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Old 03-20-2015, 01:17 PM   #21
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Originally Posted by pb4uski View Post
Have you tried googling the names of the subaccounts? Or the website of the annuity provider? Or calling the annuity provider?

It has to be BS. As I recall you can't sell equities to the public without going through the SEC and VA subaccounts are equities. Tell the broker that you plan to complain to the SEC and I suspect that the materials might magically appear.

Below is an example of what Prudential provides on their website relating to their annuities.

Annuity Prospectuses and Supplements
we were at a seminar last night where they featured the prudential defined income variable annuity.

listening to the sales speech i gave it an "A" a step up of 5.50% a year in value and guaranteed income . what a great combo.

well got home and read the real deal and i give it a B- TO "C "

THERE IS REALLY ZERO CHANCE OF GETTING BETTER THAN THE GUARANTEE AMOUNT although they call it a variable annuity ..

the 5.50% increase you get each year to your income base amount really is not accessable to you as it is only a draw off it you get and a small one at that.

if anyone wants the details i will be glade to post how it works.



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Old 03-20-2015, 01:52 PM   #22
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Am too embarassed to open a new thread, 'cuz I should know the answer to this question. So it's off-topic for variable annuity, but something I don't understand.
Here's the situation: An $8,000 "plain" annuity opened in 1984 @11.5% interest for 2 years and 4% interest thereafter. Never had a reason to change, so didn't pay much attention to it. So now, the last statement was for $56K annuity value, $48K cash value and $46K surrender value. The annual management fee is $20.

Out of curiosity I looked at a compound interest calculator and it shows about $32K based on the original amount. I used the term "plain" annuity because I'm not sure what kind of annuity it is. I just wonder where the extra $$$ came from.
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Old 03-20-2015, 02:00 PM   #23
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Am too embarassed to open a new thread, 'cuz I should know the answer to this question. So it's off-topic for variable annuity, but something I don't understand.
Here's the situation: An $8,000 "plain" annuity opened in 1984 @11.5% interest for 2 years and 4% interest thereafter. Never had a reason to change, so didn't pay much attention to it. So now, the last statement was for $56K annuity value, $48K cash value and $46K surrender value. The annual management fee is $20.

Out of curiosity I looked at a compound interest calculator and it shows about $32K based on the original amount. I used the term "plain" annuity because I'm not sure what kind of annuity it is. I just wonder where the extra $$$ came from.
I don't have any, but my general understanding is that annuities pay out more than a person can get on their own, because a large portion of the people who have one die earlier. So the remaining ones get some share of "that money" (along with the ins company).
Its great if you are a survivor.
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Old 03-20-2015, 03:19 PM   #24
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Am too embarassed to open a new thread, 'cuz I should know the answer to this question. So it's off-topic for variable annuity, but something I don't understand.
Here's the situation: An $8,000 "plain" annuity opened in 1984 @11.5% interest for 2 years and 4% interest thereafter. Never had a reason to change, so didn't pay much attention to it. So now, the last statement was for $56K annuity value, $48K cash value and $46K surrender value. The annual management fee is $20.

Out of curiosity I looked at a compound interest calculator and it shows about $32K based on the original amount. I used the term "plain" annuity because I'm not sure what kind of annuity it is. I just wonder where the extra $$$ came from.
My guess would be that the 4% was the minimum interest rate and that the insurer actually credited the contract with more than 4% for some of the years after the first two years. Easiest answer is to call the issuer and ask.

What I don't understand are the differences between the annuity value, cash value and surrender value on a 30 year old contract. I would think that there would be no surrender charges applicable to a 30+ year old contract. But again, call and ask.

In any event, if the contract is currently crediting 4% and has a 4% minimum, its probably a keeper.
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Old 03-20-2015, 06:28 PM   #25
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My guess would be that the 4% was the minimum interest rate and that the insurer actually credited the contract with more than 4% for some of the years after the first two years. Easiest answer is to call the issuer and ask.

What I don't understand are the differences between the annuity value, cash value and surrender value on a 30 year old contract. I would think that there would be no surrender charges applicable to a 30+ year old contract. But again, call and ask.

In any event, if the contract is currently crediting 4% and has a 4% minimum, its probably a keeper.
Thanks...

Am guessing you're right... it was at a time when interest rates were pretty high. Yeah, so I did call a while back. Seems like the holder of the annuity has changed several times, and the person that I talked with didn't understand what it was all about, so after being tranferred several times, I gave up... about the only thing I learned was that what was supposed to be a 5 year pay out was going to be 10 years. Am to old to think that far ahead, so let a sleeping dog lie. As of now, don't need the money, so 4% is okay with me.
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Old 03-21-2015, 03:42 AM   #26
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what prudential did is come out with a variable annuity that is really a fixed annuity but it looks good on paper.

it is a variable annuity with only one option , a bond index .


the shrewd part is they tell you for every year you delay taking withdrawals the income base amount will grow by 5.50% .

but that amount can only be used as a basis for income and not surrender or account value.

you gain a 1/10% increase in withdrawal rate for every year older you get which means although they credit the income base at 5.50% you only get to draw 1/10% of that a year as income.


it really sounds a lot better than it is,.


then depending on your age you get a guaranteed withdrawal rate as a min .

assuming age 85 or so that could get you a 3.50% return . the bond index acts as a sub account and if it goes up your income goes up , as they say.

but the expenses run almost 3% and at best bonds averaged 5.25% the last 30 years so there is noooooooo way ever the bond portion will beat the guaranteed amount . so while a good selling point the reality is no way will you ever beat the income amount and get a boost from the bonds .
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Old 03-21-2015, 06:05 AM   #27
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here are some real wotld work ups on the prudential annuity the broker will never show you .

these were done by annuity gator.


the first thing you see is the money growing at that 5.50% growth rate really has little effect unless you start way way early.

sales literature advertising the growth rate



actual withdrawal amounts at various ages.




as you see the median range of return will likely be in the low 3% range for most foolks based on life expectancy.

but even if you live to 95 you still can't get above 4.50% , never ever matching the 5,.50% growth rate.


the bond component index will offer little help to getting any more as you would need to first beat the guarranteed rate . not easy to do when expenses are almost 3% and even when rates were higher bonds averaged 5.25%





what i will say is while it isn't a great deal it certainly can be a good deal replacing some or maybe even all cash and bonds in your own portfolio.

to match that cah flow would require more selling of equities for quite a while if you were going to draw principal and interest today from cash to live.

that is where the real advantage is. that cash on your own would be gone after a number of years and now equities liquidated to make up the short fall .

using something like this has the advantage too of having an income base for life so less equities need to be sold to generate more cash flow
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