Your source for annuity information. Get the story on fixed annuities, index annuities, and variable annuities. Insightful, informative, and often controversial. Why are so many people misled by annuities? How do you evaluate annuities to see whether they are right for you? You can not do this unless you get the right annuity information. This is an unbiased look at the world of these often misunderstood vehicles...the whole truth and nothing but the truth.
So years ago, I worked at Merrill Lynch. It was incredible that I started on the day the Nasdaq was at it's all time high. So as you can imagine, it was a tough time to start. In order to make things a little easier, I wrote lyrics to an already well know song and renamed it 'Where oh Where Can My Money Be.'
I hope you enjoy it. Lyrics appear below. Feel free to share with your friends by clicking the share button on the player!!!
The sub-prime problems and credit problems aren't stopping and in fact they are hitting the insurance companies. AIG, the most recent victim, is scrambling to keep it's clients put in their annuities but it's a hard sell. I myself have received an exorbinant amount of calls from people who own AIG annuities asking if they are safe.
The answer is, AIG may not be safe as a company from a cash perspective. However, you don't need to panic just yet. There are state guaranty associations and safety nets set up for these type of situations. They are limited into how much they protect, however it is good to know that there is something available to consumers.
What to Do If You Own an AIG Annuity
Right now, there isn't much you can do. We have personally been trying to call them and they are virtually impossible to get a hold of right now. The best advice I can give you is not to panic. There are safety nets set up for these type of situations. AIG's Peter Tulupman, a company spokesman, claimed earlier in an emailed statement "Insurance policies written by AIG companies are direct obligations of our regulated insurance companies around the world. These companies are well capitalized and meet or exceed local regulatory capital requirements." To the extent that is true, only time will tell.
Again, state guaranty funds are there to help. You can continue to contact AIG for an answer but it may be a little bit before you can get a hold of them. In the meantime, if you would like some peace of mind, my best advice is to contact your state guaranty association.
Here is a way to do that. This link, http://www.milifega.org/links.cfm is the link for the State of Michigan guaranty association. Even though this is the Michigan site, if you click the down arrow, you will probably find your state guaranty association. Most of them are listed here, although, unfortunately, not all of them.
At these sites, there is so much useful information and people you may contact. Furthermore, there is information on ratings agencies. My personal favorite part about this site is the FAQ section on the left hand side. It is full of useful information.
If you do not find your state, don’t worry. Try calling any state’s guaranty association and they can likely give you the number to another state’s association.
Medicaid annuities aren't without their risks. If you are reading this, there is a good chance that you are trying to qualify for Medicaid by using an annuity. I am here to tell you that there are major risks involved in trying to do this.
The first risk is to be aware that UNLESS you are being advised by a true expert in this area, you may very well be on your way to big headaches and problems. The reason is simple. The Medicaid laws are constantly changing. This means that your 'planners' methods had better be up to date or you will have issues.
Next, it is important to consider that you may be dwelling in an area that is under high amounts of scrutiny. This means that the strategy better be well thought out and perfectly executed. If you are not using a professional that is well versed, again, you will be looking at a future of frustration and expenses. If this is not done right the first time, chances are, it cannot be redone and undoing it will cost a lot of time and money.
There are several other risk factors to using annuities to qualify for Medicaid purposes. What we have done is put together a contact form. If you need help in this area, or even just a second opinion, please visit:
AnnuityMD.com recently announced it's release of the free annuity report titled 'Annuities: The Warning Report.'
This detailed report outlines several warnings that consumers need to be aware of when buying annuities. It is a no fluff report that really does a great job in opening consumers eyes so that they can be aware of the dangerous aspects of annuities and the mistakes people are not aware of when buying annuities.
Best of all, this is a free no obligation report. The free annuity report does offer an opportunity for readers to upgrade to a paid report, however, there is no obligation. And the free report is VERY detailed and very straight forward.
