Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 08-26-2010, 10:15 AM   #41
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by dgoldenz View Post
An EIA is not an investment, otherwise it would be a security. You could make an EIA that tracks the cost of bacon or anything else for that matter. The S&P is simply used as a benchmark to determine the crediting rate. Think of it as a fixed annuity with a variable interest rate.
If someone sold something that tracked the cost of health care and college, I'd be all in. Deflation? Yeah, right.

But thanks for admitting it's not an investment. Too many insurance salesmen say that it is. Investments are investments and insurance is insurance. Both are important in a sound financial plan but one should not be mistaken or substituted for the other.
__________________

__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-26-2010, 10:24 AM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by dgoldenz View Post
An EIA is not an investment, otherwise it would be a security.

Haaahahahahahaha!!!

The SEC may have been cowed into agreeing with the sleazy end of the insurance industry that EIAs are not a security, but that is not true as far as economic substance goes.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 08-26-2010, 10:28 AM   #43
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Quote:
Originally Posted by ziggy29 View Post
If someone sold something that tracked the cost of health care and college, I'd be all in. Deflation? Yeah, right.

But thanks for admitting it's not an investment. Too many insurance salesmen say that it is. Investments are investments and insurance is insurance. Both are important in a sound financial plan but one should not be mistaken or substituted for the other.
If an insurance agent said it was an investment, they'd be in hot water, securities license or not. An investment by definition has risk attached to it to achieve greater potential returns. There is no risk to principle with an EIA unless you surrendered early, but that is not market risk.

I agree, investments are investments and insurance is insurance, which is the reason 98% of our sales are term insurance and guaranteed universal life, which is essentially term insurance guaranteed forever. Most people won't write the check for whole life premiums, though it does make more sense for high net worth people who may get some asset protection with it, have maxed out other tax-free contributions, or for business purposes (such as deferred compensation).
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
dgoldenz is offline   Reply With Quote
Old 08-26-2010, 10:39 AM   #44
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by dgoldenz View Post
If an insurance agent said it was an investment, they'd be in hot water, securities license or not. An investment by definition has risk attached to it to achieve greater potential returns. There is no risk to principle with an EIA unless you surrendered early, but that is not market risk.

I agree, investments are investments and insurance is insurance, which is the reason 98% of our sales are term insurance and guaranteed universal life, which is essentially term insurance guaranteed forever. Most people won't write the check for whole life premiums, though it does make more sense for high net worth people who may get some asset protection with it, have maxed out other tax-free contributions, or for business purposes (such as deferred compensation).
dgoldenz, I am curious about the competitiveness of the GUL product vs. longer duration level term policies. Is there is big jump in premium for the same face amount for a GUL policy vs. 20 or 30 year level term?
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 08-26-2010, 10:49 AM   #45
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Quote:
Originally Posted by brewer12345 View Post
dgoldenz, I am curious about the competitiveness of the GUL product vs. longer duration level term policies. Is there is big jump in premium for the same face amount for a GUL policy vs. 20 or 30 year level term?
Depends on the demographics. Obviously the older the age of guarantee gets, the more expensive it is. For someone young, the difference in GUL versus a 30-year term can be minimal. A 30 year old female buying $100k of GUL at the best rates would be $292/year. A 30-year term would be $127/year. The rate is more than double on a percentage basis, but for $170/year, the benefits are guaranteed for life. Will $170/year make or break most people? Will someone really "invest the difference" of a paltry $170 if they buy term instead? Probably not. Transaction costs alone would eat up a big chunk of that "savings" if they were invested.

Since there is no 40-year term, what does a young person do when they outlive the term? Buy another one at 10 times the price when they are 60 years old and health has gone downhill? Life expectancy for a 30-year-old in perfect health today is probably 85-88 years old. What does a 25-year-old buy? 30-year term only takes them to age 55.

For an older person, the difference in premium is bigger because their mortality risk is much higher. A 60 year old male buying $100k of 20-year term at standard rates is about $1100/year. To buy the GUL would be around $2000/year. If that person lived to age 80 and had to buy insurance at that point, they are probably in bad health and the rates for someone to buy at age 80 would self-insure in about 10 years, even if they could get a standard rate. The number of people 80 years old who could qualify for standard rates is minimal. People think they won't need life insurance at age 80 and too many times they are wrong and it's too late to do anything about it.
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
dgoldenz is offline   Reply With Quote
Old 08-26-2010, 11:05 AM   #46
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Thanks. I would guess that most of the readership here has little or no need for life insurance by age 50 or 60, but that does not necessarily describe the general population.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 08-26-2010, 11:09 AM   #47
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Quote:
Originally Posted by brewer12345 View Post
Thanks. I would guess that most of the readership here has little or no need for life insurance by age 50 or 60, but that does not necessarily describe the general population.
I would agree with that assessment.
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
dgoldenz is offline   Reply With Quote
Old 08-26-2010, 12:46 PM   #48
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by 73ss454 View Post
Log onto Pen Fed and buy a 5% CD without the 40 pages of disclaimers that no one understands.
How many years?
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 08-26-2010, 12:51 PM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by dgoldenz View Post
If an insurance agent said it was an investment, they'd be in hot water, securities license or not. An investment by definition has risk attached to it to achieve greater potential returns. There is no risk to principle with an EIA unless you surrendered early, but that is not market risk.
Then all NML agents should be fired, as they are told to tell clients to "think of the dividends on your WL policy as the FIXED INCOME portion of your portfolio".............they have been saying that for years.........

There is no reason an EIA can't have a shorter surrender than a VA, none except profit margin........

