Will Trice wrote:

- quote -

They did indeed! The first Tercels (including mine) went on sale in
model year 1980. And they only cost about $5000 new. <g
Karen

Its guaranteed by the company itself through a contract with them. ING
is a very strong company with strong ratings. Ratings have to do with
an insurer's financial strength and ability to meet ongoing obligations
to policyholders and ING has billions of dollars in assets to back up
their contracts. ING is not only the company that offers a guaranteed
rate of return with upside potential but each company has different
ways of accessing that guaranteed rate. With ING you have to annutize
the contract and wait at least 10 years; you cant take the guaranteed
rate or high water mark in a lump sum or withdraw from it. With some
other companies there are some other options. I can't state the company
and the specific terms and numbers of their product but one option with
another company is that in the 7+ year(or whatever year the company
says) you decide to take money out, the company will give you the
amount earned on the contract higher of the guaranteed rate or the
highest annual value. The only catch is that you can only withdraw up
to a certain percentage each year of that guaranteed amount until it is
depleted or annutize. The upside to the withdrawal option is that the
rest of the money in the contract is still in the market. If the annual
gains in the contract are highter than the amount withdrawn when you
have depleted your guaranteed amount, your actual contract still has
money and you can withdraw it either in a lump sum or take up to 10% of
it each year. Please review the options of each company and the variety
of products each have to offer. With any annuity, it is a long term
investment because of the surrender fees in the first few years so
please review carefully. The annual expenses of a variable annuity are
higher than other product and will affect the gains a little bit more
compared to money that was in a regular mutual fund or annutiy, but you
have to remember what guarantees the company is giving you if the next
few years will end up being a bear market and near retirement.

BMS wrote:
- quote -

This sounds too good to be true -- currently 10-year corporate bond
yields are in the 4-5% range. Forgetting about the upside participation
in the stock market, how can anyone guarantee 7% annualized returns
over the next 10 years, in the current interest rate environment?

You, Skip, and Beliavsky have agreed that
- quote -

You have a valid point Will, although I do not personally offer V/A's,
I can tell you that the "ongoing costs" are identifyable. There is usually
an Annual Fee, purchase fee (for load funds), possible surrender or
transfer fee (for no-load funds), fund manager fee, etc. ALL of these
are identifyed in the prospectus (which is why a prospectus is REQUIRED
PRIOR to the purchase of a V/A).
Cal Lester CLU

The test should be total return, net of expenses. That way you are comparing
apples to apples.

For example ING offers a VA that guarantees the principal return of 7% and
still allow participation in the market. In this example if you need the
principal to be at least doubled in 10 years, this could be an attractive
option.

Given the bells and whistles being put on this investments, I think trying
to figure these out any other way would lead to a headache.

"Will Trice" <wwtrice[at]paragondynamics.com> wrote in message
news:421BD8E0.5090009[at]paragondynamics.com...
- quote -

Cal Lester wrote:

- quote -

Well, reasonable and customary costs of autos (by class) and ISPs are
pretty easy. If someone tells me they paid $50,000 for a 1973 Toyota
Tercel, I can guess that someone got ripped. If someone is paying
$100/month for an ISP, this was probably not the best deal available.
What about for an annuity? You, Skip, and Beliavsky have agreed that
variable annuities carry ongoing fees. Is there not some standard for
what a variable annuity costs? Or is this a product where no price is
too high? I realize the question is somewhat simplistic because of the
huge variety of features that are available. But surely there must be a
reasonable range of expenses that can be expected.

-Will

beliavsky[at]aol.com wrote:
- quote -

Good point, as the "general" cost's involved with any Variable Insurance
product, be it Life or Annuity will always be higher that the same FIXED
product (with the potential of higher gain AND possible LOSS)
Cal Lester CLU

- quote -

And what pray tell is the "reasonable and customary" cost of an
automobile?? What prey tell is the reasonable and customary cost
of an internet provider???
Cal Lester CLU

In article <P5CdnQqXYrcryobfRVn-qA[at]comcast.com> ,
"Cal Lester" <cal-lester[at]comcast.net> wrote:

- quote -

<snip
Something more than "reasonable and customary", in my experience. :-)

In other words, I would expect there to be known, or estimatable,
average costs that are a good predictor of what a purchaser might
expect. Whether a mere consumer has any source of this information
is another question...

Will Trice wrote:

- quote -

There various kinds of annuities. For fixed immediate annuities, the
annuitant gets periodic cash payments as long as he lives. For fixed
deferred annuities, an interest rate is specified. Instead of
wondering about costs, I think an investors should compare these
annuities to similar investments, for example comparing a fixed
deferred annuity to a bank CD. Investors shop for bank CD's with high
yields, but they don't worry about their "costs". For variable
deferred and immediate annuities, cost comparisons are important,
since the returns depend on the performance of the underlying
investments, minus expenses, although variable deferred annuities have
some insurance benefits.

greenparrot wrote:
- quote -

an excellent question. The answer lies in the wording of the Annuitant's
choice. There are many ways to Annuitize a contract, and they cover
both the situations that you mention. In the event that she has NOT
made a selection of the balance at her Death, then generally speaking,
the choice would be the beneficiaries (you).

