Help -- I think SIL bought a Variable Annuity

[peggy]

My SIL told me today that she'd "invested" $100,000 with a man who she's known for years and "has her best interests at heart." And what's really cool, per SIL, is that she's already gotten some $13,000 in "sign-on bonuses."

The hubby (whose S the SIL is) and I looked at each other and said, "Annuity, right?" It IS an annuity, but I'm not certain whether it's a variable or fixed.

The name of the plan is MasterDex 10(tm) Annuity (A Flexible Premium Deferred Annuity Policy with an Index Benefit), and it's from Allianz Life Insurance Company of North America.

Can any of our whizzes tell me whether this is in fact a variable annuity (as I suspect)? If so, according to the policy, she has 20 days to review and cancel -- that's from the date she received the policy. How hard should it be for her to cancel this, if it is a variable annuity?

 

[OAG]

You may want to read this article: Allianz Special Report Sign Up.
The site will give you a free report but if you do not want to sign up for it you can find a lot of other information on the Annuity by a Google search.

 

[cute fuzzy bunny]

You've got a PM!

Thats an immediate annuity that tracks a stock index (usually the s&p500 IIRC) which limits monthly gains to something like 3% but has no limit to monthly losses.

So for example, if the S&P went up 12% in one month, down 12% the next month, and up 12% the next month, you'd have a running loss of 6% since your gain was limited in months 1 and 3 to 3% but the 12% drop counts in full. Hence you could have a net loss for a year in which the S&P has a net gain.

Add in some huge fees, and the fact that they handed back part of your SIL's principal as a feigned 'bonus', and you've got a loser.

The person that signed her up for this not only didnt have her best interests at heart, he drilled her.

 

[Texas Proud]

Get her to take it back as quickly as possible...

And tell her to stop talking to the person "has her best interests at heart." Someone who would sell that to her is only interested in themselves...

 

[bssc]

 

[brewer12345]

I believe this is an equity-indexed annuity, which is worse than a VA in some ways. See if she can give it backl and get her money back.

 

[peggy]

Thanks, everyone. I've gone and done some research (thanks for the links above), and the hubby is going to try to talk some sense into his sister. At this point, though, I'm not optimistic.

 

[chinaco]

If she purchased it in the last few days, she could still be in the free look period. Urge her to drop it while she can!

 

[Maneiac]

Tell her to abandon that idea as soon as possible. That is an Indexed Annuity and a Philadelphia Lawyer couldn't figure out the "rules and regs" of that one.....been there, done that got the scars to prove it.
They start you out with the bonus make you choose one of 3 "indexes" to follow (Usually SP500, Nasdaq and fixed interest rate) then proceed to cap the monthly income you can earn from the indexes regardless of what they gain per month...problem is they DON't cap the downside...so one really bad month can ruin any gains the whole year! Also they keep any dividends earned for themselves but they do "guarantee" that you never lose any of the initial principle invested as long as you don't try and cash out for 10 years! The 10 year lock also applies to any added principle you put into the same account. However, the 10 year clock starts from the date of the added principle. Also you can never get penalty free withdraws for more than 50% of the initial investment until after the 10 year lock in period. That is you can get your 10% penalty free withdrawal for only 5 years!

RUN RUN from this evil Allianz product.....from one who knows and is finally free from them!
BTW: I had to get the State Insurance Comissioner to reclain an ADDITIONAL 8K in penalties that Alliance tried to sneak in when I cashed out!

 

[peggy]

The hubby called SIL last night and again this morning, and told her it's a bad product and she should pull her money out of it now if she can (I don't know if she's still within the free look period or not, unfortunately). She said she would, but we haven't heard back to find out what the result of that is.

Thanks again, everyone, for all your help.

 

[mickeyd]

The hubby called SIL last night and again this morning, and told her it's a bad product and she should pull her money out of it now if she can (I don't know if she's still within the free look period or not, unfortunately). She said she would, but we haven't heard back to find out what the result of that is.

I'd recommend that she write the company and the agent a certified RRR letter TODAY requesting a refund of all money ASAP. A 10 day free-look period is normal in most states, but ten days goes by very fast and agents are trained to get folks to "think it over" in hopes that the 10 days will go by without the client realizing it.

 

[FinanceDude]

I'd recommend that she write the company and the agent a certified RRR letter TODAY requesting a refund of all money ASAP. A 10 day free-look period is normal in most states, but ten days goes by very fast and agents are trained to get folks to "think it over" in hopes that the 10 days will go by without the client realizing it.

