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Old 12-14-2010, 02:39 PM   #61
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I am sure you did a good job of that while "in the box"...........
Yup, and that's where I learned to stay away from people like that.
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Old 12-14-2010, 02:41 PM   #62
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Yup, and that's where I learned to stay away from people like that.
You are funny............
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Old 12-14-2010, 02:47 PM   #63
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Yeah? Am I funny, Ha Ha or funny Peculiar?
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Old 12-14-2010, 06:38 PM   #64
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Dgoldenz, the product is American Equitys Bonus Gold with the LIB rider.
Hi TJAY,

I know you said that you had the info you were looking for already so I may be too late, but I looked up this product and the info I see varies drastically from what you mentioned. All of the literature I can find on this product references the minimum return as being 3% per year, instead of 8%.

Here is one of the links I found via google for reference.
http://agent.american-equity.com/doc...disclosure.pdf


There also appears to be some fine print that states they have the right to lower the maximum return to 4% at any time. So your worst case scenario (aside from the company's insolvency) would be that you could have earned a higher return with a 10 year T-Bill and avoided the commissions/fees.

I'm not saying these products are good or bad, just trying to dig into the specifics a bit. I'm actually trying to keep an open mind and research them to see if any annuities make sense for my parents (without dealing with the salesmen), so thank you for bringing this up.
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Old 12-14-2010, 08:03 PM   #65
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Hi TJAY,

I know you said that you had the info you were looking for already so I may be too late, but I looked up this product and the info I see varies drastically from what you mentioned. All of the literature I can find on this product references the minimum return as being 3% per year, instead of 8%.

Here is one of the links I found via google for reference.
http://agent.american-equity.com/doc...disclosure.pdf


There also appears to be some fine print that states they have the right to lower the maximum return to 4% at any time. So your worst case scenario (aside from the company's insolvency) would be that you could have earned a higher return with a 10 year T-Bill and avoided the commissions/fees.

I'm not saying these products are good or bad, just trying to dig into the specifics a bit. I'm actually trying to keep an open mind and research them to see if any annuities make sense for my parents (without dealing with the salesmen), so thank you for bringing this up.
I did not want to say it, but I cannot help myself: IMO, this is a really sleazy and financially shaky company. If you want to buy this awful product, buy it from someone else.
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Old 12-14-2010, 08:53 PM   #66
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Hi TJAY,

I know you said that you had the info you were looking for already so I may be too late, but I looked up this product and the info I see varies drastically from what you mentioned. All of the literature I can find on this product references the minimum return as being 3% per year, instead of 8%.

Here is one of the links I found via google for reference.
http://agent.american-equity.com/doc...disclosure.pdf


There also appears to be some fine print that states they have the right to lower the maximum return to 4% at any time. So your worst case scenario (aside from the company's insolvency) would be that you could have earned a higher return with a 10 year T-Bill and avoided the commissions/fees.
.

It seems to me that minimum per page 9 is 1%. The chart on the last page shows a 3% minimum but that is for a product index 5 which is no longer being sold.

Here is the ultimate irony in what is undoubtably one of the worse decades ever for the stock market. Simply putting creating a $100K portfolio by putting $50K each in Vanguard Total Stock and Total Bond markets would have given you more money than American Equities best annuity (159K vs 157K). The difference would have almost certainly been larger if you followed the couch potato portfolio and rebalanced annually.
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Old 12-14-2010, 09:16 PM   #67
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If something seems too good to be true it is. 8% guaranteed is too good to be true. Run.

American Equity. Run faster.
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Old 12-15-2010, 09:13 AM   #68
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Im seeing some misinformation, or at least incomplete information, regarding the details of this particular annuity. There is a rider, called the Lifetime Income Benefit Rider that alters the American Equity contract significantly. The link above does not contain the details of this rider where the 8% compounded growth on the income account is guaranteed. You guys are correct about the very low minimum guarantee on the Base Contract Value. But you need to read the fine print on the rider, not just on the base contract, before concluding that its a bad deal.