This report is recommended for anyone who is thinking about buying annuities or who already owns annuities. It will truly be a great asset to help those people either avoid mistakes or to confirm suspicions that they may have already had.
This report can be obtained by clicking on free annuity report or by going to http://www.AnnuityMD.com/freeannuityreport.html.
AnnuityMD.com today announced the release of its new report 'Annuities: The Warning Report.' Unlike their paid report, this is a free report that can be obtained by going clicking Free Annuity Report.
This report details warning signs investors need tob e aware of when purchasing annuities. It offers insights to investors who may be suspicious and need to watch out for things that they may not particularly be aware of.
Again, this is a free report and is being offered to the public so they can avoid the mistakes investors make when purchasing annuities.
Annuities, as you may or may not know are almost never bought directly as a result of a consumer waking up and thinking they want an annuity. They are typically sold to people by annuity or insurance agents.
Just yesterday I received a phone call from a gentleman who mentioned that he never thought about an annuity but was thinking about an Aviva Annuity because a high pressure salesman came by and convinced him it was a good idea.
Unfortunately, this is how many annuities are sold. They are forced upon a consumer by a slick or high pressure salesperson and the consumer, only a short time late to leave the consumer wondering what the heck they purchased.
It amazes me that most consumers, YES MOST OF THEM, have no idea what their annuity does or how it works. It is only evident that they have no clue what they purchased. If this is how you feel then you are not in the minority. Unfortunately, there is never full disclosure to a consumer when they purchase their annuity.
So what's the point? If you own something that you don't know about, it's time to do a little homework and figure it out. There are so many features (good and bad) about annuities that if you wait until you need the money to figure it out, how yours works you may be disappointed. And if you are thinking about buying an annuity, don't let a high pressure salesperson talk you into it unless it is exactly what you need.
So, Mr. X who called me yesterday, I told you I would write a little article about you so this one's for you. Yes, you told me you weren't in the market for an annuity so why would you let a 'high pressure salesman' talk you into it? If you like what he had to say then tell him you'll get back to him and in the neamtime do your homework. If you didn't then tell him to go away...yes it's that simple.
Well, I hope this helps. But in the end, just stay away from the situation that would have you waking up one day thinking, 'what the heck did I buy'?
Now that you know more about how to avoid being talked into buying annuities, learn more about how to do your homework so you can buy the annuity that's right for you if that's what you are looking for.
Tony Bahu is the CEO of AnnuityMD.com and the author of 'Annuities: The Shocking Truths Revealed' which is a book that reveals the shocking secrets about annuities that agents and insurance companies DON'T want you to know. Please visit http://www.annuitymd.com/ for more information.
AnnuityMD.com is proud to announce it's Annuity Help Center. This is a place for consumers to go to get unbiased information on variable, fixed, immediate, and fixed index annuities.
The information superhighway is full of biased information particularly when it comes to annuities. AnnuityMD.com is committed to bringing consumers a very unbiased and true look at what annuities have to offer---the good, bad, and the ugly.
Please visit the Annuity Help Center by clicking on Annuity Help.
So if it is annuity help you are looking for then I urge you to read the following:
Annuity information is only as good as the source. Therefore, you must know what the source of information is about annuities before taking the recommendation. For example, of course if you listen to annuity salespeople all day, you're going to believe that annuities are the solution to all of your financial problems. Ask a shoe fixer if your shoe needs fixing and the answer is inevitably going to be yes.
On the other hand, if you listen to the news, you are going to get the BAD, the BAD, and the ugly about whatever it is. Dateline NBC, for example, exposed (and rightfully so) many issues dealing with annuities. However, they didn't deal with all the issues nor did they suggest proper solutions.
It is hard to find good annuity help. There is no doubt about that. However, if you look at the source, you can often determine whether it is worth listening to that source.