Gotta move fast. Did you sign a "policy delivery receipt"? The date on that one is important, as that is the date when the "free look" starts. If the policy was mailed without an agent delivering it, then the date of RECEIPT by the client is the beginning of the free look.

Get on the phone and call the CARRIER directly. Tell them you want to cancel, and do not want to talk to the agent............

 

[Milton]

My SIL told me today that she'd "invested" $100,000 with a man who she's known for years and "has her best interests at heart." And what's really cool, per SIL, is that she's already gotten some $13,000 in "sign-on bonuses."

Apparently she is pleased with her purchase. And it seems clear that she doesn't want your advice, or she would have asked for it before signing.

Given the above circumstances, as usual my suggestion is that you keep your own counsel and refrain from attempting to correct her perceived mistake. We all need to be free to make our own financial decisions, and you won't get any thanks for questioning her choices, or the motives of someone she says she trusts.

My two cents.

 

[peggy]

Apparently she is pleased with her purchase. And it seems clear that she doesn't want your advice, or she would have asked for it before signing.

Given the above circumstances, as usual my suggestion is that you keep your own counsel and refrain from attempting to correct her perceived mistake. We all need to be free to make our own financial decisions, and you won't get any thanks for questioning her choices, or the motives of someone she says she trusts.

My two cents.

Normally, I would totally agree with you. Heck, the hubby and I stood back and defended his mother against the rest of the family (six adult children total) even though she was making a stupid mistake with her money.

But the circumstances in this case are a bit more convoluted than I originally explained, however, and because of THOSE, the hubby and I felt we had to at least suggest that the "investment" was not wise. Which we have done, and now the ball is in her court as to whether or not to get out of it.

 

[Milton]

Fair enough!

 

[clifp]

Apparently she is pleased with her purchase. And it seems clear that she doesn't want your advice, or she would have asked for it before signing.

Given the above circumstances, as usual my suggestion is that you keep your own counsel and refrain from attempting to correct her perceived mistake. We all need to be free to make our own financial decisions, and you won't get any thanks for questioning her choices, or the motives of someone she says she trusts.

My two cents.

I complete disagree with this . I understand your point that often your advice will be ignored and you financial advice will be seen as meddling. However, even if there is only 25% chance she can convince her SIL to back out of this annuity and 100% chance that her SIL will be annoyed with her I think Peggy should try and I am glad she did.

Many/Most American are pretty sophisticated consumers, they'll check out consumer reports before buying appliances, test drive lots of vehicles and use the Internet to determine the dealer cost, scour craigslist, garage sales, and EBay for bargains, buy store brands and generic drugs.

But when it comes financial product most Americans are like kids. The moment the [-]snake charmer[/-] Financial Advisers whips out his PowerPoint slides and projected returns we become hypnotized, and all we can see is [-]lollipops[/-] pot of gold at the end of the rainbow.

It is one thing to let a kid touch a hot stove, it is another thing to let the kid try to fly off the roof. Spending 100K on this indexed annuity, best case will be painful, and worse case will result in a severe injury to their financial health. This is a mistake that will cost them $3-5K a year for at least 10 years.

Why people are so reluctant to ask friends and family on advice for financial matters is a bit baffling to me. I sort of feel like the financial doctor among my friends and family. If they want to take an herbal supplement of dubious value, no problem, but when they have cancer and elect to go to Mexico to eat Laetrile apricot pits to cure their cancer, you have to speak up.

 

[Milton]

I understand your point that often your advice will be ignored and you financial advice will be seen as meddling.

Right on. There are no advantages, and many disadvantages, in trying to save people from themselves.

 

[clifp]

You don't think saving your friends and family 3-5,000 a year is an advantage?

 

[peggy]

Just to be a little more clear about the circumstances that made me feel we needed to say something -- this SIL is the one referenced in my thread from April -- http://www.early-retirement.org/forums/f28/death-money-long-you-warned-27912.html

She had asked our advice on how to handle the situation financially, and hubby and I spent an evening with her drawing up a plan. A month or two later, we went with her to talk to a financial advisor -- a GOOD one, the one who's been handling my mom's finances for years. We'd understood at the time that SIL intended to follow the plan that we and the advisor came up with, and perhaps give a portion of her money to this "friend."

So when we found out yesterday that she'd given ALL of her money to this "friend" and that he'd put her in this highly questionable "investment," we felt obligated to tell her what's going on.

Maybe we were wrong; but we'd hate to see her lose the only start at retirement funds she has because of this "friend."

 

[haha]

Maybe we were wrong; but we'd hate to see her lose the only start at retirement funds she has because of this "friend."

