Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Old 03-01-2012, 08:20 AM   #41
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
Join Date: Mar 2003
Posts: 15,911
Originally Posted by misanman View Post
Okay, here are some details. I'd rather do this than pack my suitcase.

There are two parts, the Equity Indexed Annuity and the Income Rider. I assume they took this approach because I told them I was considering a SPIA.

- from North American Company for Life and Health Insurance
-14 year term (includes immediate 10% bonus, so $100K becomes $110K)
-Client can select amoung 4 buckets each year: fixed, 1 yr Pt to Pt (6% cap), Monthly Pt to Pt (2% cap), or Monthly average (2% cap)
-100% participation
- can be renewed at end of term or cashed out
- can be assumed by spouse at death
- no fees other than surrender fees (start at 18% and decline to 2% in last year)

Income Rider
- An initial fee that starts at .35% ($350 on $100K) - a little unclear what it could go up to
- Customer determines when to start drawing income. The longer you wait the more you can draw. If I started immediately I would get 5.6%. If I waited 5 years I'd get 8.5%
- The income stream reduces the EIA balance but if the balance goes to zero the income stream continues uninterrupted.
- There's a fair amount of "***** pocus" around all these calculations so more study is needed.

They claim this achieves the income stream of a SPIA without giving up control of your capital. Of course, if you want to continue the income stream you have to keep the money in the EIA so this seems a bit bogus.

Okay, have at it. Tell me why this is a bad idea.
Well, first and foremost would be carrier risk. I won't dwell on it, but lets not forget that you would become a creditor of an insurance company with only a state guarantee fund to look to if things went sour. This is nothing like as strong as FDIC backing.

The EIA part is something you can replicate on your own at a fraction of the cost and with no surrender charges. There is a fairly detailed explanation of how to do so here: Life, Investments & Everything: Rolling Your Own

An 18% surrender penalty! That tells us a lot about how huge the commission must be.

Finaly the annuity part is just a SPIA in sheep's clothing. Go price a SPIA for your age and you can see how close the payout is from other companies. If you won't consider a SPIA at all, why would you want teh option of getting a SPIA on top of a massively overpriced collection of bonds and call options that also exposes you to the credit risk of the insurer?

"Neither my companion or I carry firearms on our persons. We depend on the goodwill of our fellow man and the forbearance of reptiles."

- English Bob
brewer12345 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 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 03-01-2012, 11:15 AM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
Join Date: Aug 2006
Posts: 12,484
The 14 year surrender charge is another reason NOT to buy.........

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

crpc, guaranteed investment

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
Property investment seminar justetc Young Dreamers 0 01-02-2012 04:00 PM
Why geezers give the best investment advice REWahoo FIRE and Money 20 10-06-2011 06:47 AM
Transition Investment Property to Homestead - Tax Advantages njonge01 Other topics 3 07-11-2011 05:48 PM


All times are GMT -6. The time now is 05:11 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.