Annuity Opinions Needed

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Gail

Recycles dryer sheets
Joined
Jul 11, 2005
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76
Many years ago, before we knew better, the hubby and I bought a deferred variable annuity. It has done quite well, in spite of the exorbitant fees, but we are now at the point where we would like to protect the balance. There is a very low (under 2%, after fees) fixed cash option in our current annuity.

We are considering doing a 1035 exchange to a fixed annuity. We don't need the income and we don't want to lock in payments when we are close to RMDs for the hubby, so we are not in the market for an immediate annuity.

Fidelity has a MetLife 10 years fixed paying 6.75%. This sounds like a darn good deal to me right now. We are approaching this as similar to buying a 10 year CD.

My main concern is the financial health of MetLife. I would appreciate any feedback.
 
Yeah, get it from AIG the big shots need a weekend at the spa again.
 
I looked at Vanguard's fixed annuities, but they're only paying 4.4%. I would really like to get a little better rate, if I can.
 
If you get an annuity, get something low in fees and keep your dollar amounts safely below the state insurance limits with any one company. It's not as good as FDIC (like a CD) but it's better than nothing.

In calculating the payout, there's a big difference between the internal interest rate of the annuity and the payout. Make sure the principle and payments are included in the figures you're given so you can do a NPV on the total investment.

Without seeing the details, a 6+% interest rate in today's environment has got to include significant risk or slight of hand.
 
2B, this is a 10 year fixed annuity, with a net return of 6.75%. I agree that it sounds too good to be true, but we have already talked with Fidelity, and they confirmed that it is what they refer to as a "CD type" annuity.

We don't need the income, so we would just let it accrue for the 10 year period. We could then renew for a one year period, buy a new product, or annuitize if we needed to.

My main concern is with the safety of MetLife, since they are the issuing company.
 
Gail said:
2B, this is a 10 year fixed annuity, with a net return of 6.75%. I agree that it sounds too good to be true, but we have already talked with Fidelity, and they confirmed that it is what they refer to as a "CD type" annuity.

We don't need the income, so we would just let it accrue for the 10 year period. We could then renew for a one year period, buy a new product, or annuitize if we needed to.

My main concern is with the safety of MetLife, since they are the issuing company.
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This strikes me also as too good to be true also, so.....Im curious that your 1st concern is the safety of Metlife. I have a lot of insurance with them through my employer. I can't fathom how they could do something that much better than everybody else if it really is the same product.

If it really is like a CD with full return of principal in 10yrs...........and pays 6.75 apr.........where do I sign up?
(but the voice in my head keeps saying Impossible!!!)
 
jazz4cash said:
This strikes me also as too good to be true also, so.....Im curious that your 1st concern is the safety of Metlife. I have a lot of insurance with them through my employer. I can't fathom how they could do something that much better than everybody else if it really is the same product.

If it really is like a CD with full return of principal in 10yrs...........and pays 6.75 apr.........where do I sign up?
(but the voice in my head keeps saying Impossible!!!)
Click to expand...

Go to Fidelity.com and look at their fixed annuities. You have to put your state in, and they will tell you what is available. As I said, we talked to a Fidelity rep this afternoon, and, unless we are missing something incredibly obvious, this looks like a great deal.

We have so few choices in what we can do inside our current annuity, which is one of the main reasons I would advise anybody not to buy a deferred variable annuity in the first place!
 
Gail, I would suggest you get and read the fine print very carefully. It is highly likely that the 6.75% rate you are being quoted is either an outright teaser or is not fixed for the entire life of the contract. This is pretty common in the fixed annuity world, as I understand things.

I wouldn't spend a lot of time worrying about being impaired as a metlife policyholder, personally.
 
Gail said:
Go to Fidelity.com and look at their fixed annuities. You have to put your state in, and they will tell you what is available. As I said, we talked to a Fidelity rep this afternoon, and, unless we are missing something incredibly obvious, this looks like a great deal.

We have so few choices in what we can do inside our current annuity, which is one of the main reasons I would advise anybody not to buy a deferred variable annuity in the first place!
Click to expand...

Gail
I don't know alot about annuities, but I am trying to learn. As a matter of fact I have already looked at the rates on the Fidelity site, but there are so many different types of annuities and I don't know which type would compare to the Metlife quote you have.