- quote -

She is correct in that a portion of any annuity payment would be
considered Federal Income Taxable income. The amout varies
dependent on selection & age. The wisdom (if any) is that the
interest earnings on the annuity are Federal Income Tax "DEFERRED",
meaning that she pays no tax on it while it grows. However, Uncle Sugar
WILL get paid eventually.
Cal Lester CLU

HW "Skip" Weldon wrote:
- quote -


Most succinctly put................
btw: Skip if you have not met her, could it be a fairy Godfather?????
Cal Lester CLU

HW \"Skip\" Weldon wrote:

- quote -

Thanks, Skip. I didn't realize that no-load annuities existed. Even so
it doesn't sound like the loads on annuities are any worse than those on
mutual funds. After taking into account the cost of the insurance
component, are the expenses of an annuity comparable to mutual funds?
Many participants of this newsgroup (and many writers in the financial
press) revile annuities mainly based on their cost. This has made some
other participants of this newsgroup rather defensive. If annuity costs
are comparable to mutual funds after taking into account the costs of
the added benefits that an annuity brings, why the religious war? I'm
probably missing something in the whole debate...

-Will

On Mon, 21 Feb 2005 14:08:20 CST, "Cal Lester"
<cal-lester[at]comcast.net> wrote:


- quote -

It used to be around 5% for a deferred annuity. Not sure if that has
changed.

- quote -

I've always viewed the sales commission in a deferred annuity as
somewhat similar in operation to the sales commission in a B share
mutual fund. The commission is paid up front to the agent by the
insurance company, who gradually recoups it from the annuity's account
balance through a higher-than-normal expense charge (higher than a
no-load annuity.)

And in the event that the annuitant cancels before the insurance
company can recoup all their expenses including the commission, the
insurance company imposes a surrender charge which makes them whole.

While there are pros and cons with this, make no mistake: In the end
the investor pays for all costs in *every* investment. We can think
of it as an "indirect" payment or a "direct" payment, but if there is
a fairy godmother out there helping us with our costs, I haven't had
the pleasure of meeting her. <grin

-HW "Skip" Weldon
Columbia, SC

thanks for all your advice. I guess its not too bad if she has a few
annuities as long as she doesn't tie everything up in it. Another
question: as her only heir, will I get a "cash out" of her annuity
accounts after her death, or will I receive payments on a periodic
basis (in other words, inherit the annuity/ insurance).

Also, she does not intend to ever take any payments (the guaranteed
income) from the annuities, she just wants to let it sit there.

What's the wisdom in that??? I think she claims she would have to pay
taxes on the money.

Cal Lester wrote:

- quote -

Cal,

I'm not actually concerned with the commission EARNED, but rather the
costs INVOLVED. Other posters have pointed out (possibly in error) that
you start "in the hole" on an anuuity which sounds like there is an
upfront COST. From your statements above, it sounds like these COSTS
are only ASSESSED if you dump the annuity early. Is that WHAT you're
saying? Maybe the correct QUESTION should have been, what are the
typical COSTS associated with an annuity. Again, I'm sure that THESE
are all over the map, but I'm just TALKING ballpark here.

THANKS,
-Will

No, your mother gets hit with a penalty from the first annuity, the bonus
from Company B goes to offset the charge. The broker gets credit for a new
sale from Company B.

At a reputable broker/dealer, the salesman would have to prove that the
client is getting an improvement by switching.

"greenparrot" <bumblebee4451[at]yahoo.com> wrote in message
news:1109015198.552559.72570[at]g14g2000cwa.googlegroups.com...
- quote -

Will Trice wrote:
- quote -

Will, the Annuity buyer does NOT pay ANY commision to the
salesperson. The Carrier pays the commission out of the General Fund
of the company. It is however included in the overall costs that
would be applied in the event of an early surrender.

You should NOT be concerned with the commission being EARNED,
but concentrate on the Company, Contract wording, Guarranteed
Interest, "additional interest (if any)",the reputation of your Agent, and
last but not least, whether or not ANY Annuity is the correct product
for YOU, at the present time.
Cal Lester CLU

John A. Weeks III wrote:
- quote -


WHOA, you are doing it again. Most Annuities are sold by Life
Insurance companies, who operate under STATE Laws that
protect the Annuity Owner. Life Insurance companies RARELY
ever "go broke". The State Laws require that there be sufficient
funds to back every Annuity. Of course, there are unscrupulous
people in the industry, who would cheat & misshandle the
companies funds, but you also find them "all over Wall Street".
I believe that EVERY State has a Guarrantee Fund, that protects
the Annuity Owner in the event of a default. Florida has a $100K
backup. However in the past (and the forseable future) whenever
a company appears to be in financial trouble, OTHER companies
take over their "book of business". It would be a RAREITY if a
company were to default, and the Annuity Owner did NOT get
back his initial investment PLUS the minimum guarranteed interest.

There have been cases wher Annuity Owners DID lose the
accumulated Interest, but ONLY those who chose to SURRENDER
their contract PRIOR to the completion of the takeover.
Cal Lester CLU