PAC Life Voyager Variable Annuity

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anonymous's picture
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Joined: 2005-09-29

Is anyone familiar with this VA?  Also, what about their Core Income advantage and flexible income plus riders.  I'm looking for any information positive and/or negative.

BerkshireBull's picture
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Joined: 2009-06-10

Yes.  We sell a lot of Pac Life.  What are you trying to accomplish with it?

anonymous's picture
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Joined: 2005-09-29

Specifically, I want to know any real world situation in which the Pac Life Voyager variable annuity would be better than a variable annuity from a strong company with a 10 year GMAB.  The client is in his 60's and won't need to touch the money for at least 10 years.
 
The competing company charges 1.0 M&E, .15 admin expense, and .45% for the GMAB
PAC Life Voyager is 1.0 M&E, .15 admin expense, and .40% for the Core Income Advantage.  The competing company is financially stronger.
 
I'm struggling to find any time that the PAC Life product can realistically give the client more money.  I'm assuming that the sub accounts should perform the same.

ChrisVarick's picture
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Joined: 2008-09-04

anonymous wrote:Specifically, I want to know any real world situation in which the Pac Life Voyager variable annuity would be better than a variable annuity from a strong company with a 10 year GMAB.  The client is in his 60's and won't need to touch the money for at least 10 years.
 
The competing company charges 1.0 M&E, .15 admin expense, and .45% for the GMAB
PAC Life Voyager is 1.0 M&E, .15 admin expense, and .40% for the Core Income Advantage.  The competing company is financially stronger.
 
I'm struggling to find any time that the PAC Life product can realistically give the client more money.  I'm assuming that the sub accounts should perform the same.

 
Which product is the competing company? Are both the ME/Admin fees based off of each year's accumulation value or the original principal premium?

anonymous's picture
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Joined: 2005-09-29

Does any company have M&E and Admin fees just based upon original principal value?

ChrisVarick's picture
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Joined: 2008-09-04

Yes, check your PM.

anonymous's picture
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Joined: 2005-09-29

That would mean that it would become a very expensive contract if the market goes down. 
Ex. M&E 1.5% and original contract value = $100,000.  M&E = $1,500.  If the market drops to $50,000, the M&E is still $1,500 which equals 3%. 

ChrisVarick's picture
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Joined: 2008-09-04

True, it could be dangerous, but the fee structure would work exactly the same way as GMAB riders and especially GMIB riders. That 50% drop would of held true if clients chose this VA option in 2007, but I think the M&E/Admin fees based off the original principle is pretty appealing today.

anonymous's picture
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Joined: 2005-09-29

I agree with you about the GMIB riders.  That's one of my problems with them.   The increased cost means that if the investments go down while money is being removed, it becomes pretty likely that all that the person will get is what is guaranteed.  However, at least in the case of that happening with the rider, it's only the case of the rider getting more expensive.  With a contract like you are describing, the entire contract is getting more expensive. 
By the way, it makes absolutely no sense for M&E expenses to go up as the contract increases in value.  Ex. Jack buys a VA for $100,000 and M&E of 1% ($1000).  The contract increases in value.  It is now worth $500,000.  Jack is paying $5,000 for M&E, but the insurance company now has almost no mortality risk, but are charging 5x more.
 
I'm not arguing with you.  That sort of M&E structure is great if the market goes up.  It's just that it's another element of risk. 

ChrisVarick's picture
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Joined: 2008-09-04

I agree. M&E is just another way for the insurance company to make more money off our clients and to hedge themselves against the risk of the market not performing the way the actuaries anticipate it would.
 
Oh by the way, I read in another one of your posts that insurance carriers will NEVER EVER post the "guaranteed COI" of a VUL product. Are you telling me that when I look in a VUL policy and I turn to the back where it has a "maximum guaranteed charges" table, that it is still not guaranteed?

anonymous's picture
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Joined: 2005-09-29

ChrisVarick wrote:I agree. M&E is just another way for the insurance company to make more money off our clients and to hedge themselves against the risk of the market not performing the way the actuaries anticipate it would.
 
Oh by the way, I read in another one of your posts that insurance carriers will NEVER EVER post the "guaranteed COI" of a VUL product. Are you telling me that when I look in a VUL policy and I turn to the back where it has a "maximum guaranteed charges" table, that it is still not guaranteed?

