FIA looks like just what I need.

[73ss454]

I just wanted to yell this out "DON'T BE STUPID AND BUY THIS CRAP'

If an insurance company is involved it's not to your advantage. Any part of this statement that you don't understand? I can't yell much louder.

 

[sheehs1]

Suggestion TJay: I'm positive the salesman showed you a progression of what your account values will be. If he hasn't already done so, ask him...to run the numbers for you during both good and bad yearly market conditions...such as 10% up, 2% up , 5% down and 10% down or what the heck...even 50% down. Salesmen love to show you the good stuff. Make him show you the bad stuff.

Next: Ask him to run the numbers with the same market conditions when you start to take your yearly pay outs.

You may be able to see discrepancies or things that might give you pause. I did . I was investigating an annuity with a guaranteed death benefit. Of course I paid 1/2% or more for this death benefit every year. When the numbers were run, I noticed the quaranteed death benefit I supposedly paid for....went to zero under negative market conditions after I started pay outs. Surprise!!! I know you said you didn't care about the death benefit...but running the numbers under different scenarios might ferret out something else you don't know about. I didn't buy this annuity. Ive yet to find one I will buy. An Immediate income annuity is about the only one I might consider.

P.S. Ask for full disclosure. I also noticed when analyzing this annuity..that they charge you every time you take a pay out. The brokerage house I dealt with probably had to disclose that. Your salesman might not have to.

And of course they can give you 8% a year. They are logging that on one side as they are taking their fees (what 3% to 5% depending on the riders) out of your real cash on the other.

Good luck...and put this salesman thru his paces! Read the fine print - there might also be something about when they can increase their fees in there.

 

[brewer12345]

I'm amazed and impressed with the patience of forum members for ledge walkers. I would have yelled "JUMP" a long time ago.

When you encounter someone who has loaded a couple of slugs into the shotgun, crammed the barrel into their mouth and is frantically kicking off their shoes so they can pull the trigger with their toes even after being told what the outcome will be, the best choice is usually to don a raincoat and watch from a safe distance.

 

[Gone4Good]

brewer12345, excellent advice about starting fresh when the legal details arrive. And you are right - unless I read something in the prospectus or contract that "punches me in the face" (I really like that valuable insight from an unlikely source), I'll probably do it.

Another piece of advice, from someone who's livelihood depended, in part, on his ability to correctly read prospectuses. You have to read every word. Every, single word. And every single word has to be interpreted literally, and from the prospective of the author. If the wording seems like it allows a variety of interpretations, assume the intended interpretation is the one most favorable to the issuer.

A couple of specifics jump to mind: Be mindful of defined terms, and refer to the definition religiously. The definition in the prospectus of a common word, like interest, or guarantee, may be significantly different from what you'd normally assume. Watch for clauses that negate or limit previous assertions. As in "Issuer guarantees a 4% annual return floor . . . notwithstanding anything else in this clause, issuer will pay no more than the monthly return on the S&P 500 Index less 400 basis points."

Good luck

 

[73ss454]

Good post Gone4Good, now can someone tell me why they would want to put their money into something that is designed to trick them?

 

[brewer12345]

Good post Gone4Good, now can someone tell me why they would want to put their money into something that is designed to trick them?

<insert PT Barnum quote>

 

[FinanceDude]

Are we focusing on the delivery method (sale by agent) or what the insurer is doing in inventing these products? Because, in my experience, insurance companies are like the house in Vegas, they set products up for THEM to win. Insurance companies don't WANT to pay, they HAVE to pay.........

 

[73ss454]

Are we focusing on the delivery method (sale by agent) or what the insurer is doing in inventing these products? Because, in my experience, insurance companies are like the house in Vegas, they set products up for THEM to win. Insurance companies don't WANT to pay, they HAVE to pay.........

So, I guess TJAY can always rely on the agent to explain everything to him.
I'm sure the agent wouldn't want TJAY to be tricked by the insurance company.

 

[haha]

So, I guess TJAY can always rely on the agent to explain everything to him.
I'm sure the agent wouldn't want TJAY to be tricked by the insurance company.

Hey, this boat can't sink!

 

[FinanceDude]

So, I guess TJAY can always rely on the agent to explain everything to him.
I'm sure the agent wouldn't want TJAY to be tricked by the insurance company.

I am sure you did a good job of that while "in the box"...........

 

[73ss454]

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.

 

[FinanceDude]

Yup, and that's where I learned to stay away from people like that.

You are funny............

 

[73ss454]

Yeah? Am I funny, Ha Ha or funny Peculiar?

 

[uofmbish]

Dgoldenz, the product is American Equity’s 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/documents/1107-SB-09.01.10-w-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.

 

[brewer12345]

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/documents/1107-SB-09.01.10-w-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.

 

[clifp]

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/documents/1107-SB-09.01.10-w-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.

 

[pb4uski]

If something seems too good to be true it is. 8% guaranteed is too good to be true. Run.

American Equity. Run faster.

 

[TJAY]

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.

 

[TJAY]

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

 

[REWahoo]

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.

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'...

 

[ziggy29]

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.

I wonder if there's any cause-and-effect going on here...

 

[dgoldenz]

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...

 

[brewer12345]

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.

 

[dgoldenz]

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.

 

[brewer12345]

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.