Banks Peddling Annuities

[chinaco]

Anyone notice how banks have begun peddling insurance products.

Seems like many of them are pushing fixed annuities as an alternative to CDs.

They must be getting fees from insurance companies.

 

[bbbamI]

Yes, our bank tried to do that to us a few months ago. They said they could offer us a great rate on a CD.

It was an annuity. They kept trying to gloss over it calling it everything but an annuity. But if it walks, talks, looks....you get my meaning.

 

[freebird5825]

I don't do business with traditional banks. However, my credit union keeps sending me these silly letters offering me the "opportunity" to upgrade a basic accidental death/dismemberment policy that is free to members. I just toss the letter into the junk mail burning pile.

After 20+ years of being a share holder, I'm still waiting for my free toaster.

 

[youbet]

Anyone notice how banks have begun peddling insurance products.

This spills over to credit unions as well. And it's worse in the sense that the credit union sponsor (business, union, professional association, etc.) is tacitly implicated as endorcing the annuity.

 

[rescueme]

However, my credit union keeps sending me these silly letters offering me the "opportunity" to upgrade a basic accidental death/dismemberment policy that is free to members.

Your CU must be owned by AARP ...

 

[Free To Canoe]

I was doing the low income property tax rebate for my Moher the other day.
I noticed that her CD interest tax document was a 1099-R and not the normal 1099-Int. Ut Oh!
Couple that with the fact that she was bragging about the 5 and 7% "interest rate" and...
I think the nice, well dressed man at the bank took the old lady's money.

It could be that an annuity is the best thing for her at this point in her life. I should have thought ahead and had that talk with her. She is not quite all there in the mind and I am sure that she thinks that her children will be inhereting those CDs.

Better to not tell her or to tell her? I may know more next week when I go down to her place and finish the rebate form.

 

[REWahoo]

Better to not tell her or to tell her?

You know your mom better than we do, but if "She is not quite all there in the mind..." why would you take the chance on stressing her unnecessarily by telling her? My vote is to say nothing.

 

[clifp]

You know your mom better than we do, but if "She is not quite all there in the mind..." why would you take the chance on stressing her unnecessarily by telling her? My vote is to say nothing.

I think it is important that kids have facts of life conversation about money with their aging parents.

"There are a lot of shysters out their that take advantage on the poor eyesight and poor hearing that many seniors have. They'll tell you that are getting 7% interest rate on the CD, but buried in the fine print that you probably can't read and filled with legal jargon is something different. Mom please in the future make sure to take to me before signing up for any of theses CD or other investments."

She might be offended or a bit stressed but I'd rather see that than having her get taken by annuity salesman.

 

[braumeister]

When my mother reached her 80th birthday, she asked me if I would be willing to take care of her finances, since she just didn't have the energy for it any more. She didn't have much, just enough to live on, with a small cushion. The only things she ever invested in were municipal bonds and CDs.

I though that was a good decision, so we put everything into JTWROS accounts, and I began to handle everything for her. She was very relieved to not have to worry about money.

I tried to be a good steward, and now, 15 years later, her accounts still allow her to get by, with a small cushion. Her expenses are far higher now, in an Alzheimer's assisted living facility (which is great, by the way), but I've been able to keep her finances OK.

If anyone is trying to deal with this situation, I would recommend bringing up the thought of how much effort it is to keep up with your money. That might be the key issue.

 

[REWahoo]

I think it is important that kids have facts of life conversation about money with their aging parents.

"There are a lot of shysters out their that take advantage on the poor eyesight and poor hearing that many seniors have. They'll tell you that are getting 7% interest rate on the CD, but buried in the fine print that you probably can't read and filled with legal jargon is something different. Mom please in the future make sure to take to me before signing up for any of theses CD or other investments."

Clif, I completely agree.

I interpreted Free to Canoe's post to be an after-the-fact question. The way I read it, his mom had already purchased an annuity and probably didn't know it. That was the basis for my comment.

