One more time, variable annuities.... - Page 3

Marquette · 10-08-2008, 11:06 AM

And, now we have some balance (morbid though it is) on the other side. A company went under but you'll still get the full balance of the annuity agreement.

Did another carrier pick up your policy? I'm not familiar with the Executive Life failure. If you don't mind sharing, was it a 'big' or 'not so big' policy?

2B · 10-08-2008, 11:25 AM

Quote:

Originally Posted by Marquette

And, now we have some balance (morbid though it is) on the other side. A company went under but you'll still get the full balance of the annuity agreement.

Did another carrier pick up your policy? I'm not familiar with the Executive Life failure. If you don't mind sharing, was it a 'big' or 'not so big' policy?

The key thing to do if you buy an annuity is to make sure it's under your state's "insurance" limit. State insurance funds are underfunded for a significant failure. The "insurance" aspect does not represent "the full faith and credit" of the individual states like their bonds mostly do. In the event of a major drop, I would expect a state to not come to the full "insurance" rescue because it would be in times like we're in now. Every state and local government is currently scrambling for money. Credit is tight and tax revenues are falling rapidly. Only the Feds can print money and there's a limit to how much they can print before we start using it for TP.

Art G · 10-08-2008, 12:23 PM

Quote:

Originally Posted by Marquette

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?

I wish you wouldn't put words in my mouth.

Marquette · 10-08-2008, 01:05 PM

Quote:

Originally Posted by 2B

The key thing to do if you buy an annuity is to make sure it's under your state's "insurance" limit. State insurance funds are underfunded for a significant failure. The "insurance" aspect does not represent "the full faith and credit" of the individual states like their bonds mostly do. In the event of a major drop, I would expect a state to not come to the full "insurance" rescue because it would be in times like we're in now. Every state and local government is currently scrambling for money. Credit is tight and tax revenues are falling rapidly. Only the Feds can print money and there's a limit to how much they can print before we start using it for TP.

I need to do some digging but my impression is that the reserve pools for most states are somewhat funded and cap coverage. I'm also not sure if they limit coverage to individuals or if they include trusts and endowments as well. I'd have to defer to someone much more knowledgeable in that area.

My previous point was that we now have two eyewitness accounts, one where the party was obviously screwed out of a significant chunk of what they thought was a rock-solid agreement and another where it seems to be honored. Just trying to learn more.

Art G · 10-08-2008, 01:49 PM

Quote:

Originally Posted by Sarah in SC

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.

Yes, I agree. There is much to be learned from people on here, however, is this a healthy outlook?

Quote:

Originally Posted by Gumby

Nope, still hate them. I would rather suffer a total portfolio meltdown than give even one dime to an annuity salesman

REWahoo · 10-08-2008, 01:51 PM

Quote:

Originally Posted by Art G

Yes, I agree. There is much to be learned from people on here, however, is this a healthy outlook?

Not if you're an annuity salesman.

ziggy29 · 10-08-2008, 01:53 PM

Art G · 10-08-2008, 01:53 PM

WOW! My post hadn't even appeared on my screen before someone couldn't wait to take a shot! Amazing.
Yes, it's much better to wish your money away. No investment concerns then.

Art G · 10-08-2008, 01:54 PM

Quote:

Originally Posted by ziggy29

Awesome emoticon! I must steal that!!

Marquette · 10-08-2008, 01:55 PM

Quote:

Originally Posted by CuppaJoe

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.

And, just because I'm too darn centrist, I'd like to explore the do not trust part of that as well.

For me, I think it'd come down to the fact that I either put so little into an annuity that it makes no material difference. Or, I place so much in that I'm exposed to single carrier risk. Now, we know that carrier investment assets are held separate from general funds, and we know that states have insurance pools. But, 2B has a compelling experience w/r/t Lutheran Brotherhood and you had bad luck with Executive.

Some companies are more forthcoming in how (in a big bucket sense) they allocate their investment capital, but still you don't know the details. You get more transparency by buying a VA. You limit downside and upside, but you at least know what you're allocating money towards. At that point, you're exchanging the overhead fees from the carrier (and your money isn't going into passive indexes) for access to a risk pool larger than 1 (or two if you're married).

Anyway, no real point, but I don't know that I'm smart enough to pick the right carrier, just like I don't know that I'm smart enough to pick the right stocks. With stocks, at least, I can spend time and really research and get to know a lot more about a company. With an annuity, and given what we've seen with ratings, I'm not sure that someone could ever get a solid feeling for the underlying strength.

Art G · 10-08-2008, 02:01 PM

I called a couple insurance companies this morning, just out of curiousity to see whether it was safer if the money was kept in separate accts. or annuitized, thus giving up ownership, but locking in an income base for life.
I was told by both companies that there has never been a failure to pay out once annuitized. Of course, this doesn't mean there never will be, but anyway, I just thought I would pass along what I was told.
For any of you who have no understanding of me (there seems to be quite a few of you), I am very concerned as to the promises made, by me, towards annuity products. My reputation and my word is all I've got in this world. If someone else is going to screw it up for me, I want to be proactive.
It's possible that I have done the very best thing possible for people months ago. In spite of what some of you think was my motivation.

Marquette · 10-08-2008, 02:36 PM

Quote:

Originally Posted by Art G

My reputation and my word is all I've got in this world.

You should buy an annuity too... then you'd have your reputation, your word, and a safe income stream for life. Not too shabby.

