Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Old 10-07-2008, 09:48 AM   #21
Thinks s/he gets paid by the post
 
Join Date: Nov 2007
Posts: 1,052
Quote:
Originally Posted by Marquette View Post
Would that be an annuity with Hartford, getting an infusion from Allianz, or an annuity with Aviva, a company that just reported 30% of it's capital surplus wiped out, or maybe an annuity with AIG, a company selling their life business in the UK to pay off a certain bailout.

I just don't know, I guess I've got a penguin problem.

So far, AIG is still in existence and claims they will honor their guarantees. Supposedly these companies used hedging strategies like S&P LEAPS to protect themselves. For what it's worth, I've been buying AIG stock lately, I think they'll make it.
As to the insurance products themselves, the money is held completely separate from the general funds of the company itself.
The theory of the insurance company is that the living benefit will be paid out over a long period of time. Many of those recipients will die and thus never receive those benefits. Many will never need nor request them. For the first many years, they will merely be giving back the clients funds.
With all that said, if these insurance companies do fail, another insurance company would have to pick up the contracts and decide to honor the benefits. I have my doubts that any profitable company would wish to do this, HOWEVER, right this minute, it's a heck of a lot better chance of working than the guaranteed loss I'm viewing on my mutual fund statements right now.
For my money, I'd much rather have the chance of the benefit I paid for actually keeping their contractual obligation than knowing I have none at all.
For some really smart people on this board, I truly can't believe you are so closed minded that you wouldn't at least admit the benefits may be there.
For those interested, I'd be happy to explain further, but in all honesty, the products were better done BEFORE the market tanked. All JMO.
__________________

__________________
Art G is offline  
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 10-07-2008, 09:51 AM   #22
Thinks s/he gets paid by the post
 
Join Date: Nov 2007
Posts: 1,052
Quote:
Originally Posted by ziggy29 View Post
Given the current "situation" you are describing, don't you think this is a little too much of a leap of faith?

Yes, it is a leap of faith. That's why months ago I suggested only picking the strongest of companies. I've outlined in my last post why it may still work. Insurance companies have been around for centuries without going under. Obviously the gov't wants to keep them around.
__________________

__________________
Art G is offline  
Old 10-07-2008, 09:56 AM   #23
Thinks s/he gets paid by the post
 
Join Date: Nov 2007
Posts: 1,052
Quote:
Originally Posted by ats5g View Post
Let's see:

1) The fees. Keep on paying north of 2% while I pay 0.15%.
1a) With those high fees, your upside is going to be no better than bonds, unless you're stilll smoking the crack pipe and think stocks are going to return 10% before fees.
2) Taxation. Keep on turning those capital gains and qualified dividends into ordinary income.
3) You can't tax loss harvest while I can.

I've always been willing to pay fees for service. I have auto insurance though I've rarely used it. I have home owners insurance though I've rarely used it. I have life insurance though....well I'm hoping not to use it.
There are also many services I'm willing to pay a bit more for.
Let me say this, if that 2% works out, it was one of the best bargains I've ever gotten.
I've got plenty of bonds and preferred stocks that are down to nothing. My GMAC bonds are currently valued at $28. Where's the value there?
The VA has a 7% annual step up towards income, regardless of market results.
Taxes, if the money is spread out over a lifetime it's not that much, and it beats the heck out of your capital loss.
__________________
Art G is offline  
Old 10-07-2008, 01:39 PM   #24
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 2,020
Quote:
Originally Posted by CuppaJoe View Post
As the holder of an annuity from the defunct Executive Life Assurance Co. HATRED does not begin to express my attitude. But I will moderate myself and refer you to dozens of posts by 2B.
Did another insurer pick up your policy? Did you get any sort of cash settlement from the state's fund?

Quote:
Originally Posted by 2B View Post
It's great having the right kind of reputation. Don't forget the Lutheran Brotherhood failure. I know a guy that went to his grave pissed at how much he lost in their failure.
Lost money from investing in them or buying their product? If it was a policy, wouldn't it still be serviced by Thrivent?
__________________
Marquette is offline  
Old 10-07-2008, 01:48 PM   #25
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: 42,149
Quote:
Originally Posted by Art G View Post
I've always been willing to pay fees for service. I have auto insurance though I've rarely used it. I have home owners insurance though I've rarely used it. I have life insurance though....well I'm hoping not to use it.
There are also many services I'm willing to pay a bit more for.
Let me say this, if that 2% works out, it was one of the best bargains I've ever gotten.
Art, do you ever stop quoting from the insurance sales manual?
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 10-07-2008, 02:18 PM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,649
I still wouldn't touch a variable annuity with someone else's ten foot pole. I have expressed interest in inflation protected SPIAs but the current situation has given me pause about the viability of insurance companies. DC has a much higher guarantee than other jurisdictions so if they and most of the companies survive this current mess I may still keep SPIAs in the possible category as I get older.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline  
Old 10-07-2008, 02:54 PM   #27
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Houston
Posts: 1,435
The Journal says: Lower Fees Make Annuities More Attractive