 

[Free To Canoe]

I appreciate the input. I think that it is after the fact.
When you are not all there, it is easy to use a play on words to confuse. She is beyond "reading fine print". In her younger days such a deception would not have been possible. She handled all of the finances during my childhood days.
She has resisted my efforts to "help". I wanted to get joint on the checking just so I could check in on things. No dice.
The takeaway for others might be "the facts of senior life" for seniors with just CDs in this low interest rate environment.

 

[bubba]

An employee at the bank chased me to my car pushing annuities. Will avoid going to the bank in future; everything online forevermore...... Free to Canoe, best of luck with your mother. When our aging parents don't want our help, it's tricky at best.

 

[braumeister]

She has resisted my efforts to "help". I wanted to get joint on the checking just so I could check in on things. No dice.

That seems to be pretty much the norm.

When Mom was in a regular retirement place, she said she didn't know a single person there who would allow their kids to even know about their finances.

The result was that as their mental facilities diminished, so did their nest eggs, and they were moving out all the time due to inability to make the monthly payments, frequently to move in with relatives who were less than thrilled about the prospect.

If joint accounts are unpalatable, there is at least the option of making accounts "payable on death" to a designated beneficiary. You could perhaps sell that idea by pointing out that a POD account would simplify things.

 

[Dawg52]

Nope, haven't had a bank or anyone try to sell me an annuity.

 

[Nords]

She was very relieved to not have to worry about money.
If anyone is trying to deal with this situation, I would recommend bringing up the thought of how much effort it is to keep up with your money. That might be the key issue.

Back in Dec 2009, despite my Dad's clear dementia problems, he adamantly refused all assistance. He didn't want our help, he didn't want paid help, he didn't want to waste any more time on doctors, he especially didn't want to do POAs. He made it another 14 months but, judging from his bank and his credit-card records, his mental acuity declined rapidly during the 15th month and he ended up in the hospital ER.

During the week I visited him in the surgical ward, he just wanted to leave. (Hard to blame him for feeling that way.) When I brought him a suitcase of clothes & toiletries, he decided he was on a business trip and kept packing to check out of the hotel and go home. (Which got him labeled a "wanderer".) He couldn't even remember how to operate his CD player, but he wanted to resume his independent life and be back in charge of things. Every time I brought it up his resistance hardened, so I just kept changing the subject.

On the day before he was discharged to a skilled nursing facility, I brought in the utility bills with (filled-out) checks for him to sign. When he saw how quickly we got through the pile of paperwork (hey, I'd had a tour on an admiral's staff) he broke down in tears and said that he'd been having a terrible time taking care of his affairs. When he got to the SNF and realized that they'd prep his meals and do his laundry, he decided that he would stay there for the rest of his life.

I think giving up that control is so hard that most parents don't even know how to do it. But when they do, the relief is immense. The trick is helping them get over that first hurdle of accepting help.

Nope, haven't had a bank or anyone try to sell me an annuity.

So to the bankers you don't look old enough, inattentive enough, or presbyopic enough...

 

[Dawg52]

So to the bankers you don't look old enough, inattentive enough, or presbyopic enough...

No, they just know I don't have enough money to waste their time on.

 

[braumeister]

During the week I visited him in the surgical ward, he just wanted to leave. (Hard to blame him for feeling that way.)

Reminds me of a poignant moment recently with my mom. After independent living, independent retirement community, assisted living, and now Alzheimer's assisted living, she has been through a lot in the last few years. Each new place got the same reaction: "Get me out of here."

Last week, during the conversation, she said "I just want to get out of here."
Knowing that she realizes that she is in a really good place and there are no alternatives, I asked where she wanted to go.
She answered "Heaven."
Stopped me in my tracks.

 

[381966]

Annuities vs. Stocks For Retirement Income

I think that annuities are a good option for retired persons for
no more than 25-30% of your assets.

I do like dividend stocks more than annuities for the following reasons.

Dividend stocks can be sold in case of emergency. If you invest in solid companies that pay 4-5% dividends, then why lose the principal amount with an immediate annuity? You can get the same return with a high paying dividend stock and have the ability to sell the principal holding any time you want. This is why I recommend 30% immediate annuity, 30% stock dividends, and 40 percent in cash/bonds/CD's. For those who aren't stock market savy, you can put money in index funds instead of individual stocks and sell 4% every year to make up for the dividends.

