guaranteed Income Account.  

FIXED Indexed Annuity, 10% bailout, 6% guaranteed Income Account.



What's the catch?

The surrender charges.





Annuities are NOT designed for someone to put their money in and take it right back out like some day trader playing stocks like a flee market swap meet.



If you understand that you will make money and contractually cannot lose one penny of principal.



Depending on your age when you start taking your guaranteed lifetime income stream you can receive anywhere from 5% to 8% for life.



Did I mention the surrender charges?



Insurance companies are not going to pay you a 10% upfront interest bonus, guarantee the contract, pay averaged indexed interest of 6.4% AND guarantee you a lifetime income stream for you to put your money in and take it right back out.



Putting money in and taking it right back out and moving it all around so you can't tell heads from tails is the Wall St. shell game and we can all see how well that works for your IRA or 401k! Rolling Eyes



Anyone up for a good Internet Thread War on the topic of annuities?



I promise to play fair, after all, I DON'T post anonymously.



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PostPosted: Wed Oct 15, 2008 10:50 am   Post subject:   

I'm sure that the other members would love to contribute to this thread. Meanwhile, can you explain it to me little more explicitly? IMO annuities are purchased in order to create the stream of income after the retirement.



In case of Fixed Indexed Annuity, the amount grows at a compound rate along with receiving return form the financial market, which certainly has suffered a huge loss given the current market scenario.



Quote:
What's the catch?

The surrender charges.




Normally one may expect 10% of the amount of the premium paid as the surrender amount after the first year.

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PostPosted: Wed Oct 15, 2008 11:02 am   Post subject:   

Hey Gary, you meant to say that one shouldn't look at the annuity plan for short term benefits, rather you should leave it for a long term to generate return for you!?!



Quote:
Putting money in and taking it right back out and moving it all around so you can't tell heads from tails is the Wall St. shell game and we can all see how well that works for your IRA or 401k!




I've also found this part of your post very interesting can you explain it more.

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PostPosted: Thu Oct 16, 2008 12:31 am   Post subject:   

sunshinechild wrote:

Quote:
IMO annuities are purchased in order to create the stream of income after the retirement.


No not really, although the guaranteed income stream availability is important to many people.



The vast majority of Traditional FIXED Annuities and Fixed Indexed Annuities are purchased for an efficient transfer of wealth, probate avoidance, principal protection and for many seniors to stop paying federal income tax on their interest earnings from bank CDs and other taxable investments when they aren't even spending the income.



A fixed annuity is a SAFE place to put your money after you've made your money.



Quote:
In case of Fixed Indexed Annuity, the amount grows at a compound rate along with receiving return form the financial market, which certainly has suffered a huge loss given the current market scenario.


No, not exactly.

Not one penny of any client's money has been lost in a Fixed Indexed Annuity. All principal is SAFE and sound. The worst thing that happens in a flat or down market is the client won't get any indexed interest credit but all principal is SAFE and sound. There isn't any direct investment of the client's money into the market.



In an up market a client will participate in "some" of the gains of the market without risking one penny of principal.



Don't confuse a Fixed Indexed Annuity with the infamous bloated pig with lipstick....a VARIABLE Annuity.



Quote:
Normally one may expect 10% of the amount of the premium paid as the surrender amount after the first year.


True.



A typical surrender charge schedule starts about 10% the first year and usually decreases by 1% per year and would be 0% in the 11th year.



However, as stated above:

Insurance companies are not going to pay you a 10% upfront interest bonus, guarantee the contract, pay averaged indexed interest of 6.4% AND guarantee you a lifetime income stream for you to put your money in and take it right back out.



coffee&caramel wrote:

Quote:
Hey Gary, you meant to say that one shouldn't look at the annuity plan for short term benefits, rather you should leave it for a long term to generate return for you!?!


No, I didn't say that.

NOBODY has nor will they EVER get rich putting money into a fixed annuity. A fixed annuity is a SAFE money savings instrument and is a place to put your money after you've made your money.



There are clients all the time who need and want a guaranteed lifetime income stream and they want that income to start right away. I met with a client today whose $150,000 premium into her fixed annuity will generated a monthly income of about $985 per month guaranteed.



No bank or investment firm will GUARANTEE her $985 per month on $150,000. ONLY insurance companies with fixed annuities can do that.


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PostPosted: Thu Oct 16, 2008 12:41 am   Post subject:   

Echo GS on this.



You will never see this from a bank product. They don't even like to use the "G" word.



However, insurance companies do and can.



We have a product that guarantees 7% annually. That $150,000.00 premium generates $1,312.50 per month.