With all that said, let me explain why 'Annuities: The Shocking Truths Revealed' is a trusted source of information on annuities. First and foremost, we don't sell annuities. So there is no vested interest to get you to want one. And we don't sell other investments (at the time I am writing this article) or offer investment alternatives. We are soley providing UNBIASED information on the GOOD, BAD, and UGLY about annuities. That is it. YES, we do charge for our product, however, barely enough to make any profit whatsoever. It cost us a lot of money to run our site.
If you want the absolute best unbiased information on annuities, it is best to check out AnnuityMD.com and get the annuity help you are looking for. I promise you it will not be a waste of your time or your money. And by the way, if you call me, I actually answer my phone and would welcome any kind of conversation regarding annuities.
And one more thing---'The Shocking Truths' is not a 5 page stupid enticement for annuities like most other annuity 'books' or 'documents' are. It is a fully detailed and extremely deep knowledge base on what you need to know to make a good purchasing decision. Thorough and PRACTICAL information.
Unsuitable annuity? Annuity not as promised? Fees to get out too high? Not enough liquidity?
The list goes on and on.
There is finally a way to escape from your unsuitable annuity if you qualify:
Annuities are very often misappropriately sold. Unfortunately, the ones who end up paying for it are the unsuspecting consumers. You may be one of them. There are many disgruntled annuity owners and many of them are not to blame. Many of them were steered in the wrong direction by their insurance agent or financial advisor.
Now, if you go to the annuity settlement form at AnnuityMD.com, you can see if you are having the issues that may qualify you for a return of your money including damages.
With that said, you can also see our Annuity Report that has helped hundreds of consumers avoid the mistakes that are made when purchasing annuities. This is a 100 page resource guide that is second to none in the world on annuity information.
Hopefully this information helps and it's information that you act on.
Tony Bahu CEO AnnuityMD.com
AnnuityMD.com has been committed to providing consumers with the absolute best information on annuities. Why can we do that? Because we do not sell annuities. Most people who provide annuity information are annuity marketing companies. Their goal is to get you to buy an annuity.
The following applies to equity index annuities, fixed annuties, and variable annuities and in some cases immediate annuities.
Let's just cut to the chase here. There have been many e-mails coming in the last few days regarding the new information that has been posted on AnnuityMD.com so I would like to clarify.
Many annuities that are sold are sold inappropriately. There are many types of unsuitable sales that happen and many reasons that cause these sales to be inappropriate. The bottom line is if you feel you were deceived, you can be helped.
There is now a program at AnnuityMD.com that allows you to find out if you were deceived. If you feel like you were sold an unsuitable annuity, then it probably makes sense to go to AnnuityMD.com and see if there is recourse you can take.
Therefore, you may be entitled to receive your money back. Particularly if you were maliciously sold a bad annuity. And there is expert help to assist you in determining if that is the case.
Has an annuity salesperson of “financial advisor/planner” scared you, mom and dad, or grandpa or grandma into thinking they will outlive their money, becoming destitute in their golden years? What a clever fear sale indeed. Yes, it’s true that people are living much longer and they need to plan better to stretch their money over more expected years.
So bingo! Here’s the solution offered by the “trusted advisor”: a guaranteed, lifetime income. That’s right, in return for your giving your money to an insurance company, you will receive a predictable income for as long as you and if you are married, your spouse live. But wait… There’s a few catches and some basic math that isn’t often explained by the annuity seller.
For starters, unless you select a period certain benefit, if you die the next day in a car accident (for example), you have made a large, non-deductible charitable gift to… That’s right, the insurance company. They keep all of your money with nothing payable to your family. Ok, let’s now assume you instead live to be 90. The rate of return on that annuity may only be in the 2-3% range (and that’s before taxes). Granted, if you live longer, the rate of return increases. Annuity buyers are fooled easily with these income annuities for one simple reason. They are shown that if you put $100,000 in the annuity, you get say $7,000/year back. That’s a 7% return right? In a word, nope! It’s your own money back (zero return) for the first 14 plus years then you start getting a return after then.