You should never hold all your eggs in one basket. Interest rates will increase dramatically in the future, so CD's will be ok in a few years out.

Remember, safety and peace of mind are important in retirement. Don't lose everything because you want to goose your returns a few percentage points.

Good luck to everyone.
Dave

 

[Independent]

I was doing the low income property tax rebate for my Moher the other day.
I noticed that her CD interest tax document was a 1099-R and not the normal 1099-Int. Ut Oh!
Couple that with the fact that she was bragging about the 5 and 7% "interest rate" and...
I think the nice, well dressed man at the bank took the old lady's money.

It could be that an annuity is the best thing for her at this point in her life. I should have thought ahead and had that talk with her. She is not quite all there in the mind and I am sure that she thinks that her children will be inhereting those CDs.

Better to not tell her or to tell her? I may know more next week when I go down to her place and finish the rebate form.

If it's an annuity, the agent has an obligation to deliver a physical contract. You could look around and see if she has one and what it says.

You could call the bank, tell them you're working on your Mom's taxes and would like some information on where this 1099-R came from. You've got her SSN and birthdate, that may be enough to get you at least some general information.

Or you could go into the bank and look around for the "investment" office. If it's an annuity, the person who sold it has an insurance license he doesn't want to lose. He might be willing to provide some information.

But, I'd look for the contract first.

 

[FinanceDude]

Fixed annuities have a 30-day "free look" policy. That means you have 30 days AFTER physical delivery of the policy to return it and it is null and void. Just a little FYI, banks have been selling fixed annuities for 40 years or so!!

 

[chinaco]

Fixed annuities have a 30-day "free look" policy. That means you have 30 days AFTER physical delivery of the policy to return it and it is null and void...

Yes... Why do you think that is the case? Why do you think that rule was enacted?

... Just a little FYI, banks have been selling fixed annuities for 40 years or so!!

Perhaps... but what was once the equivalent of getting a mailer inserted in one's bank statement... or perhaps a real agency or licensed agents located in certain banks...

Has turned into little more than a branch bank representative [-]promoted teller[/-] handing over bank customers to insurance companies to be sold an annuity for the return of a fee.

You don't see many of those customer going directly into the insurance agency to stash their savings... do you!

 

[brewer12345]

Yes... Why do you think that is the case? Why do you think that rule was enacted?




Perhaps... but what was once the equivalent of getting a mailer inserted in one's bank statement... or perhaps a real agency or licensed agents located in certain banks...

Has turned into little more than a branch bank representative [-]promoted teller[/-] handing over bank customers to insurance companies to be sold an annuity for the return of a fee.

You don't see many of those customer going directly into the insurance agency to stash their savings... do you!

Let's not get too overexcited here. The dominant bank-sold annuity is/was a CD-type fixed annuity. This looks like a long term CD backed by an insurer, with a fixed crediting rate just like a CD. There are times when these products can be more attractive than a CD. Where things get iffy is when banks sell EIAs or VAs.

The salesperson is humping your leg to sell you an annuity because the job is commission-based.

 

[Brat]

Frankly I would take that 1099 to the bank and ask for a copy of the contract. I would also look at her total asset situation, what % does it represent.

If the OP's mother was sold a product that was not appropriate you may be able to unwind that sale even if it is past to look-over period because of her advanced age and lack of financial sophistication. There is a suitability test.

 

[Nords]

The salesperson is humping your leg to sell you an annuity because the job is commission-based.

Oboy, there's some long-lasting imagery being burned into my cerebral cortex.

Next time I step onto anyone's sales floor, let alone a bank or Best Buy, I'm going to have a hard time keeping the smirk off my face.

 

[REWahoo]

Next time I step onto anyone's sales floor, let alone a bank or Best Buy, I'm going to have a hard time keeping the smirk off my face.

Think about getting some latex shin guards...