Im not saying that Im thrilled with the financial stability of American Equity, they just happen to be the ones offering the best deal. There are several highly rated, well established companies offering similar products, with slightly lower growth and payout percentages, that I am considering. As far as whether or not FIAs in general are too good to be true, I was hoping to get some knowledgeable feedback and real life experience from people who have used this product. Ill keep looking.
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Old 12-15-2010, 09:44 AM   #69
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Sorry, I intended to include the link to the details of the American Equity LIB Rider on my previous post. Here it is:
http://agent.american-equity.com/documents/1127-SB-09.24.10-w-disclosure.pdf
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Old 12-15-2010, 09:53 AM   #70
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As far as whether or not FIAs in general are too good to be true, I was hoping to get some knowledgeable feedback and real life experience from people who have used this product. Ill keep looking.
As you say it appears no one here has any first hand experience. You might want to ask yourself why that is the case.

Is it simply randomness and it just so happens no one here owns this particular insurance product? Or do those who bought it not want to own up? Or perhaps the analysis by many of us led us to an understanding that "too good to be true" is an accurate description?

Just sayin'...
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Old 12-15-2010, 09:56 AM   #71
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Im not saying that Im thrilled with the financial stability of American Equity, they just happen to be the ones offering the best deal.
I wonder if there's any cause-and-effect going on here...
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Old 12-15-2010, 10:06 AM   #72
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I wonder if there's any cause-and-effect going on here...
The highest rates are always from the companies with lower financial ratings (usually A- with AM Best), but that's part of the game. There's a reason New York Life and other A++ companies don't offer guaranteed income riders on their annuities, and if they did, would be much lower payouts. ING has an A rating and comes pretty close to the payout offered by AE as they have a 7% compound income rider, but pay out 6% at age 70 instead of 5.5% with AE. I would trust ING over AE with my money for the long term, especially when the contract has a 16-year surrender period, while ING's is 10 years...
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Old 12-15-2010, 11:32 AM   #73
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I would trust ING over AE with my money for the long term,
So would I, but I still would not buy an insurance product from ING.
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Old 12-15-2010, 11:35 AM   #74
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So would I, but I still would not buy an insurance product from ING.
Any particular reason? Their life insurance rates are some of the lowest around with pretty aggressive underwriting. Just curious.
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Old 12-15-2010, 11:47 AM   #75
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Any particular reason? Their life insurance rates are some of the lowest around with pretty aggressive underwriting. Just curious.

I know the company very well (past insider status). I would not do business with them.
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Old 12-15-2010, 11:51 AM   #76
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I know the company very well (past insider status). I would not do business with them.
Alrighty, I'll leave it at that then...
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Old 12-15-2010, 04:13 PM   #77
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I’m seeing some misinformation, or at least incomplete information, regarding the details of this particular annuity. There is a rider, called the Lifetime Income Benefit Rider that alters the American Equity contract significantly. The link above does not contain the details of this rider where the 8% compounded growth on the income account is guaranteed. You guys are correct about the very low minimum guarantee on the Base Contract Value. But you need to read the fine print on the rider, not just on the base contract, before concluding that it’s a bad deal.

I’m not saying that I’m thrilled with the financial stability of American Equity, they just happen to be the ones offering the best deal. There are several highly rated, well established companies offering similar products, with slightly lower growth and payout percentages, that I am considering. As far as whether or not FIA’s in general are “too good to be true”, I was hoping to get some knowledgeable feedback and real life experience from people who have used this product. I’ll keep looking.
Well that rider is pretty confusing. {Deleted incorrect info}

As dgoldenz has pointed out EIA/FIA haven't been around very long mid 2000 before they starting taking off. Even the study that you linked to discusses accumulated contract values, not the important information which what are what actually monthly payments. Right now the vast majority of these policies are in the accumulation stage. I suspect the real howls we will here will be in 5 or 10 year. This iswhen people think they can withdraw 15K a year for the rest of their life and find out they can actually only take out 6-8K.
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Old 12-15-2010, 04:37 PM   #78
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Well that rider is pretty confusing. I hope you noticed the * in their case study where their growth rate is a hypothetical one. My interpretation is that riders don't actually increase the amount of money available in your contract, only the amount of money you can withdraw each year.

When the money you have withdrawn from your policy via you lifetime income benefits exceeds the contract value of your policy your LIB stops even if you and/or your wife are still living. The term lifetime is deliberately deceptive in my opinion.

