Annuities....The Next Nightmare

[flytiger]

I sold annuities for 30 years. Never went nuts. I never was that ambitious. But they do what they say. A few facts......

Each insurance company is registered in each State. The State backs up the policies to a certain degree. Elizabeth, call your Insurance commissioner before you do something you may regret.

They are great investments for people who do stupid stuff, like get in at highs and out at lows. The surrender charges actually work in the benefit of the customer.

There is a deferral on taxes.

Commissions could be called high, but if you put 50 grand in a contract and get 5% for five years with a five year surrender, and a bank is offering a cd for 5%, And I make 4%, how much does the bank make, and what's the diff to customer? That's what a contract is for.

Of all the garbage the industry offers, annuities are tops for quality.

That being said, this is now. The insurance companies, especially the ones you see advertise all the time, have a bunch of garbage. I saw some of the numbers from an institutional guy; they are ugly. You might want to get an equity research report before you invest in one.

I do not currently carry any licenses, which make you a target for every shyster lawyer, but I repeat myself.

 

[VoodooMMI]

Most annities sold in the US have some safety net ($100K per account typically) through state guaranty associations. See
http://www.nolhga.com/

 

[nutmeg]

Thanks for the comment fly and the link voodoo.

I was a tad worried but not enough to actually call or check out the situation.

 

[piezoe]

Quote from Vinny1:

Zero coupon treasury bonds are great investments. I bought some 4 months ago with a 28 year maturity and they are already up 11%. Great return on something that is risk free.

Well at least that will keep you almost even with inflation! Not good but way better than losing money big time.

 

[flytiger]

Quote from VoodooMMI:

Most annities sold in the US have some safety net ($100K per account typically) through state guaranty associations. See
http://www.nolhga.com/

The 1983 founding coincides with the failing of one Baldwin United. Met Life took the assets. You know, I've got an Uncle, lives over a Bank. His assets over 50,000,000 dollars, at least pre - CDO's.

Also, it was, and I believe, still is, illegal for insurance men to use the guarantee to sell product. He can't say your policy is insured to 100,000 or whatever.

Nice link. thanks.

 

[LEAPup]

Quote from gnome:

Sounds like everybody hates annuities... but just in case you think you could use one for the tax deferral...

Prudential has a good (?) Variable Annuity they acquired from American Skandia... "Adviser's Choice 2000". No front end charges, no CDSC, comparatively low fees, lots of fund choices and unlimited trades if executed online.... limit 20 round-turns per year if executed on the phone.

FWIW...

Good advice bro! You brought balance to this debate!

I've not sold an annuity for several years, but I can see where they've "evolved" into better products than the snake oil they were just a few years ago.

 

[Cutten]

I wonder what further restrictions they will put on individual speculators as a result of predatory sales tactics and fraud by establishment corporate behemoths and their scum executives. Shoot the messenger again?

 

[Vinny1]

Quote from piezoe:

Well at least that will keep you almost even with inflation! Not good but way better than losing money big time.

It sure beats having bought Wachovia, Bear Stearns, or Lehman Brothers at the highs, not that I did, and watching your money go down the drain.

 

[Vinny1]

Quote from piezoe:

Well at least that will keep you almost even with inflation! Not good but way better than losing money big time.

For me, they are great investments. My home, car, and credit card bills are paid off. I have no debt at all. So if I'm earning over $100k/year just in interest from these bonds, it's more than enough to pay my food and utility bills and be able to travel to Europe 6 months of the year.

 

[piezoe]

Quote from Vinny1:

For me, they are great investments. My home, car, and credit card bills are paid off. I have no debt at all. So if I'm earning over $100k/year just in interest from these bonds, it's more than enough to pay my food and utility bills and be able to travel to Europe 6 months of the year.

You are sitting in the "cat bird seat". Your only serious risks now are inflation and the credit rating of the US. You should consider diversification into bonds of countries with more stable economies. Keep most of your zero coupons, but move perhaps a third to 50% into non-US Bonds.