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PostPosted: Thu Oct 16, 2008 9:55 am   Post subject:   

LifeIsGood two questions just to be clear.



Your 7% guarantee is referring to the Income Account Value, correct?



Quote:
That $150,000.00 premium generates $1,312.50 per month.


Is that the 10 year certain payout?



I ask because $1,312.50 per month would require 10.5% interest to generate $1,312.50 per month on $150,000.



This part is funny:

Quote:
They don't even like to use the "G" word.


Which "G" word we talkin' 'bout?

Wink Gary or GUARANTEED Razz


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PostPosted: Thu Oct 16, 2008 1:48 pm   Post subject:   

I did some quick math (didn't use a calc)...we give a bump on the interest if a customer pays via lump sum.



Hmm...the "G" word - it used to be guaranteed...but after a few more of your excellent posts, it could be both ! Laughing



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PostPosted: Thu Oct 16, 2008 6:33 pm   Post subject:   

So did you really use the calculator???????? Maybe your fingers instead??LOL

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PostPosted: Fri Oct 17, 2008 5:28 am   Post subject:   

Quote:
Your 7% guarantee is referring to the Income Account Value, correct?




Hey guys, I may sound like a novice but what is Income Account Value???



Also, aren't a portion of the income generated in the annuity plan is guaranteed in the Fixed Indexed Annuity plans?



How much return one may expect on a Fixed Indexed Annuity plan given the present market scenario? A hypothetical case study may help me understand the situation better, if you please….



Supposing I'm a male of 35 yrs and want to put money on the annuity plan for retirement income…what income I may expect after the end of the tenure of 25 years (retirement age is 60 years for example)
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PostPosted: Fri Oct 17, 2008 9:50 am   Post subject:   

Quote:
Hey guys, I may sound like a novice but what is Income Account Value???


The Income Account Value is a guaranteed mathematical formula the insurance company uses to determine the maximum lifetime payout regardless of policy performance. A 6% yearly guarantee is typical.



For example if someone paid $100,000 into a fixed indexed annuity and over the next 10 years never received any indexed interest credits his Account Value (the actual money in the contract) would be $100,000.



However, the Income Account Value would be about $188,000. The insurance company would use the $188,000 to determine your maximum lifetime payout.



Quote:
Also, aren't a portion of the income generated in the annuity plan is guaranteed in the Fixed Indexed Annuity plans?


Yes.



All indexed interest earnings added to the Account Value become principal and once credited cannot be lost.



Quote:
How much return one may expect on a Fixed Indexed Annuity plan given the present market scenario?


0% if in most any indexed strategy IF you bought your contract one year ago. Going forward a client who gets in now could very well see 14% to 18% one year from now without risking one penny of principal.



3% if funds are in the fixed strategy.



The 55 year indexed interest earnings average based on the S & P 500 with AVERAGE being the operative word is about 6.4%



Quote:
A hypothetical case study may help me understand the situation better, if you please….


I'll run some numbers of actual contracts and post to this thread as time permits sometime next week.



Quote:
Supposing I'm a male of 35 yrs and want to put money on the annuity plan for retirement income…what income I may expect after the end of the tenure of 25 years (retirement age is 60 years for example)


Would need to know how much money and premium payment method. Such as, a one time lump sum or annual payment of how much money for 25 years before that calculation can be made?


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PostPosted: Sat Oct 25, 2008 7:54 pm   Post subject:   

The current trend seems to be what I call a 2 bucket system.

Bucket #1 Account Income Value-- as defined earlier is the value used to determine the Monthly/annual available income. The product I use the most has a Guaranteed 7% each year for this account for the first 10 years.



Bucket #2 is the actual accumulation value-- this is the amount you can get as a lump sum. In a fixed indexed annuity if this value ever raises above the AIV (Bucket #1 Value) then the value of the AIV raises that much extra. This then usually resets.



Current annuitys are excellent places to keep your money today. But dont forget to do your due dilligence. And remember the big BONUS annuitys are usually 2 tiered products, You can almost never take that money out in a lump sum.





Thanks



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PostPosted: Mon Nov 10, 2008 8:54 pm   Post subject: 2 tiered bonus products  

Actually, the post referring to the bonus products usually being 2 tiered is not quite accurate. That is the way the industry was a few years ago, but there are a number of carriers and products that offer substantial bonuses - (2.5% for 5 years up to 10% for 10 years) that are "walk away" products. You can also add income riders to both.



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PostPosted: Wed Jul 03, 2019 8:52 pm   Post subject:   

Final score and explorations



Kylian Mbappe, announcing his presence on the sport's grandest stage. (Pilar Olivares/Reuters)



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