There is risk in an EIA, no matter what an insurance agent tells you........get one of them to explain "crediting rates" or "participation rates" to you, and it will make the disclaimers at the end of car commercials easy to understand..........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 08-26-2010, 01:05 PM   #50
Thinks s/he gets paid by the post
saluki9's Avatar
 
Join Date: Feb 2005
Posts: 2,032
Quote:
Originally Posted by brewer12345 View Post
Haaahahahahahaha!!!

The SEC may have been cowed into agreeing with the sleazy end of the insurance industry that EIAs are not a security, but that is not true as far as economic substance goes.
Exactly...

When you consider that you need a series 7 to sell a CD in a brokerage account, its criminal in my mind that you don't need to be registered to sell EIAs
__________________
saluki9 is offline   Reply With Quote
Old 08-26-2010, 01:06 PM   #51
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by saluki9 View Post
When you consider that you need a series 7 to sell a CD in a brokerage account, its criminal in my mind that you don't need to be registered to sell EIAs
There is a bit of an art to selling something as an investment without calling it an investment...
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 08-26-2010, 01:07 PM   #52
Thinks s/he gets paid by the post
saluki9's Avatar
 
Join Date: Feb 2005
Posts: 2,032
Quote:
Originally Posted by FinanceDude View Post

There is risk in an EIA, no matter what an insurance agent tells you........get one of them to explain "crediting rates" or "participation rates" to you, and it will make the disclaimers at the end of car commercials easy to understand..........
I'd be less worried about crediting rates than I would be the financial condition of the types of companies that issue EIAs
__________________
saluki9 is offline   Reply With Quote
Old 08-26-2010, 01:09 PM   #53
Thinks s/he gets paid by the post
saluki9's Avatar
 
Join Date: Feb 2005
Posts: 2,032
Quote:
Originally Posted by ziggy29 View Post
There is a bit of an art to selling something as an investment without calling it an investment...
There is also an art to buying the best lobbyists
__________________
saluki9 is offline   Reply With Quote
Old 08-26-2010, 01:27 PM   #54
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Quote:
Originally Posted by FinanceDude View Post
Then all NML agents should be fired, as they are told to tell clients to "think of the dividends on your WL policy as the FIXED INCOME portion of your portfolio".............they have been saying that for years.........

There is no reason an EIA can't have a shorter surrender than a VA, none except profit margin........

There is risk in an EIA, no matter what an insurance agent tells you........get one of them to explain "crediting rates" or "participation rates" to you, and it will make the disclaimers at the end of car commercials easy to understand..........
I don't know what NML tells their agents to do, so I can't comment on that. EIA's go as short as 5 years. Most people buying them do a 7 or 10 year. Crediting rates and participation rates are easy to explain. Like I said before, if it can't be explained in 10 minutes and understood in 30 minutes, move on to the next thing. KISS method wins every time.
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
dgoldenz is offline   Reply With Quote
Old 08-26-2010, 01:40 PM   #55
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by dgoldenz View Post
I don't know what NML tells their agents to do, so I can't comment on that. EIA's go as short as 5 years. Most people buying them do a 7 or 10 year. Crediting rates and participation rates are easy to explain. Like I said before, if it can't be explained in 10 minutes and understood in 30 minutes, move on to the next thing. KISS method wins every time.
Read Aviva's EIA contract once, and you'll know what I mean.........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 08-26-2010, 01:43 PM   #56
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Quote:
Originally Posted by FinanceDude View Post
Read Aviva's EIA contract once, and you'll know what I mean.........
I've read one and even posted in another thread here (or earlier in this one) that it was 125 pages, which is ridiculous. An EIA contract shouldn't be more than 30-40 pages. I think the one we did for a client with RBC last year was around 20-25 pages, about the same length as a life insurance policy.
__________________
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
dgoldenz is offline   Reply With Quote
Old 08-26-2010, 02:28 PM   #57
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by saluki9 View Post
I'd be less worried about crediting rates than I would be the financial condition of the types of companies that issue EIAs
Give that man a cigar.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 08-26-2010, 04:54 PM   #58
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
Quote:
Originally Posted by FinanceDude View Post
How many years?

10
__________________
73ss454 is offline   Reply With Quote
Old 08-30-2010, 12:29 PM   #59
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,925
Thanks all for the comments. I've distilled my personal nuggets of gold that
I sifted from the tailings:
1) DIV yield not included in equity index but is in equity funds
2) Carrier risk
3) Consider time period analyzed (up or down markets)
4) Historical returns may not reflect new investments because
product terms/conditions different
5) Consider rolling your own (brewer)
6) Compare vs. CD (the KISS principle)
7) Be sure you understand features of specific product and
are not confusing those from different products....e.g.
guaranteed return valid only if annuitize, etc.
when signon bonus valid,

Since the pot seems to have calmed down, I thought I'd add this link that I
found by accident via google. Just for giggles, I googled the author's name, found a contact e-mail address and sent a message to Dr. Babbel asking if the results reflected his study. Today I got an e-mail reply confirming that they did. You can choose to believe or not whether this is a grand conspiracy.

http://www.annuitydigest.com/blog/to...rical-evidence

It's an interesting study. Critque appreciated.
__________________

__________________
kaneohe is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
EIA~Boy is this action overdue... mickeyd FIRE and Money 3 07-30-2008 05:17 PM
How to replicate an equity-indexed annuity (EIA) brewer12345 FIRE and Money 22 04-09-2008 08:28 AM
Insurance company trashes EIA mickeyd FIRE and Money 0 11-01-2006 02:43 PM

 

 
All times are GMT -6. The time now is 03:24 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.