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10-07-2008, 08:48 AM
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#21
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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Quote:
Originally Posted by Marquette
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.
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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.
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10-07-2008, 08:51 AM
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#22
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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Quote:
Originally Posted by ziggy29
Given the current "situation" you are describing, don't you think this is a little too much of a leap of faith?
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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.
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10-07-2008, 08:56 AM
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#23
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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Quote:
Originally Posted by ats5g
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.
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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.
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10-07-2008, 12:39 PM
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#24
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Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 2,020
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Quote:
Originally Posted by CuppaJoe
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.
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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
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.
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Lost money from investing in them or buying their product? If it was a policy, wouldn't it still be serviced by Thrivent?
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10-07-2008, 12:48 PM
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#25
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
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Quote:
Originally Posted by Art G
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.
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Art, do you ever stop quoting from the insurance sales manual?
__________________
Numbers is hard
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10-07-2008, 01:18 PM
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#26
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,328
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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.
__________________
Idleness is fatal only to the mediocre -- Albert Camus
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10-07-2008, 01:54 PM
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#27
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Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: Houston
Posts: 1,448
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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.
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10-07-2008, 02:02 PM
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#28
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Moderator Emeritus
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
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Quote:
Originally Posted by soupcxan
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.
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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.
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10-07-2008, 02:13 PM
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#29
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Thinks s/he gets paid by the post
Join Date: Aug 2004
Location: Houston
Posts: 1,448
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Quote:
Originally Posted by Rich_in_Tampa
Then there are the surrender fees if you want out sooner.
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Why on earth would you want to get out of such a great investment
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10-07-2008, 02:37 PM
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#30
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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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?
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10-07-2008, 02:55 PM
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#31
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
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I ask "Art, do you ever stop quoting from the insurance sales manual?" and you respond with:
Quote:
Originally Posted by Art G
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?
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I'll take that as an emphatic "NO!"
__________________
Numbers is hard
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10-07-2008, 03:35 PM
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#32
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Thinks s/he gets paid by the post
Join Date: Nov 2007
Posts: 1,052
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Well that was a pretty poorly thought out response. Nice job, way to prove my point.
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10-07-2008, 03:42 PM
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#33
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
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Art, you are so much fun!
__________________
Numbers is hard
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10-07-2008, 03:51 PM
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#34
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,765
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Quote:
Originally Posted by Art G
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?
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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." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
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10-07-2008, 06:48 PM
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#35
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,566
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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
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10-07-2008, 09:05 PM
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#36
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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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.
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Highly rational viewpoint.
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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10-08-2008, 03:56 AM
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#37
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 4,337
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Quote:
Originally Posted by Marquette
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?
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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
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10-08-2008, 07:56 AM
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#38
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by Rich_in_Tampa
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.
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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.........:)
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10-08-2008, 09:37 AM
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#39
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Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 2,020
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10-08-2008, 09:51 AM
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#40
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Moderator Emeritus
Join Date: Jun 2007
Location: At The Cafe
Posts: 6,873
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Quote:
Originally Posted by Marquette
Did another insurer pick up your policy? Did you get any sort of cash settlement from the state's fund?
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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.
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