[Aces4]

Originally Posted by golden

If Gigi3000 is miffed that he can't buy an annuity directly from an insurance company, try buying a new Chevy as it rolls off an assembly line. Autos and annuities are products and products generally have a channel of distribution. I don't know what Gigi3000 did for a living, but I assume it required some level of expertise for which he got paid. Folks who have expertise in products are called salesmen and they get paid via something dubbed a commission. Others who have expertise (lawyers, doctors) get paid by something called a fee. CFPs can get paid by either or both.

For those who have trashed annuities on this site, I would mention that annuities offer features that are important to seniors---death benefits, avoidance of probate, and the option to pay tax on gains when they choose.

Commissions are paid to the seller of an annuity. A purchaser should ask about the total costs of an annuity, which include commissions and expenses. It is not an unfair question to ask the seller how much he is being paid for the sale. A purchaser would be prudent to consider investing in an annuity with lower total costs.

Apparently, Gigi3000 has already picked out his products of preference. Those products he selected lock in an interest rate at current levels. Forty years ago interest rates were 16% and it generally takes 40 years for bond yields to completely cycle. So, Gigi3000 should understand that he is locking in a fixed interest rate at the bottom of the cycle.

Finally, it appears that Gigi3000 has a problem either proofreading or spelling the words annuity and the word already. Thus, it would probably behoove Gigi3000 not to buy anything directly and to seek as much advice as he can from either a commissioned or fee-based professional. But, if Gigi3000 is intent on not paying money for someone's expertise, I would be willing to perform his appendectomy in my garage.

I have questions. Are annuities FDIC insured? If people stop purchasing them would the annuity company collapse from underfunding and would the current annuity holders take a bath? How does that work? (I know I could perform an internet search but it sounds as though we have many experts here regarding annuities and it appears annuity companies themselves can be very vague.)

[Mrprez]

Originally Posted by sail33or

To all the folks that say what return they are getting:

They are paying you these returns with your "OWN" money you just gave them.

So theoretically I can give you any return you like up to the point "YOUR" money and its real return runs out.

Of course there are zillions of types and all complicated but it is no longer your money when you "BUY" an annuity.

BUY EXXON (pays huge dividend, always has) and quit worrying. Let them talk electric all they want, in your lifetime it takes more oil to manufacture, deliver and charge electric cars. As long as Jet Airplanes fly, Exxon will be paying dividends.

Really? I started an annuity with an inherited annuity from my mother when she passed away. It was for $113,000. On the advice of my broker, we rolled that over into an LFG variable annuity with income for life as well as a life insurance policy to pay out to my wife in the event of my death.

I have received ~48 months of payments to the total of ~$26,000. So, by your reasoning, I should have a balance of $87,000, right? Please explain to me why my balance is now $111,000? Also, YTD return is 8.5%. Since the date of inception, the rate of return is around 5.5%. The minimum percentage is 4%.

Now, I understand that they are paying me with the return on the investments, but I don’t care if they make money as well. If they didn’t, there would be no annuities.

[golden]

Dear Aces4:

Annuities are NOT FDIC insured. They are insured by the state in which the insurance company is domiciled. In the few instances that I am aware of, the assets of the insurance company that folded were purchased by another insurance company so there was no losses to policyholders. This has allowed the insurance company to say that no one has lost money in an annuity. I would caution, however, that if we have a total collapse in our economy, there is not enough money in any state's insurance fund to cover the losses of multiple insurance companies. Ditto, FDIC.

Generally, there are two types of annuities--fixed in variable. With variable, which are basically tax-deferred mutual funds, you direct where your assets are invested and it is segregated from the insurance company's assets. In fixed annuities, the insurance takes your money and co-mingles it with everyone else's $ and makes the investments for you. If those investments go sour and the company folds, see the first paragraph.

Underfunding is not an issue, in my opinion.

[golden]

Originally Posted by Aces4

I have questions. Are annuities FDIC insured? If people stop purchasing them would the annuity company collapse from underfunding and would the current annuity holders take a bath? How does that work? (I know I could perform an internet search but it sounds as though we have many experts here regarding annuities and it appears annuity companies themselves can be very vague.)

Dear Aces4-

When you give money to an insurance company, whether it be for a fixed annuity, immediate annuity, or to simply pay an insurance premium, that insurance company does not keep your money in an FDIC insured checking account, but invests it. Their three main investments are stocks, bonds, and real estate. So, if you are concerned about the financial health of the insurance industry, since each of these assets have performed above historical norms for several years, presently I would not be too concerned.

Currently, interest rates that insurance companies are offering are in the low- to- mid single digits. The three asset classes of stocks, bonds, and real estate have done much, much better than that for several years. The difference between what they promised to pay you and what they earned on your money can be substantial and is their profit.