I do know that annuity payments <may> include 'return of principal' which makes the interest calculation much different from a CD interest rate calculation. All CD principal is returned when it matures. I never heard of a CD-type annuity and I wonder if the name is misleading.
 
gail said:
go to fidelity.com and look at their fixed annuities. You have to put your state in, and they will tell you what is available. As i said, we talked to a fidelity rep this afternoon, and, unless we are missing something incredibly obvious, this looks like a great deal.

We have so few choices in what we can do inside our current annuity, which is one of the main reasons i would advise anybody not to buy a deferred variable annuity in the first place!
Click to expand...
Gail... Interesting... Not sure why it's so much higher than others:confused:

Metlife.JPG

Metlife Rating.JPG
 
So, if I understand this correctly, the Metlife annuity quote Gail cited is available from Fidelity?

In my state of Maryland, the best 10 yr rate quoted on the Fidelity site is 4%.
 
jazz4cash said:
So, if I understand this correctly, the Metlife annuity quote Gail cited is available from Fidelity?

In my state of Maryland, the best 10 yr rate quoted on the Fidelity site is 4%.
Click to expand...

Yes, that's the way I see it. In my earlier post I chopped off the ref to Fidelity:duh:

Fidelity Site.JPG
 
Gail said:
2B, this is a 10 year fixed annuity, with a net return of 6.75%. I agree that it sounds too good to be true, but we have already talked with Fidelity, and they confirmed that it is what they refer to as a "CD type" annuity.

We don't need the income, so we would just let it accrue for the 10 year period. We could then renew for a one year period, buy a new product, or annuitize if we needed to.

My main concern is with the safety of MetLife, since they are the issuing company.
Click to expand...

MetLife is one of the strongest carrirs there is. I would stay away from AIG at this time..........:p
 
Thanks for the feedback, everyone.

So far, I seem to be hearing that I don't need to worry any more or less about MetLife than about the annuity company we are currently with, so that's a plus. We would save a bundle just on fees by moving.

Fidelity is mailing us a prospectus, which we will thoroughly read. If that backs up what we have read and been told by Fidelity, then I think this makes a lot of sense for us. This is part of our fixed income investments, and we can't even come close to this type of yield anywhere else.
 
Tell me more! I guess it's not to good to be true afterall. Curious nothing anywhere near that rate is available to me in MD, but I never heard of a CD annuity before. I did a search and found a definition that a CD-type annuity is a fixed annuity that pays a fixed rate for a term equal to the surrender period....now what I am trying to understand is whether the rate is calculated like a CD rate, or some other way? Can the withdrawal phase be deferred for the full 10 yrs, or is it like an immediate annuity that pays out over 10 yrs and there's no principal left at the end?
 
Not sure if this is an endorsement or not but the US Government TSP retirement plan uses MetLife for it's annuity option.
 
zinger1457 said:
Not sure if this is an endorsement or not but the US Government TSP retirement plan uses MetLife for it's annuity option.
Click to expand...

Might put them first in line to be absorbed into the Government bank. :)

As an aside, I just closed out a MetLife money market account (not FDIC insured). They paid well above any of my other MM accounts, but I won't take the risk for the extra percent or two.
 
jazz4cash said:
Can the withdrawal phase be deferred for the full 10 yrs, or is it like an immediate annuity that pays out over 10 yrs and there's no principal left at the end?
Click to expand...

It is not an immediate payout annuity, although you can take out some each year if you want to. You also have the option of taking just the interest from the previous year. If you don't need to withdraw, then you can leave the entire amount in for the guaranteed period (10 years in this case) and draw interest on each year's balance. At least, that's what the Fidelity rep told me. We haven't received any actual paperwork yet.

I think Metlife is probably trying to raise cash, thus the great rates.
 
Gail said:
It is not an immediate payout annuity, although you can take out some each year if you want to. You also have the option of taking just the interest from the previous year. If you don't need to withdraw, then you can leave the entire amount in for the guaranteed period (10 years in this case) and draw interest on each year's balance. At least, that's what the Fidelity rep told me. We haven't received any actual paperwork yet.

I think Metlife is probably trying to raise cash, thus the great rates.
Click to expand...
I was talking with my Fidelity Rep the other day concerning CD's and Bond ladders and he pointed me toward the same MetLife fixed annuities listing that you are talking about. He also told me the same information. 6.75 for 10 years seems like a great rate. :) I am also requesting additional information today. I also like the other rates that MetLife offers for shorter terms and am thinking perhaps a ladder would also offer further protection. By the way, have you tried to ascertain the Insurance coverage in your state on this MetLife annuity?
 
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