Variable Annuities Are the Way to Go!!!!!

[FinanceDude]

That is the way the uber-weathy handle their money. They don't buy VAs.
.

No, they buy hedge funds, structured notes, TONS of life insurance, REITs, lease buyback programs, etc.

Most of them don't own a lot mutual funds either, they own individual stocks and muni bond ladders,etc.

They don't do many CD's either, they are tax sensitive folks.......

 

[FinanceDude]

Not true. Every state has a state guarantee fund that all the insurers doing business in the state pay into. In the event a failed insurers assets don't cover policyholder liabilities, the guaranty fund is supposed to make up the difference. Its a far cry from FDIC insurance, but t is something.

I'm sure it's as underfunded as FDIC, maybe more so. I'll look around for the numbers on FDIC, but in 2005 it had $97 billion to cover $4.4 TRILLION in assets.......

However, if all the large banks were to fail simultaneously, we'd have bigger problems than FDIC............

 

[brewer12345]

I'm sure it's as underfunded as FDIC, maybe more so. I'll look around for the numbers on FDIC, but in 2005 it had $97 billion to cover $4.4 TRILLION in assets.......

But there is a big difference: FDIC insurance carries the full faith and credit of the feddle gumint. Insurance has the benefit of whatever is in the guaranty fund kitty and that's it. The full faith and credit means that I don't really care what the FDIC has as assets.

 

[FinanceDude]

But there is a big difference: FDIC insurance carries the full faith and credit of the feddle gumint. Insurance has the benefit of whatever is in the guaranty fund kitty and that's it. The full faith and credit means that I don't really care what the FDIC has as assets.

What about the fact that FDIC can negotiate settlements as long as 99 years to the policyholders? Granted, the chance is small....... Again, another caveat most folks who blindly trust FDIC have no clue about. I agree FDIC was needed to give folks trust in banks again, but I don't trust the govt to run any insurance company......

Seems like eveyone forgets the bail-out of the S&L industry a while ago............what a fiasco that was.................

 

[brewer12345]

What about the fact that FDIC can negotiate settlements as long as 99 years to the policyholders? Granted, the chance is small....... Again, another caveat most folks who blindly trust FDIC have no clue about. I agree FDIC was needed to give folks trust in banks again, but I don't trust the govt to run any insurance company......

Seems like eveyone forgets the bail-out of the S&L industry a while ago............what a fiasco that was.................

Of course you should look at any bank carefully before making a deposit, but unless we are talking about a collapse of the banking system (and with it western society as we know it), FDIC insurance means depositors will be protected. One cannot say the same WRT insurance guaranty funds.

 

[Gearhead Jim]

Of course you should look at any bank carefully before making a deposit, but unless we are talking about a collapse of the banking system (and with it western society as we know it), FDIC insurance means depositors will be protected. One cannot say the same WRT insurance guaranty funds.

There is a similar system for federally chartered credit unions, whose exact name escapes me at the moment. Do you have any comments on the safety of the FCU protection system?

 

[brewer12345]

There is a similar system for federally chartered credit unions, whose exact name escapes me at the moment. Do you have any comments on the safety of the FCU protection system?

Its fine. In general, credit unions are at least as safe as banks because they tend to be more conservatively run.

 

[Gearhead Jim]

I failed to check my facts before asking the question. The credit union where I have some money is Alliant Credit Union, which used to be the United Airlines Employees Credit union. They changed their name a couple of years ago because NOBODY wants to be associated with United Airlines these days. So far, the credit union's finances have been a whole lot better than the airline's.

They state that
"Alliant Credit Union is an Illinois chartered credit union, and as such, is under the supervision of the Department of Financial and Professional Regulation (DFPR) of the State of Illinois. Alliant's share savings accounts are insured by the National Credit Union Administration (NCUA), an independent agency of the federal government which administers the National Credit Union Share Insurance fund (NCUSIF). The NCUSIF is the strongest of the federal insurance funds.
..."

That gives me a headache, can anyone explain what it all means? And, would a CD or IRA CD be coverd by the insurance? They mention "share savings accounts", nothing else. Maybe it's all the same, maybe not.

 

[2B]

I think one could buy the individual stocks of large insurers and get lost on Gilligan's Island for 20 years and still make money........

Now, Mary Anne could probably sell me an annuity.

 

[2B]

That gives me a headache, can anyone explain what it all means? And, would a CD or IRA CD be coverd by the insurance? They mention "share savings accounts", nothing else. Maybe it's all the same, maybe not.

Yes, it would be covered by the insurance limits of the account. They are backed by the US govt but not as "secure" as treasury bonds/notes. Any account or CD would be covered unless they specifically identified it as a non-insured money market or brokerage account. They might have brokerage services available. If they do, don't use it.

 

[2B]

Seems like eveyone forgets the bail-out of the S&L industry a while ago............what a fiasco that was.................

The depositors were bailed out but hundreds of S&Ls shut their doors forever. Some were reconstitued with all the prior equity blown away to nothing.

The failed but resurrected S&Ls were stripped of their known bad debts and sold for next to nothing to investors. The "smart money" said they were bad investments and that they'd go broke again. I know one person that put a few hundred thousand into one in Oklahoma that got bought out for several million in profit to him just a few years later.