Art G
Thinks s/he gets paid by the post
- Joined
- Nov 5, 2007
- Messages
- 1,052
The problem is this.
In order to get the 7% guarantee you have to put what for most people is a large portion of their assets into one credit. Yes, your assets are in a separate account should the company go BK, but you would lose the guaranteed benefit.
Recently our firm has come close to putting some seven figure sums into some of these VAs. (I even came close to putting some of my own money into one) But, I've read the 300 page prospectus on these things and there has always been a couple of huge issues that have stopped us (besides the fees) to me, the issue I can't get over is that should we get a market environment where you really need to guarantee, it will be the same environment that will make it too expensive for the insurer to keep hedging their exposure. The more I study them, the more I see that the restrictions they place on the benefits are the only things that keep them from being really appealing, but they have no choice otherwise it would be too good to be true which with insurance isn't as good thing. Just ask Brewer, VA companies have a history of making promises they later decide they can't keep.
Very valid concerns. That is why I'd strongly suggest anyone with a large sum of money split their contracts between more than one company, make sure those companies are large and highly rated, and find out what percentage of their business is in annuities vs. other forms of safer insurance.
I haven't seen insurance companies reneging on payouts, but I have seen them discontinue features once they figured out they bit off more than they could chew. I think some of those soon to be eliminated features are currently in existence. JMO