Lower Fees Make Annuities More Attractive - WSJ.com

Wow, when they said "lower fees" they are talking about an annual fee of 2% instead of 3%. I can't imagine throwing away 2% of my portfolio every year for what is essentially an index fund (the only annuity choice at the lower fee level is a 60/40 stock/bond split according to the article). I could do that at Vanguard for a tenth of the cost.
__________________
soupcxan is offline  
Old 10-07-2008, 03:02 PM   #28
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Quote:
Originally Posted by soupcxan View Post
Wow, when they said "lower fees" they are talking about an annual fee of 2% instead of 3%. I can't imagine throwing away 2% of my portfolio every year for what is essentially an index fund (the only annuity choice at the lower fee level is a 60/40 stock/bond split according to the article). I could do that at Vanguard for a tenth of the cost.
And if I understand this correctly, those are only the insurance carrier's fees. Expenses of their underlying funds are added on to that (or buried in their returns). Then there are the surrender fees if you want out sooner.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline  
Old 10-07-2008, 03:13 PM   #29
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Houston
Posts: 1,435
Quote:
Originally Posted by Rich_in_Tampa View Post
Then there are the surrender fees if you want out sooner.
Why on earth would you want to get out of such a great investment
__________________
soupcxan is offline  
Old 10-07-2008, 03:37 PM   #30
Thinks s/he gets paid by the post
 
Join Date: Nov 2007
Posts: 1,052
Quote:
Originally Posted by REWahoo View Post
Art, do you ever stop quoting from the insurance sales manual?

Apparently you don't read my other posts. I've suggested stocks and bonds on this site, and most have done quite well.
On the other hand, have you ever considered that perhaps you misjudged the product and this happens to be the perfect market conditions to have bought VA's months ago. I just looked at one of my policies. People made fun of it, it was guaranteed after five years you could walk away with worst case scenario 1.5% gain per year for a very low fee. Now the fund is still well above that value, but how nice in knowing it can't lose money?
Ya' know, I understand this is a board for "me hate brokers and can brag that I don't need 'em". However, just imagine if the world turned upside down and they actually added value?!!!!
Would it take a lightning bolt before some of you people admitted you have something you could learn from a professional?
__________________
Art G is offline  
Old 10-07-2008, 03:55 PM   #31
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: 42,149
I ask "Art, do you ever stop quoting from the insurance sales manual?" and you respond with:
Quote:
Originally Posted by Art G View Post
Apparently you don't read my other posts. I've suggested stocks and bonds on this site, and most have done quite well.
On the other hand, have you ever considered that perhaps you misjudged the product and this happens to be the perfect market conditions to have bought VA's months ago. I just looked at one of my policies. People made fun of it, it was guaranteed after five years you could walk away with worst case scenario 1.5% gain per year for a very low fee. Now the fund is still well above that value, but how nice in knowing it can't lose money?
Ya' know, I understand this is a board for "me hate brokers and can brag that I don't need 'em". However, just imagine if the world turned upside down and they actually added value?!!!!
Would it take a lightning bolt before some of you people admitted you have something you could learn from a professional?
I'll take that as an emphatic "NO!"
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 10-07-2008, 04:35 PM   #32
Thinks s/he gets paid by the post
 
Join Date: Nov 2007
Posts: 1,052
Well that was a pretty poorly thought out response. Nice job, way to prove my point.
__________________
Art G is offline  
Old 10-07-2008, 04:42 PM   #33
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: 42,149
Art, you are so much fun!
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 10-07-2008, 04:51 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,441
Quote:
Originally Posted by Art G View Post
Apparently you don't read my other posts. I've suggested stocks and bonds on this site, and most have done quite well.
On the other hand, have you ever considered that perhaps you misjudged the product and this happens to be the perfect market conditions to have bought VA's months ago. I just looked at one of my policies. People made fun of it, it was guaranteed after five years you could walk away with worst case scenario 1.5% gain per year for a very low fee. Now the fund is still well above that value, but how nice in knowing it can't lose money?
Ya' know, I understand this is a board for "me hate brokers and can brag that I don't need 'em". However, just imagine if the world turned upside down and they actually added value?!!!!
Would it take a lightning bolt before some of you people admitted you have something you could learn from a professional?

In my opinion, a bad investment is a bad investment. I knew when I started investing decades ago that the stock market had it's ups and downs. Every once in a while something can look like a good investment compare to the market when it's in one of it's down swings. For instance, gold was looking pretty good back in the early 80s. But it wasn't a good long term investment, except in small amounts as a hedge.