Also, during that first 14 years, you have to pay income tax on a portion of the payment (under section IRC §72). So effectively, it may take many years more to get into the positive and earn any return. Any wonder why insurance companies are so rich and agent’s can be paid so much for offering so little?
Written by Steven Roth of Wealth Management International
Equity Indexed Annuity salespeople most often tell you how great these products are. And just as fast the salesperson pulls out their annuity application, starts writing and before you know it, a pen has been thrust into your hand to seal the deal. Not so fast. There’s a lot about these products that isn’t being told to you. And what’s being kept from you is for a reason. First, annuities are sold by, well… salespeople.
I know what you’re probably thinking, my advisor is a professional, a licensed, experienced, yadda, yadda. Well, that may be true, but the product is the product, no matter who is pitching you. Understand that the reward (commission) is very high for these complex annuities. The slick brochure, or slick salesperson, advisor, insert your term of preference, is not giving you the whole story. How do I know this? 90% of the transactions I have reviewed for clients have in no way matched what the clients thought they had bought. Then there are dozens of negative annuity articles written by excellent sources such as The Wall Street Journal, Forbes Magazine, Kiplinger, Smart Money, etc. And guess what these articles have in common? They slam annuity sales tactics and warn investors. Lastly, there are several multi-million dollar class action lawsuits against annuity sellers for, well… fraud.
After extensive studies, both those conducted by outside independent agencies, as well as my personal and very intimate reviews of dozens of annuities (including the biggest and most respected insurance companies) arrives at one truth. That truth is that many Equity indexed Annuities will give you horribly low returns, between 40% - 60% of the market’s return, before being hit with ordinary income tax under the terrible LIFO and IRD rules. Yep, no lower capital gains or tax on gains forgiveness for your family like you would get on other alternatives.
There’s good news though. If you are already in one of these annuities, with the right help, you may be able to get your money and losses back. And in case you were wondering if the salesperson will help you here, you might also want to ask the wolf to baby sit the hens while you go out to dinner.
Written by Steven Roth of Wealth Management International
Thinking that you own an unsuitable annuity and knowing for a fact you own one are two totally separate issues. Let me explain what I mean.
Annuities have advantages and disadvantages. These should be explained to you up front prior to purchase but mostly they aren't. Why you ask. Because, it is not profitable for your insurance agent to tell you the bad things and quite honestly, in my opinion, they just don't. If you knew all the bad things about what you are potentially going to 'buy' or invest in, you might just change your mind.
Annuities: The Pretenses You Purchase Under
It's not whether or not you like everything about your annuity that makes it suitable or unsuitable. It's how it was presented to you and under what pretenses you purchased the annuity. If you were told your equity index annuity would earn 'better than stock market returns' THEN MOST LIKELY YOU WERE DEFRAUDED. You may have purchased this under false pretenses. However, if your annuity didn't quite earn as much as you wish it did because of poor market conditions, that is a totally different story.
Annuities are often misrepresented and sold under false pretenses. Ultimately, proving that, or discovering how it was done is the trick. There are ways to guess and ways to know definitively. It is often not easily discernible by an average consumer. Often times it takes professional help.
But where can you get this help from? I mean, another annuity agent is going to tell you it's bad so he can get you out and into another one. An attorney may or may not be able to help you depending on their experience (By the way, we will be doing a FULL article on why attorneys are often unsuccessful at recovering moneys for clients in an unsuitable annuity).
Getting Help With Your Unsuitable Annuity
There are ways to get help and we will look at those in CLOSE detail in the upcoming posts. In fact, I will identify several points as to how you may be clued into if what was sold to you was unsuitable. This will put you so far ahead of just shooting in the dark.
Annuities are grossly misrepresented but figuring out if you are a victim of annuity fraud is not easy. We are here to help. Feel free to continue reading or go to our site to get more information.
Annuity lawsuits are becoming a lot more prevalent these days. Fixed annuities, Equity Index Annuities, and Variable Annuities are all coming under scrutiny and justifiably so. There has been tremendous abuse connected to annuity sales to consumers.