Art G · 10-08-2008, 02:47 PM

Quote:

Originally Posted by Marquette

You should buy an annuity too... then you'd have your reputation, your word, and a safe income stream for life. Not too shabby.

What makes you think I haven't? Is this a new form of breaking someone? One person tells me I'm beating the dead horse while the other keeps egging me on? I don't get it.

ziggy29 · 10-08-2008, 02:51 PM

Quote:

Originally Posted by Art G

What makes you think I haven't? Is this a new form of breaking someone? One person tells me I'm beating the dead horse while the other keeps egging me on? I don't get it.

Actually, I didn't tell you that you're beating the dead horse. I'm just saying this whole *thread* is beating a dead horse.

Art G · 10-08-2008, 02:55 PM

Quote:

Originally Posted by ziggy29

Actually, I didn't tell you that you're beating the dead horse. I'm just saying this whole *thread* is beating a dead horse.

Sorry to mis-read your meaning. In actuality, the thread should be quite topical right now. However, too many pundits to discuss this stuff logically.

Marquette · 10-08-2008, 02:57 PM

Quote:

Originally Posted by Art G

What makes you think I haven't? Is this a new form of breaking someone? One person tells me I'm beating the dead horse while the other keeps egging me on? I don't get it.

I'm not trying to egg you own and if it's me then I'll chill... but some of your posts are a funny set up to the humor in my mind.

Break down VAs a little more. Make them easier to understand. Run an illustration as an example and post what your assumptions are. I think that's the main problem so far... not enough numbers and too many calls to emotion. I know it's a lot of work on your part, and a lot to ask of someone offering their time, but at least we could discuss numbers instead of things like 'hate'.

**CuppaJoe** · 10-08-2008, 04:22 PM

Quote:

Originally Posted by Marquette

And, now we have some balance (morbid though it is) on the other side. A company went under but you'll still get the full balance of the annuity agreement.

Did another carrier pick up your policy? I'm not familiar with the Executive Life failure. If you don't mind sharing, was it a 'big' or 'not so big' policy?

It is now handled by Aurora.

My original Executive Life policy was very small, the bigger annuities did not get their full amounts; although I've forgotten the specifics, I remember something about taking care of the little guys.

My (distorted by memory) take on it was that my employer was able to unload its pension responsibility at a very low cost because interest rates at the time of annuity purchase were about 15%.

**Gumby** · 10-08-2008, 05:52 PM

Quote:

Originally Posted by Art G

Yes, I agree. There is much to be learned from people on here, however, is this a healthy outlook?

[/i]

You're still not getting my dime, no matter how much you insult me.

ERD50 · 10-08-2008, 06:15 PM

Quote:

Originally Posted by FinanceDude

All VAs have a no-surrender option you can purchase, just a little FYI....

So, would that be a fee you pay upfront to avoid paying the other fee you might pay?

Is there a fee for asking that question? -ERD50

brewer12345 · 10-08-2008, 08:09 PM

Quote:

Originally Posted by Marquette

Anyway, no real point, but I don't know that I'm smart enough to pick the right carrier, just like I don't know that I'm smart enough to pick the right stocks. With stocks, at least, I can spend time and really research and get to know a lot more about a company. With an annuity, and given what we've seen with ratings, I'm not sure that someone could ever get a solid feeling for the underlying strength.

There are perhaps a half dozen life insurers I can think of that will pretty much never fail (or if they do we will all be sleeping under overpasses and eating squirrel for dinner). Outside of that select group, the likelihood of failure isn't particularly high, but it is non-zero and if we are talking about a decent sized chunk of net worth that is an issue.

[Moderator edit - No personal attacks]

10-08-2008, 01:53 PM	#47
ziggy29 Thinks s/he gets paid by the post Join Date: Oct 2005 Location: Texas Hill Country Posts: 2,330	__________________ FIRE Clock: Retired. Since it feels like I'll never be now. waiting for the government to privatize the gains and socialize my losses in my 401K...

10-08-2008, 11:06 AM	#41
Marquette Thinks s/he gets paid by the post Join Date: Jan 2008 Posts: 2,020	And, now we have some balance (morbid though it is) on the other side. A company went under but you'll still get the full balance of the annuity agreement. Did another carrier pick up your policy? I'm not familiar with the Executive Life failure. If you don't mind sharing, was it a 'big' or 'not so big' policy?

10-08-2008, 01:53 PM	#48
Art G Thinks s/he gets paid by the post Join Date: Nov 2007 Posts: 1,052	WOW! My post hadn't even appeared on my screen before someone couldn't wait to take a shot! Amazing. Yes, it's much better to wish your money away. No investment concerns then.

10-08-2008, 02:01 PM	#51
Art G Thinks s/he gets paid by the post Join Date: Nov 2007 Posts: 1,052	I called a couple insurance companies this morning, just out of curiousity to see whether it was safer if the money was kept in separate accts. or annuitized, thus giving up ownership, but locking in an income base for life. I was told by both companies that there has never been a failure to pay out once annuitized. Of course, this doesn't mean there never will be, but anyway, I just thought I would pass along what I was told. For any of you who have no understanding of me (there seems to be quite a few of you), I am very concerned as to the promises made, by me, towards annuity products. My reputation and my word is all I've got in this world. If someone else is going to screw it up for me, I want to be proactive. It's possible that I have done the very best thing possible for people months ago. In spite of what some of you think was my motivation.