Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
EIA again
Old 08-25-2010, 12:58 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,930
EIA again

Took DW to a dinner presentation for her annual vaccination against these
things. Speaker presented a chart showing supposedly actual performance
over a 10 yr or so period ending in 2009. Red line showing S&P500 went up and down and ending up basically even with starting point. Green line showing EIA stairstepped up and ended up ? ###? (some number that I didn't document but significantly higher than red line).

What to conclude?
1) Numbers are false.
2) Numbers are selective/hence misleading
3) Number are real. Environment has been favorable for EIA and unfavorable for S&P500.

Supposedly you can buy 5-10 yr EIAs and get out at the end of the term with
gains preserved. Gains supposedly are net of the caps/participation rates/etc. I know EIAs have the rep for being complex/sneaky investments but how to systematically find the flaws in this presentation?
__________________

__________________
kaneohe 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 08-25-2010, 01:33 PM   #2
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Buy!

The presenter knows more than you (can you do .PPT?)
__________________

__________________
rescueme is offline   Reply With Quote
Old 08-25-2010, 01:36 PM   #3
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
What do you need them for. Do your own EIA. Take a look at Brewers fine post here:

How to replicate an equity-indexed annuity (EIA)

The other thing is... Don't they make you annuitize at their crappy rate to get the promised sum. In reality they are promising much less than it appears.
__________________
MasterBlaster is offline   Reply With Quote
Old 08-25-2010, 02:10 PM   #4
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Quote:
Originally Posted by MasterBlaster View Post
What do you need them for. Do your own EIA. Take a look at Brewers fine post here:

How to replicate an equity-indexed annuity (EIA)

The other thing is... Don't they make you annuitize at their crappy rate to get the promised sum. In reality they are promising much less than it appears.
No. Some of the old annuities did that and it gave the whole industry a bad rap because the bonus recapture periods were longer than the surrender periods. Some annuities will make you annuitize to get the bonus if there is one, others will not. If buying an EIA, know the requirements and if you do not want to annuitize, buy a "walk-away" annuity where you can take the lump sum after the surrender period and do as you please.


Quote:
Originally Posted by kaneohe View Post
Took DW to a dinner presentation for her annual vaccination against these
things. Speaker presented a chart showing supposedly actual performance
over a 10 yr or so period ending in 2009. Red line showing S&P500 went up and down and ending up basically even with starting point. Green line showing EIA stairstepped up and ended up ? ###? (some number that I didn't document but significantly higher than red line).

What to conclude?
1) Numbers are false.
2) Numbers are selective/hence misleading
3) Number are real. Environment has been favorable for EIA and unfavorable for S&P500.

Supposedly you can buy 5-10 yr EIAs and get out at the end of the term with
gains preserved. Gains supposedly are net of the caps/participation rates/etc. I know EIAs have the rep for being complex/sneaky investments but how to systematically find the flaws in this presentation?
EIA's lock in the gains and will never go below the previous year's balance unless you have some sort of rider that is charged against the account. Once the gain is locked in, any negative returns in the index will only generate a 0% return for the year with the stepped-up principle preserved.
__________________
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 08-25-2010, 02:17 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,930
Quote:
Originally Posted by MasterBlaster View Post

The other thing is... Don't they make you annuitize at their crappy rate to get the promised sum. In reality they are promising much less than it appears.
The claim was that you could just take the $$$ and run when the term ended.
Good question to double check, tho.

Thanks for the link. Will have to take a 2nd look.
__________________
kaneohe is offline   Reply With Quote
Old 08-25-2010, 02:31 PM   #6
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Quote:
Originally Posted by kaneohe View Post
The claim was that you could just take the $$$ and run when the term ended.
Good question to double check, tho.

Thanks for the link. Will have to take a 2nd look.
For most EIA's, yes. After the surrender period, you can walk away with the lump sum. Some annuities are designed for lifetime income and may require annuitization to keep all of the features. Most of those have gone the way of the do-do though. Make sure you understand what you're getting, read the brochure thoroughly and read the sample contract.
__________________
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 08-25-2010, 03:53 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Better yet, run away.
__________________
"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 08-25-2010, 03:56 PM   #8
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,116
Quote:
Originally Posted by kaneohe View Post
The claim was that you could just take the $$$ and run when the term ended.
As brewer said, take your money and run before the term ever starts...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 08-25-2010, 04:07 PM   #9
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
So, you think the insurance co and the brokers are there to help you. Sheeeesh!
__________________
73ss454 is offline   Reply With Quote
Old 08-25-2010, 04:09 PM   #10
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Quote:
Originally Posted by 73ss454 View Post
So, you think the insurance co and the brokers are there to help you. Sheeeesh!
Doesn't your car and homeowner's insurance broker help you? Just asking.
__________________
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 08-25-2010, 04:10 PM   #11
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
Doesn't your car and homeowner's insurance broker help you? Just asking.
The peope at GEICO are somewhat helpful, but I suspect that they generally do not steer me to optimal coverage for the price.
__________________
"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 08-25-2010, 04:11 PM   #12
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Quote:
Originally Posted by brewer12345 View Post
The peope at GEICO are somewhat helpful, but I suspect that they generally do not steer me to optimal coverage for the price.
Time to find a new agent. Hopefully you don't buy your car insurance directly from the company.
__________________
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 08-25-2010, 04:48 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by 73ss454 View Post
So, you think the insurance co and the brokers are there to help you. Sheeeesh!
I think this is a red herring. We recently heard from a new MD who has not even completed his residency about how he wishes to get out, how he wants to play golf midweek like "everyone else". (How little he apparently knows about everyone else!)