However, many people are now finding that there is some recourse. But, the challenge is proving that there was some sort of negligence or willful misconduct. So that becomes the challenge. The reason is simple. You may be in your annuity and know that there is something wrong but not quite know how to pinpoint it. Or worse, you may absolutely know there is something wrong with your annuity but not know EXACTLY what is wrong. YOU ARE NOT ALONE.
Annuity Lawyers: What's the Problem?
Sometimes, unless you are well versed with annuities, it is hard to what the problem is with your annuity. You may have lack of performance due to high fees, a poor crediting method, a tax time-bomb, limited liquidity, or one or more other problems, but not quite know to what degree or to what extent. But that is quite critical when going to an attorney. Chances are the attorney, unless he specializes in annuity lawsuits and is very familiar with the inner workings of annuities is NOT going to know how to assess the TRUE DAMAGE that was done to you in your annuity. Let me repeat---most attorneys don't know how to assess the damage done to you unless they are annuity and financial experts and most of them aren't. So you have to hope that they have the right experts to assist them. Also, they have to also be on top of securities, insurance, and other complex laws. Otherwise, your case may not be successful and you have lost your shot, and unless the attorney is on contingency, paid a lot of money for nothing.
The Major Key to Recovery from Your Unsuitable Annuity
Knowing what your losses or damages are play a MAJOR role in recovery from your annuity company as well. Thesefactors are critical to get right if you are torecover what you are entitled to from the annuity company. If you cannot quantify your damages and explain why it shouldn’t have happened, then how can you have recourse? You must be able to prove that there are damages, the extent of the damage, and how the agent and or the annuity company are responsible. So unless you can do that or have a resource to do that (if you don't, we're going to show you how), your recovery efforts will probably be unsuccessful.
So the bottom line is, annuity lawsuits have been more prevalent but the ones that have gone favorably for the consumer have been the ones where the consumer goes in with a FULL assessment of the true damages properly documented and the right argument for why they should get out of penalties, recover lost interest, etc.. Stay tuned for the next several days and weeks to learn in full detail what to look for and how to take action. Alternatively, if you feel like you are in an unsuitable annuity and want to take action right away, feel free to visit AnnuityMD.com to begin the discovery process. IGNORANCE IS NOT BLISS
Annuities are not getting any easier to sell and that's a fact. There is not only increased competition in the market but regulators are trying hard to put more restrictions on how annuities are sold. Furthermore, there is more litigation these days directed towards both insurance companies and annuity agents.
With that said, I would like to mention something for annuity agents to think about. Do you know you are doing the right thing for your client? I mean, I am sure you THINK you are but do you really know? I have seen the lawsuits being filed and in many cases, the agents are misinformed.
Well, you don't have to be. At this very moment, there is a resource for consumers and agents to get their hands on....and guess what. At the moment I am writing this, it is being offered at no charge. It is a simple yet extremely powerful 98 page information filled document that sheds light on annuities in a way you've never seen before. This thing is loaded with great information on variable, fixed, and equity index annuities.
So no matter how good you think you are, I promise this is worth a look. So take a moment and go to AnnuityMD.com and get a copy of 'Annuities: The Shocking Truths Revealed'. You may be surprised at what you might learn!!!
'Annuities the Shocking Truths Revealed' being offered at NO CHARGE for a limited time only
Years ago, AnnuityMD.com was introduced to the public and it was a site designed to be an 'Objective Annuity Consumer Protection Firm.' In otherwords, AnnuityMD was designed to provide unbiased information to people who wanted to know about annuities. Not the textbook explanation. But what it is that agents aren't telling them---the inside secrets that are never revealed to them.
So that's where AnnuityMD.com came in. It was just that. The plain and simple unbiased truth about annuities. And since it's inception, this website, through it's report has literally helped hundreds of people avoid the costly mistakes that people make when buying annuities. And guess what? It just got better.