The only way to get a true lifetime benefit is to annuitize your policy when you turn 70.5. It seems in the worse case you are looking at the 1% minimum growth rate of the policy. So in 11 years you are looking at $111,600 (perhaps less fees and expenses not sure about that). At that time you can withdraw your $15K a year like you want the catch is after 7 or 8 years the money runs out and you have $0. Even if you assume that policy value increases at more reasonable rate of say 5% you'll still run of money in a dozen or so year at 15K/year

As dgoldenz has pointed out EIA/FIA haven't been around very long mid 2000 before they starting taking off. Even the study that you linked to discusses accumulated contract values, not the important information which what are what actually monthly payments. Right now the vast majority of these policies are in the accumulation stage. I suspect the real howls we will here will be in 5 or 10 year. This iswhen people think they can withdraw 15K a year for the rest of their life and find out they can actually only take out 6-8K.
I think you are misunderstanding how the lifetime income rider works. Even when the cash accumulation account is drawn down to $0, the company will continue paying the lifetime income benefit for life at the same amount that it was before the accumulation account value was $0.

Think of the policy as two buckets - one with the accumulated value and one with the income account value. The income account is guaranteed the 8% increase, the accumulation account increases are determined by the crediting method (usually tied to the S&P 500, subject to a cap). The accumulated value is what you can walk away with after the surrender period. The income value is how the lifetime payment is determined as it is based on a percentage of that value. When you start taking annual distributions from the lifetime income rider, the accumulation account is reduced annually by the amount distributed via the income rider.

When the accumulation account is reduced to $0, distributions continue at the same rate as before, but when you (or you + spouse if joint annuity) die, there is nothing left. If you die while there is still an accumulation value available, the accumulated value passes to the beneficiary. That is how an income rider is different from annuitization. You could also choose to annuitize instead if interest rates were to increase in the future and that presented a better option at the time.

It's easier to explain on paper, hopefully that makes sense.
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Old 12-15-2010, 05:06 PM   #79
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I think you are misunderstanding how the lifetime income rider works. Even when the cash accumulation account is drawn down to $0, the company will continue paying the lifetime income benefit for life at the same amount that it was before the accumulation account value was $0.

Think of the policy as two buckets - one with the accumulated value and one with the income account value. The income account is guaranteed the 8% increase, the accumulation account increases are determined by the crediting method (usually tied to the S&P 500, subject to a cap). The accumulated value is what you can walk away with after the surrender period. The income value is how the lifetime payment is determined as it is based on a percentage of that value. When you start taking annual distributions from the lifetime income rider, the accumulation account is reduced annually by the amount distributed via the income rider.

When the accumulation account is reduced to $0, distributions continue at the same rate as before, but when you (or you + spouse if joint annuity) die, there is nothing left. If you die while there is still an accumulation value available, the accumulated value passes to the beneficiary. That is how an income rider is different from annuitization. You could also choose to annuitize instead if interest rates were to increase in the future and that presented a better option at the time.

It's easier to explain on paper, hopefully that makes sense.
No that makes sense, and that is consistent with the example. I was confused when it said that payments stop when IAV becomes zero due to excess withdrawals. They do say the LIB don't count as excess withdrawals but....

I still remain skeptical that there isn't a catch in the 8% income rider especially given the short time of these products.
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Old 12-15-2010, 05:10 PM   #80
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No that makes sense, and that is consistent with the example. I was confused when it said that payments stop when IAV becomes zero due to excess withdrawals. They do say the LIB don't count as excess withdrawals but....

I still remain skeptical that there isn't a catch in the 8% income rider especially given the short time of these products.
Keep in mind that the "8%" number really could be anything. They could make it 9% and have a 5% withdrawal rate instead of 5.5%, or make it 10% and make the withdrawal rate 4.5%, or make it 5% and have an 8% withdrawal rate, as long as the payment comes out the same way. If they made it 15% and the withdrawal rate was 1%, the 15% would look great in a marketing piece, but wouldn't change the payout a dime. They probably use 8% because it sounds like a realistic number. In reality, they can play games with the payout rate any way they want.
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