But if you were sick would you refuse service from him knowing that he works mostly (or perhaps even entirely) for money? If you pay a guy to cut your yard, is it any less cut for him being paid?

Most people work mostly for money. That doesn't mean that one's well being cannot be enhanced by trading with a person who works for money.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 08-25-2010, 05:50 PM   #14
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 dgoldenz View Post
Doesn't your car and homeowner's insurance broker help you? Just asking.
No I really don't think they do. These two insurances are something most people need and with car ins it's the law in most states. No one NEEDS this other crap. It's just sold to people who aren't paying attention. Let's call a spade a spade.
__________________
73ss454 is offline   Reply With Quote
Old 08-25-2010, 05:52 PM   #15
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 haha View Post
I think this is a red herring. We recently heard from a new MD who has not even completed his residency about how he wishes to get out, how he wants to play golf midweek like "everyone else". (How little he apparently knows about everyone else!)

But if you were sick would you refuse service from him knowing that he works mostly (or perhaps even entirely) for money? If you pay a guy to cut your yard, is it any less cut for him being paid?

Most people work mostly for money. That doesn't mean that one's well being cannot be enhanced by trading with a person who works for money.

Ha
Maybe, everyone needs medical attention from time to time. I don't believe anyone NEEDS this other stuff and I believe it's just sold to unsuspecting people.
__________________
73ss454 is offline   Reply With Quote
Old 08-25-2010, 05:54 PM   #16
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 haha View Post
I think this is a red herring. We recently heard from a new MD who has not even completed his residency about how he wishes to get out, how he wants to play golf midweek like "everyone else". (How little he apparently knows about everyone else!)

But if you were sick would you refuse service from him knowing that he works mostly (or perhaps even entirely) for money? If you pay a guy to cut your yard, is it any less cut for him being paid?

Most people work mostly for money. That doesn't mean that one's well being cannot be enhanced by trading with a person who works for money.

Ha
The problem is not that they get paid. The problem is a misalignment of incentives combined with the fact that insurance agents don't legally have to act as fiduciaries toward their clients.
__________________
"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 08-25-2010, 05:54 PM   #17
Recycles dryer sheets
 
Join Date: May 2010
Posts: 254
Quote:
Originally Posted by haha View Post
I think this is a red herring. We recently heard from a new MD who has not even completed his residency about how he wishes to get out, how he wants to play golf midweek like "everyone else". (How little he apparently knows about everyone else!)

But if you were sick would you refuse service from him knowing that he works mostly (or perhaps even entirely) for money? If you pay a guy to cut your yard, is it any less cut for him being paid?

Most people work mostly for money. That doesn't mean that one's well being cannot be enhanced by trading with a person who works for money.

Ha
I don't care if my Dr works just to pay off his student loans and for greens fees. But I don't want him to get paid more to upsell me additional therapies I don't need.

My insurance agent should help me optimize my purchase to fit my needs. He should not use fear to sell me coverage I do not need. There is a not-so-fine line between explaining what coverage is available and selling people coverage they do not need
__________________
DoingHomework is offline   Reply With Quote
Old 08-25-2010, 06:00 PM   #18
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
Before I was smart enough to pay attention I used AGEdwards as my broker and bought 3 Whole Life Polices from various brokers and ins companies. None of these things worked out to well for me. (heh) If there is something I can get done without using brokers or insurance companies I will do so.

All 3 whole life policies ended up in litigation and were sold by lying and using deceptive tactics.
__________________
73ss454 is offline   Reply With Quote
Old 08-25-2010, 06:11 PM   #19
Recycles dryer sheets
 
Join Date: Dec 2009
Posts: 214
One thing I have picked up on, is the comparisons often ignore the dividends on the S&P 500. In other words, they plot total return on the annuity vs only the price of the S&P 500 w/o dividends being considered let alone reinvested.
__________________
chemist is offline   Reply With Quote
Old 08-25-2010, 06:12 PM   #20
Full time employment: Posting here.
 
Join Date: Nov 2009
Location: VA
Posts: 923
Quote:
Originally Posted by DoingHomework View Post
My insurance agent should help me optimize my purchase to fit my needs. He should not use fear to sell me coverage I do not need. There is a not-so-fine line between explaining what coverage is available and selling people coverage they do not need
Which is exactly what a good agent will do....of course, there are plenty of scummy ones out there, so I understand your point and the stereotype. The number of people who have problems with insurance because they bought it on their own and didn't understand it is far greater than the amount that bought with agents. It would be a lot harder to get a claim paid fighting with the insurance company by yourself than having your State Farm/Allstate/etc/etc agent going to bat for you.

Quote:
Originally Posted by brewer12345 View Post
The problem is not that they get paid. The problem is a misalignment of incentives combined with the fact that insurance agents don't legally have to act as fiduciaries toward their clients.
Hopefully that was a joke....otherwise there'd be a lot of lawyers out of business.
__________________

__________________
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
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 05:47 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.