Now this free annuity reportcan be yours for FREE. No, there is no catch. You can read the entire story on the website. However, this offer may only be good for a limited time. It has sold, since it's inception for $50 to $100 and has sold quite well. There is a chance now to obtain a copy for no charge.
Therefore, if you are suspicious about your annuity, your annuities, your agent, or anything regarding your investment, you NEED to pick up your copy now. It is worth it. Oh, and by the way, if you think AnnuityMD is giving this away to try to make you an annuity lead, you're wrong. AnnuityMD and its affiliates DO NOT SELL ANNUITIES. Therefore, you can be rest assured that you are not going to be an 'annuity lead.'
I certainly hope you take advantage of this offer. If the offer is no longer available by the time you read this, please do not e-mail us requesting your free copy.
As you know, at AnnuityMD.com, it is our duty to inform the public of the traps concerning annuities. I recently came across a document that I thought was profoundly true and interesting. I am reposting it here. For additional help with that or anything else regarding annuities, please refer to http://www.annuitymd.com/.
A M u l t i - T r i l l i o n D o l l a r I n d u s t r y o f D e c e p t i o n
C R E A T E D J A N U A R Y 2 0 0 5
All roads lead to insurance and annuities. At least that’s what you may have been or will be told by many insurance salespeople, financial planners, and insurance companies. The reality is that all insurance is a carefully calculated bet between you and the insurer; like gambling in Las Vegas, the house comes out ahead. The idea that wealth is best accumulated and preserved through insurance products is simply untrue. You should obtain a detailed analysis for any policy you own or those you are considering to determine how you will benefit from the policy (after taxes) as compared to other options. This analysis should be from an independent, unbiased qualified source. WMi clients receive such analyses as a standard part of our services. Don’t be taken…
Although life insurance can play an important and valuable role in life, a balanced, objective discussion is hard to come by — the specialists are mostly the salespeople, financial planners, and others who earn their living from high commissions. You may have read articles or seemingly authoritative books suggesting life insurance and annuities are the answer to most every financial planning objective — from meeting retirement needs to paying estate taxes. Curiously, the authors either sell those products or are aligned with someone who does and receives kick-backs. Therefore, their advice is biased. Conventional wisdom is often wrong. The problem stems from undisclosed details about:
High commissions Loss of investment control Loss of preferential tax rates (annuities) Potential IRS challenges of certain arrangements Limited availability of risk management and tax planning strategies.
Cash Value Life Insurance Commissions: 50% – 100%+ of first-year premium, 3% – 10% on renewal premiums for most policies Surrender Charges: 10 – 20 policy years IRS Penalty: 10% for withdrawals before age 59 ½ (certain loans exempt.)
Rate of Return on Death Benefit and Cash Value Regardless of the type (term or permanent), a life insurance policy is simply a contract granting substantial benefits to your beneficiaries — far greater than your premiums plus interest — if you die prematurely. But if you live to or beyond life expectancy, it’s the insurer who comes out ahead, with cumulative premiums plus what they earned on them over the years being far greater than the death benefit. Specifically, the insurer pays only a fraction of the money’s value (typically 3.5% – 5%) and pockets the difference (the spread) — usually several percent more over the years. At best, you should view the policy as a long-term, low-yield, low-risk asset. You may be able to achieve higher returns while carrying a low-cost term policy to insure against premature death. This will be clear in a side-by-side comparison of a term policy and properly managed separate investment account or on an Internal Rate of Return (IRR) policy illustration from the insurer.
Getting Income from the Policy — the Tax-Free Loan Scheme/Trap The internal gross rate of return on premiums, after policy expenses, is a negative (loss) for the first several policy years (usually for the first 8 to 12). The rate then typically increases gradually each policy year, maxing out at 3% – 5.5% if the policy is adequately funded and all sales loads are recovered (based on current, non-guaranteed assumptions; based on policy guarantees, returns are far less). Furthermore, it can take 20 years or longer to reach this lack-lustre, non-guaranteed rate.