If I had bought VAs months ago, I would be looking pretty for a few months/years. But overall it's a losing proposition. I'm in for life, and there's no way a VA can justify itself over the long haul. And there's no way the world could turn upside down and they could add value. If the wrld turns upside down, they will be defaulting right and left. You can say it ain't so, but anyone who can do simple math can see it. Sadly, they don't seem to teach math in schools anymore.

As far as learning from profesionals, I can learn things from my 2.5 y.o. grandaughter, and from my dogs. I can learn from pros too. But I can add, subtract, and do other basic math. All a VA salesman can teach me is to check my Caller ID before I answer.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is offline  
Old 10-07-2008, 07:48 PM   #35
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,457
Quote:
Originally Posted by Art G View Post

Would it take a lightning bolt before some of you people admitted you have something you could learn from a professional?
Um, speaking as one (or at least that is what my paper says), yeah, I learn a lot from professional money managers, with whom I am very fortunate to speak during the course of my work life.

Additionally, and perhaps more importantly for my own investment decisions, I also learn a great deal from the professional money managers on this board, and I include the ones with only one client (themselves) on that list of learned scribes.
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline  
Old 10-07-2008, 10:05 PM   #36
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,387
Quote:
Originally Posted by Gumby View Post
Nope, still hate them. I would rather suffer a total portfolio meltdown than give even one dime to an annuity salesman.
Highly rational viewpoint.
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline  
Old 10-08-2008, 04:56 AM   #37
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
Quote:
Originally Posted by Marquette View Post
Did another insurer pick up your policy? Did you get any sort of cash settlement from the state's fund?



Lost money from investing in them or buying their product? If it was a policy, wouldn't it still be serviced by Thrivent?

It wasn't my policy but was owned by the father of a friend. He put enough money into a Lutheran Brotherhood SPIA for several thousand dollars a month in payments. Lutheran Brotherhood went under and he spent about 2 years lawyering up before the "insurance" kicked in. He got about $1000 per month but he went without anything for 2 years and then got only a small percentage of his "safe" money.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline  
Old 10-08-2008, 08:56 AM   #38
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 Rich_in_Tampa View Post
And if I understand this correctly, those are only the insurance carrier's fees. Expenses of their underlying funds are added on to that (or buried in their returns). Then there are the surrender fees if you want out sooner.
All VAs have a no-surrender option you can purchase, just a little FYI....
__________________
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  
Old 10-08-2008, 10:37 AM   #39
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 2,020
Quote:
Originally Posted by 2B View Post
It wasn't my policy but was owned by the father of a friend. He put enough money into a Lutheran Brotherhood SPIA for several thousand dollars a month in payments. Lutheran Brotherhood went under and he spent about 2 years lawyering up before the "insurance" kicked in. He got about $1000 per month but he went without anything for 2 years and then got only a small percentage of his "safe" money.
Well that doesn't make sense, Art just said a few posts ago that the above shouldn't happen. However shall we reconcile an accounting of a real life story with a statement to the contrary from a broker?
__________________
Marquette is offline  
Old 10-08-2008, 10:51 AM   #40
Moderator Emeritus
CuppaJoe's Avatar
 
Join Date: Jun 2007
Location: At The Cafe
Posts: 6,866
Quote:
Originally Posted by Marquette View Post
Did another insurer pick up your policy? Did you get any sort of cash settlement from the state's fund?
Thanks, Marquette, yes it will pay out as agreed but I chose a ten-year-payout instead of lifetime because I do not trust annuities.

When Executive Life failed, my company was setting up an ESOP. A meeting was set up for employees to meet with the company’s financial planner. The meeting had been cancelled and put off a week or so because the financial planner who recommended Executive Life had committed suicide. The new FA said that he had been saying he couldn’t stand to have people look at him because he put so many into those annuities. Over the last year or so on this forum posters occasionally say things like,”it’s not so bad, people are not jumping out of windows”; but keep in mind people keep suicides private. There was a news story just last week about an unemployed FP who blew away his entire family, San Jose, I think, nice house.

At the time I thought, imagine that, someone thought that something he did at work mattered. How times have changed, or maybe they haven’t. That was the early ‘90s but I still remember how it feels to have a small pension in jeopardy.
__________________

__________________
CuppaJoe is offline  
Closed Thread


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
Variable Annuities Are the Way to Go!!!!! 2B FIRE and Money 35 09-21-2007 12:24 PM
Variable Annuities? Worth it? Breitling Young Dreamers 17 04-23-2007 11:28 AM
Could Variable Annuities be too cheap? saluki9 FIRE and Money 19 01-12-2007 08:01 PM
Variable Annuities Craig FIRE and Money 8 01-13-2005 05:27 PM
Annuities-Variable? Fixed? Immediate jackalope FIRE and Money 6 10-01-2003 05:36 AM

 

 
All times are GMT -6. The time now is 04:59 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.