 
That's not what I'm saying.  I'm saying that they hide the information in selling situations.  When one is looking to buy a VUL product, there are typically two pieces of sales material used.  One is the illustration.  The other is the prospectus.  Neither one has the cost of insurance.  Additionally, the insurance company probably doesn't have a single compliance approved piece that has the cost of insurance at every age.   The client doesn't see the cost of insurance until after a policy is approved and they only see this if they dig through their actual contract. 
 
Does it make any sense for someone to buy a product like this without understand the costs and their impact?  What's worse is that I'm pretty convinced that VUL gets sold primarily because agents don't understand the costs and their impact. 

ChrisVarick's picture
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Joined: 2008-09-04

anonymous wrote:ChrisVarick wrote:I agree. M&E is just another way for the insurance company to make more money off our clients and to hedge themselves against the risk of the market not performing the way the actuaries anticipate it would.
 
Oh by the way, I read in another one of your posts that insurance carriers will NEVER EVER post the "guaranteed COI" of a VUL product. Are you telling me that when I look in a VUL policy and I turn to the back where it has a "maximum guaranteed charges" table, that it is still not guaranteed?

 
That's not what I'm saying.  I'm saying that they hide the information in selling situations.  When one is looking to buy a VUL product, there are typically two pieces of sales material used.  One is the illustration.  The other is the prospectus.  Neither one has the cost of insurance.  Additionally, the insurance company probably doesn't have a single compliance approved piece that has the cost of insurance at every age.   The client doesn't see the cost of insurance until after a policy is approved and they only see this if they dig through their actual contract. 
 
Does it make any sense for someone to buy a product like this without understand the costs and their impact?  What's worse is that I'm pretty convinced that VUL gets sold primarily because agents don't understand the costs and their impact. 

 
I am also not a big fan of VULs either. Have you looked into executive benefits VULs? The ones where it seems that you can get all your premiums back in year one. They seem very appealing on paper, but I just don't know what's underneath all the nuts and bolts. For the record, my previous post was just trying to understand your statement about COI being nowhere to be found. So when I look at the policy and there is a "guaranteed COI" table there, that is it? I'm not expecting any other surprises right? In addition, our illustration software shows a "guaranteed" column of all the contract charges. Am I not understanding your statement or is everyone's illustration different?

anonymous's picture
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Joined: 2005-09-29

When you look at a policy, the guaranteed cost is accurate.  However, that isn't even very helpful because the actual cost is probably less.  
 
The guaranteed column of an illustration also isn't very helpful.  The problem with it is that it is probably showing what happens when the client keeps paying his $5,000/year premium and the investments average 0%.   What happens instead when the market has a serious drop and the client goes a couple of years without paying out of pocket premiums?
 
The only way to really understand is to understand the cost of insurance. 
 
In your illustration software, you should (hopefully) have a page that is for client use only that has the cost of insurance. 
 
VUL gets you one way or another.  It could be with a high sales load that never goes away.  It could be with M&E charges (makes no sense for M&E to exist).  It may be with the insurance charges.
 
When a client has a VUL and there is $200,000 of cash and a death benefit of $1,000,000, you must recognize (all made up numbers) that they are getting hit with $2,000 of M&E charges, being charged $1,200 for insurance, and $500 of their $10,000 premium is disappearing as a sales load. 
 
The product should not be sold or purchased without understanding the costs.  Instead, the product is sold on the fantasy of the illustration which should say, "This is what you will have if the market increases 8% every single year for eternity and you never change your premium payment and you never try to take a penny out of the policy.  Otherwise, all bets are off."

Pokerguy's picture
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Joined: 2010-01-23

Pacific Life has a good annuity. You can add / remove riders as you need. Cost wise they are on the less expensive side.(Vs. Metlife, Hartford, JH) I would also encorage you to look at Prudentials annuity series. The "Highest Daily Value" 6% withdrawl rider is something to consider.
 
Just remember: "FOR EVERY GIVE ME THERE IS A GOTCHA"

anonymous's picture
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Joined: 2005-09-29

"You can add / remove riders as you need. "
 
Not according to the prospectus.
 

Just remember: "FOR EVERY GIVE ME THERE IS A GOTCHA"
 
Ok, what is the gotcha with a GMAB rider?

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