Even your best case — the 5.5% return — has an additional caveat: While you may take tax-free loans from the policy, you can never actually access all of your money in this way. If you do, the policy will lapse, making the entire amount of the policy’s prior gain subject to ordinary income tax in the year of lapse. So, to avoid this trap, you must leave on deposit with the insurer enough of your cash value to sustain the policy to your death — in essence, a form of "insurance tax." The remaining death benefit of course is of value… just not to you. The required deposit can be substantial — 20% or more of your cash value — effectively further reducing your return on investment. It gets worse: If the policy allows for an increase in insurance costs, or higher interest than when you originally structured the loan, you may have to return money to the insurer, or suffer the potentially devastating economic effects of the policy’s lapse.
Conclusion: Life insurance is generally not an attractive investment. Much can and does go awry, and it should be used only to meet the need of managing risk. Only policies with a low cost for providing the desired death benefits should be used. WMi can help you make these decisions and evaluate policies disclosing the costs and economic comparisons to alternatives.
Term Life Insurance This type of insurance is simple and straight forward. You choose the amount of coverage and the policy term, or number of years the policy is guaranteed to remain at a level premium. Term insurance and certain universal life policies with low premiums and long-term death benefit guarantees are usually the best deal. They can be designed to meet any insurance need at the lowest cost.
* Commissions: 3% – 12% of premium * Surrender Charges : up to 8% for policy years 1 through as many as 10 * IRS Penalty: 10% for withdrawals before age 59 ½ While there are many types of annuities, they fall into 3 basic classes: fixed, variable, and immediate. Annuities are taxed under special rules that insurers and salespeople tend not to explain adequately. Although interest or gains in annuities are tax deferred, this deferral can come at a high cost — after expenses and taxes, any economic benefit to you may be erased for reasons described below:
Fixed Annuities These interest-bearing contracts are similar to a certificate of deposit (CD), with crediting rates set by the insurer annually and not tied to any index. Because of this, the rate of return you actually earn on your money doesn’t correlate to what you receive. You’re at the insurer’s mercy, and can only hope to get a fair rate. Be sure to compare the insurer’s crediting rate history to investments with similar risks and time commitments to see how they’ve treated policyholders in the past.
What they earn and what they pay – Naturally, the insurer has issued the contract seeking a profit. So if they earn 8%, for example, on your money in a given year, they’re required to pay you only the minimum guaranteed rate — typically 3%. While it is in the insurer’s interest to keep your money for as long as possible, in good economic times they will pay higher than the minimum to keep you invested. Over time, we have commonly seen policy’s earn a below-market rate of return. A side-by-side comparison of an annuity earning say 6.5% to a separate "ordinary" account earning the full 8% return under this example will show the purported tax benefits are of little to no value (depending on time and your tax rate) as you may not come out ahead after tax.
Variable and Equity Indexed Annuities Comparable to investing in mutual funds, these annuities can be costly mistakes as a result of very high commissions, ongoing fees, and horrendous, inflexible tax treatment. Because capital gains and dividends on annuities are taxed as ordinary income, you lose the lower tax rates (as of the publishing of this document 11-1-2004) currently max. 15% vs. 35% max. for ordinary income). All gains are taxed under last in/first out (LIFO) rules — gains are deemed withdrawn first and are fully taxed as ordinary income – results in more tax being paid sooner upon withdrawal. High insurance (mortality) charges ranging from .75% – 2.5% annually — for an expensive to illusory benefit for most policies at best — further cut into your return.
Redeeming products in this group are Equity-Indexed Annuities and certain step-up guaranteed policies. While they have the same unfavourable tax treatment and high fees, they allow you to participate in some of the upside of the market while being guaranteed against loss and provide a minimum return during market declines. The guarantees can be very costly. If markets do well, your net return will be far less than what you would have had because of the charges and higher taxes.