You can invest in these asset classes directly, but you may lose money. So, simply put, an annuity investor is sacrificing decent gains for insurance company guarantees. Some call that peace of mind.

[Aces4]

Originally Posted by golden

Dear Aces4:

Annuities are NOT FDIC insured. They are insured by the state in which the insurance company is domiciled. In the few instances that I am aware of, the assets of the insurance company that folded were purchased by another insurance company so there was no losses to policyholders. This has allowed the insurance company to say that no one has lost money in an annuity. I would caution, however, that if we have a total collapse in our economy, there is not enough money in any state's insurance fund to cover the losses of multiple insurance companies. Ditto, FDIC.

Generally, there are two types of annuities--fixed in variable. With variable, which are basically tax-deferred mutual funds, you direct where your assets are invested and it is segregated from the insurance company's assets. In fixed annuities, the insurance takes your money and co-mingles it with everyone else's $ and makes the investments for you. If those investments go sour and the company folds, see the first paragraph.

Underfunding is not an issue, in my opinion.

Thank you for that succinct explanation. The difference between the federal government and the state insuring money is that one can print the money to cover the losses. History has proven that to be true.

[Villageswimmer]

Originally Posted by Packer Fan

I got it before. I would never invest without the contract. Lincoln investments was the company. It’s a boilerplate contract. I would run from anyone who would not provide it. There is a trust issue there.

Google Lincoln Financial Investment reviews.

[manaboutown]

I wonder if the Edward Jones brokers who own the house that sold for $1.041M in 2006 on Russell Loop and are having it torn down to build a two story mansion on the lake view site sell many annuities to their customers?

[golden]

Originally Posted by Aces4

Thank you for that succinct explanation. The difference between the federal government and the state insuring money is that one can print the money to cover the losses. History has proven that to be true.

Dear Aces4-

You are correct that the Feds can print money and the states cannot.

As I mentioned, in the event of a total financial collapse. since insurance companies invest in stocks, bonds, and real estate, none of those assets are likely to go to zero and those holding annuities will receive some money back.

In the case of FDIC with multiple banks going under, the Feds can "bail out" depositors by printing worthless currency. It has been suggested, however, that the more likely scenario is a "buy in" whereby depositors are given stock in the bank that went under.

[Aces4]

Originally Posted by golden

Dear Aces4-

You are correct that the Feds can print money and the states cannot.

As I mentioned, in the event of a total financial collapse. since insurance companies invest in stocks, bonds, and real estate, none of those assets are likely to go to zero and those holding annuities will receive some money back.

In the case of FDIC with multiple banks going under, the Feds can "bail out" depositors by printing worthless currency. It has been suggested, however, that the more likely scenario is a "buy in" whereby depositors are given stock in the bank that went under.

True, the Feds could do that but it hasn’t happened in the recent past financial debacles.

[kathyspear]

Originally Posted by manaboutown

I wonder if the Edward Jones brokers who own the house that sold for $1.041M in 2006 on Russell Loop and are having it torn down to build a two story mansion on the lake view site sell many annuities to their customers?

FWIW: The headline to the article on that rag news site is misleading if not a downright lie. She did not demolish the home. She removed the existing garage and roof so a second floor could be added.

kathy

[Ken D.]

Originally Posted by Marlene36

We HIGHLY RECOMMEND - Liz at TB Financial in Fruitland Park. EXCELLENT SERVICE AND TOP EXPERT in ALL ANNUITY PRODUCTS. We purchased our single premium annuities with her several years ago and are extremely pleased.
Call them for an appointment: (352) 350-1161 She also runs regular ANNUITY 101 SEMINARS on general info on the variety of annuities out there for you to pick from.

So, what did it cost you, no beating around the bush.

[Gigi3000]

Originally Posted by retiredguy123

Annuity salespeople will promise rates and will make all kinds of claims about what the annuity will do for you. But, ask them to provide a copy of the entire annuity contract so you can read the actual contract that you will sign. I have tried many times to get a copy of an annuity contract and they have always refused to provide it and have sometimes gotten nasty about it.

Also, sometimes the promised annuity rate of 6 or 7 percent does not mean that is the rate of return on your investment. It often means that they will pay you that rate, but some of the money will come from the principal that you invested. Of course, if they won't let you read the contract, you don't know how it is calculated.

The bank agent said I couldn't have a copy of the contract before signing but I do have a right of rescission of at least 10 days after signing. However still taking it lump sum.

[Stu from NYC]

Originally Posted by Gigi3000

The bank agent said I couldn't have a copy of the contract before signing but I do have a right of rescission of at least 10 days after signing. However still taking it lump sum.

Why in the world would anyone in their right mind go ahead with a contract they are not allowed to read before execution?

[retiredguy123]

Originally Posted by Stu from NYC

Why in the world would anyone in their right mind go ahead with a contract they are not allowed to read before execution?

I totally agree.