Fixed Annuities
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In light of the recent AIG hubbub, our firm has reason to get back into the fixed annuity business (we have clients who want out of Aig Retirement, but want to stay with fixed annuities).
Seeing as we have not done much independent business in the fixed annuity world, I hoped you all could provide some feedback as to which companies you’ve had good experiences with, and what products you’re using.
Some features I’m looking for are:
1. Short cdsc: 3 to 5 years
2. 10% annual free out
3. RMD friendly
4. Fed/State tax with-holding friendly (some companies won’t do state for some reason)
5. Electronic forms!
I’ve been using ING, Hartford, and New York Life this last week, but none of them have all the features I’m looking for. Thanks!
How are NYL's rates these days?In light of the recent AIG hubbub, our firm has reason to get back into the fixed annuity business (we have clients who want out of Aig Retirement, but want to stay with fixed annuities).
Seeing as we have not done much independent business in the fixed annuity world, I hoped you all could provide some feedback as to which companies you’ve had good experiences with, and what products you’re using.
Some features I’m looking for are:
1. Short cdsc: 3 to 5 years
2. 10% annual free out
3. RMD friendly
4. Fed/State tax with-holding friendly (some companies won’t do state for some reason)
5. Electronic forms!
I’ve been using ING, Hartford, and New York Life this last week, but none of them have all the features I’m looking for. Thanks!
NYL’s 5 year is currently at 4.6. Not the greatest around, but they are the highest rated by Moody’s and Fitch that I’ve seen, which is something a few of my clients care more about recently.
Mass Mutual’s fixed looks pretty bad. Their 5 year has an “enhanced” rate of 4.75. When I asked what “enhanced” meant, they said it’s only for year 1. Year 2 drops to 3.75, and after that it’s the pool rate, not to drop below 2%.
Just if anyone’s interested, Metlife released their Fixed annuity numbers the other day
5 year: 5.80%
3 year: 4.60%
I wouldn’t believe it till I called and confirmed today.
Here’s a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.
It depends. The fixed annuity is tax-deferred. Other than that, I would ask the same question. Something else to consider: I believe fixed annuities are held in the insurance company's general account, which is accessible to creditors.Here’s a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.
It depends. The fixed annuity is tax-deferred. Other than that, I would ask the same question. Something else to consider: I believe fixed annuities are held in the insurance company's general account, which is accessible to creditors. [/quote] I too, have thought about this myself. After doing the math, years of tax deferrals with a high income tax bracket would make the client a lot more money. However, you are correct snaggle, the fixed annuity is held in the general account. I think most insurance companies pay 2-3% commission on their fixed annuities, which isn't much considering you put them into a 5 year FA...[quote=Gordon Gekko]Here’s a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.
With respect to MassMutual, their “enhanced rate” is 6.25% first year, 4.75% second year (base), from thereafter it ranges from 3.5-4.5% depending on when it was purchased.
It depends. The fixed annuity is tax-deferred. Other than that, I would ask the same question. Something else to consider: I believe fixed annuities are held in the insurance company's general account, which is accessible to creditors. [/quote] All the more reason to choose a mutual company with good ratings. A fixed annuity has some advantages that a CD would not (assuming it is taxable money): Tax-deferral Creditor-protected for the client Avoids probate at death[quote=Gordon Gekko]Here’s a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.
principal guarantee...even if you surrender early. unlike a cd if you surrender early that may cause a reduction in principal.Here’s a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.
You can add on to a FA which is not always the case (if ever) with a CD. Granted you add on at whatever the current rate is, its still an added advantage.
Include that with the tax deffered growth, ability to add bene's, and withdraw up to 15% each year w/o penalty - well its a no brainer.[quote=gvf] Just if anyone’s interested, Metlife released their Fixed annuity numbers the other day
5 year: 5.80%
3 year: 4.60%
I wouldn’t believe it till I called and confirmed today. [/quote]
That was a nice rate, locked in a couple of those.
Anyone willing to take a change with AIG fixed(actually American General) but same idea.
5 year 5.00% fixed
Wow, has this dynamic changed since GG wrote this back in mid-October...I compared a 5-yr CD at 3.5% to a 6-yr JNL fixed that starts at 4.85% and has a 3% floor and it's a no-brainer when tax-deferral is considered. Better yet, the lady I set this up for today made a charity the primary beneficiary, so any interest she doesn't take is tax-free to the charity at death. For the first time in awhile, traditional fixed annuities look very attractive when compared to just about any other fixed income option available. Sure, you can get more coupon, but you're probably taking a fair amount more risk to get there. I was doing a fair number of munis but within the last two weeks, those rates have come down quite a bit, especially on the short end (less than 7 years). My question for the rest of you is, aside from JNL which I know well, what are the best rates you are seeing out there that (1) are not with troubled insurers, (2) pay me reasonably and (3) are 7 years or less to surrender?Here’s a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.
Wow, has this dynamic changed since GG wrote this back in mid-October...I compared a 5-yr CD at 3.5% to a 6-yr JNL fixed that starts at 4.85% and has a 3% floor and it's a no-brainer when tax-deferral is considered. Better yet, the lady I set this up for today made a charity the primary beneficiary, so any interest she doesn't take is tax-free to the charity at death. For the first time in awhile, traditional fixed annuities look very attractive when compared to just about any other fixed income option available. Sure, you can get more coupon, but you're probably taking a fair amount more risk to get there. I was doing a fair number of munis but within the last two weeks, those rates have come down quite a bit, especially on the short end (less than 7 years). My question for the rest of you is, aside from JNL which I know well, what are the best rates you are seeing out there that (1) are not with troubled insurers, (2) pay me reasonably and (3) are 7 years or less to surrender?[/quote] Look at the picks of the week from research. We like the fact that the rates are fixed, no surprises to client.[quote=Gordon Gekko]Here’s a dumb question - why not buy a CD and forget all the red tape? You can get 5% ish on an FDIC insured CD. You get paid next to nothing is already taken as a response.
Thanks, Nog for making me feel stupid…
...and I see Allianz Dominator is on the list...good stuff...