Immediate Annuities They are an irrevocable assignment of your money to the insurer in exchange for a lifetime guaranteed income that may be more or less than your money would yield under your control, depending on how long you live and the payout rate used by the insurer. Again, the house (the insurer) is willing to gamble that you will lose. You should consider these products only if your investment style and anticipated life expectancy make it likely that you will benefit. WMi can help you determine this.
A Last Thought on Annuities All annuities are ineligible for an adjusted stepped-up basis at death (aka income in respect to a decedent, or IRD). This means any amounts left to your heirs over the cost basis (or investment) amounts are taxed as ordinary income. If instead you invested in mutual funds, stocks, real estate, etc., no tax would be due; your heirs would be assumed to have paid the fair market value at your death for the asset. A WMi economic analysis can accurately reveal the advantage or disadvantage of any cash-value life insurance or annuity product. We strongly recommend you obtain the analysis before you buy. Refer to our Life Insurance and Annuity fact sheets for more information and examples.
Privacy Protec t i o n A s s e t Protecti o n Risk Management Insurance Assessment Investment Evaluation Private Banking Taxation Estate-Transfer Charitable Giving Anyone advising you who make more or less money based on your decisions, they have a conflict of interest.
DO NOT BUY AN ANNUITY UNTIL YOU READ THIS. It is very important that you read this. Many poeple each and every day are put into annuities that may be unsuitable for them. There are many reasons for this. Well, I am here to let you know about the resources we offer.
AnnuityMD.com is not a place where you can go to buy annuities. It is basically a consumer annuity protection site. The idea is that we offer UNBIASED information on annuities that you can't get elsewhere. This is information that you AREN'T being told.
So before you buy an annuity, please do yourself a favor and visit our site. You will not be disappointed and you will learn how to avoid the mistakes many have made when it comes to purchasing annuities.
That's the best advice I can give you and I hope you at least come check it out.
Well, I'm glad to say that we have had some tremendous recent developments at AnnuityMD.com. We are now taking further steps to ensure that you get all the help you need when it comes to annuities. We have partnered up with a firm that does an annuity analysis on the annuity you have purchased or are considering to purchase. What's nice about this is the f0llowing. Neither AnnuityMD nor WMi sells annuities. Therefore, you are going to get professional and unbiased information on the annuity. The second thing is, we will actually tell you the steps to take if you are in an unsuitable annuity.
With this also comes one more major benefit. We have recently done some major editing on our book. Therefore, all of our great information is STILL there, however, we have improved on it and added new information. And if you have purchased before, don't worry!!! We will provide you with the brand new edition for no extra charge. Yes, our commitment to you still stands. Once you purchase, you get the new upgrades at no additional charge.
Again, I would like to remind you that AnnuityMD is purely a consumer annuity protection site. Our dedication is that you don't get screwed buying the wrong annuity. We are here for you and are happy to help you. Please feel free to contact us at anytime when you need help.
Were you sold an unsuitable annuity? Chances are you probably are not sure. Well what I can tell you is we can help. AnnuityMD.com has recently partnered up with a company that has the ability to do a full comprehensive analysis on your annuity. Therefore, there's no more guessing. I have seen this reports and I love them. I think there is nothing like them in the industry that can provide you with a more detailed look inside your annuity to see if it does what your agent said it does.
Whether your agent miscommunicated, lied to you, or was unaware that he was putting you in an unsuitable annuity, there is something you can do. Don't feel like you are trapped. If you do find out the annuity is unsuitable, there is recourse. Often times it is against the insurance company. Don't believe that you are trapped just because 'they' say so and don't let the insurance company bully you around. We can help. Visit us at AnnuityMD.com and see what we can do for you. And for a limited time, we have a VERY special offer that we have never offered before. Please go. YOU WILL NOT BE DISAPPOINTED.
Tony Bahu CEO AnnuityMD.com Ignorance is NOT BLISS