I see this as part of a larger philosophical question. It almost always easier to keep friends and family members from getting angry at you by staying totally out of their decisions. Even if they ask, you are often setting yourself up for "I never should have listened to you, my friend bought that stock and now she is going to Cancun for a month."

Still, we do have some degree of expertise, and ongoing connection to these people. What do we do if their schemes fail and they are broke? My Dad's younger sister was married to a charming but non-productive waster. Dad tried to get them to slow down their burn rate, but all he ever got was being called a fuddy-duddy and meddler. Eventually they divorced. The ex-husband managed to take a big hunk of my Aunt's inheritance, and soon after my aunt was beseeching Dad for handouts. He gave her enough to keep her off the street, but he didn't feel very good about any of his choices.

I think things would go better for most people if more attention was paid to the usually wise council of more experienced family. Not going to happen though; not for most families.

Ha

 

[bright eyed]

Just to be a little more clear about the circumstances that made me feel we needed to say something -- this SIL is the one referenced in my thread from April -- http://www.early-retirement.org/forums/f28/death-money-long-you-warned-27912.html

She had asked our advice on how to handle the situation financially, and hubby and I spent an evening with her drawing up a plan. A month or two later, we went with her to talk to a financial advisor -- a GOOD one, the one who's been handling my mom's finances for years. We'd understood at the time that SIL intended to follow the plan that we and the advisor came up with, and perhaps give a portion of her money to this "friend."

So when we found out yesterday that she'd given ALL of her money to this "friend" and that he'd put her in this highly questionable "investment," we felt obligated to tell her what's going on.

Maybe we were wrong; but we'd hate to see her lose the only start at retirement funds she has because of this "friend."

I think the deeper question to consider is - why would she do this? Why would she give ALL the money to the "friend?"

Why did she make this move on her own - did she want to feel independent?

Did his pitch sound too good to surpass - he convinced her it was all she need to do to be FI?

And why didn't she go back and check with you about this decision if you all had done this as a group before?

Family stuff is so complicated. Dynamics are both old and hardened while also changing as we age.

If you can answer those questions, it might help you come up with the best approach to helping find some resolution.

If you just call her and say, "hey, this is like the worst idea ever" she may feel stupid, get mad/defensive and not consult you any further on other big decisions. I know from experience.

Finally, this friend is a real selfish jerk if they knowingly took all her money into this bad plan...especially if they knew they would get such a great bonus out of it - and knowing what she had been through.

Again, in that scenario it may be a question of who SIL is choosing to trust and why...

 

[peggy]

Home from work and have an update --

SIL told hubby that, "I can see you've found something that upsets you." And she and hubby are going to talk to the "friend" (jerk, salesman, your choice) on Wednesday. The clock on the free look period started ticking on the 22nd, which is better than we'd hoped for (we thought it started on the 15th).

Bright Eyed, you raise good questions. My best knowledge of the situation at this point is, (a) she's still grieving, and (b) hubby is younger than she is by a lot -- the big sister thing is hard to shake. Thankfully, she does seem to realize that she was TOO trusting in this instance.

Again, many many thanks to all of you!

 

[RetireeRobert]

Home from work and have an update --

SIL told hubby that, "I can see you've found something that upsets you." And she and hubby are going to talk to the "friend" (jerk, salesman, your choice) on Wednesday. The clock on the free look period started ticking on the 22nd, which is better than we'd hoped for (we thought it started on the 15th).

Bright Eyed, you raise good questions. My best knowledge of the situation at this point is, (a) she's still grieving, and (b) hubby is younger than she is by a lot -- the big sister thing is hard to shake. Thankfully, she does seem to realize that she was TOO trusting in this instance.

Again, many many thanks to all of you!

Clock starts ticking 22nd, but they don't meet till Wednesday. Hope the free period IS 10 days, and they act fast after Wednesday's meeting.
Interesting story. Please keep us updated on developments!

 

[bright eyed]

Do let us know how it goes!

Sounds like she at least has some buyers remorse... even if it means lil' bro is right!

It would be hard for me to be at that meeting (if this was my friend or family) and not want to deck that "friend"! but then again, some people are so ignorant and have no ethics so they have no idea how wrong they are...

would love to hear what the friend says...they are always great at the pitch, not at the rebuttle...

 

[Bailer]

There has been a lawsuit filed against Allianz regarding Deferred Variable Annuities. I remember hearing about it in the news, and did a quick google search.. Your SIL might
mention that at the meeting on Wednesday.