alanryder[at]aol.com wrote:

- quote -

Alan, I think a better reply would follow if you provide a name or
better yet, a link, to the precise product you are considering. The
prospectus needs to spell out the details, including fees. If, as Kastna
suggested, there is a way to provide you a 7% annual withdrawal, for
life, depending on your age this can make sense. I am willing to
consider that there are different products with different feature sets.
Wrapping a mutual fund in a VA simply to defer taxes is an example of
where I am anti VA. If this product can offer a higher return with no
market downside, I am willing to ignore the fees. Truth is, all that
would matter is what you get in your pocket, net.
JOE

Alan,

The 7% sounds similar to the Guaranteed minimum income beneift (GMIB)
that is VERY popular these days. I don't know anything about these
companies' products, but 7% is high compared to all of the other
products I've seen. Maybe that's good, maybe that's too good to be
true.

Ask your agent to show you a client-approved brochure on the benefits
you are buying. Secondary guarantees are much easier to explain and
understand when looking at numerical examples and a couple of charts
that every company uses.

As for fees, he didn't mention them because he is not YET required to
by law. They are undoubtedly there. How do you think the insurance
portion of the annuity is paid for? How do you think the agent is
paid? Annuity illustrations are required to have GROSS and NET returns
when projecting future account values. You will usually see that even
if your sub-accounts return 8% your account value will only go up by
5.5% (all hypothetical numbers). The difference between Gross and Net
returns equal the fees charged to the annuity. They are often between
2 and 3% (which is high from a pure investment standpoint).

Many annuities also offer a "bonus". They give you an extra x% up
front but charge an extra 20bps or so. Usually the extra fees catch-up
with the bonus after about 14 years.

It sounds like your agent told you everything you need to hear for him
to make a sale. Ask more questions! And I better not be talking to a
45 year old!!!

Good luck

I was interested in them as they offered good rates of return on my
investment, and there was a sort of guarantee, on both where I could
take out 7% of my investment per year, no matter how the annuity did.
If not these then what? Don't like the stock market, and the best I
could do on a CD was under 6%! What other reasonable safe investments
are there? I also have some money in the Franklin Fund. My planner
didn't mention any fees on Pacific Life or Penn Mutual. Penn Mutual is
4 years before maturity for me, and Pacific Life is liquid with no
penalties I know of for withdrawal. Would really love some feeb=dback.
Thanks!


On Mar 6, 4:17 pm, "kastnna" <kast...[at]auburnalum.org> wrote:
- quote -

Joe I agree that VAs are often not suitable for many clients and they
are often oversold. Like all insurance, they have fees that make them
less efficient cash accumulators than other investment vehicles.
However, what are your thoughts on secondary guarantees (perhaps the
single biggest "pro" to buying a VA)?

Some companies offer a 6% net guaranteed minimum withdrawal benefit (I
won't say which ones, I wouldn't want to be accused of selling or
generating a "buzz"). If the subaccounts make more than 6% NET they
get the actual performance return. If they return less than 6%
(including negative %s) they still get a 6% step-up in withdrawal
value. In other words limited upside (you may need 8.5% gross returns
to net 6% after fees) but guaranteed to have no major downside (can't
make below 6%).

For long-term investors I would expect opposists to argue that the
market has historically averaged better than 6%, but what about older
people that are ready for distributions and can't afford an early
downturn (and definitely a recession/depression)? Many posters will
even argue that the market is not likely to continue its high returns.

I'm sure I have overlooked and angle here, and I'm not "all for VA's"
I would just like to hear your thoughts on the matter.

On Mar 6, 10:00 am, "alanry...[at]aol.com" <alanry...[at]aol.com> wrote:
- quote -


There is a general negative reaction whenver annuity is mentioned
here. To get any useful replies here you need to be more specific,
starting with age of client and type of annuity.

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

Didn't Robert Frost write a poem about choosing between dying in fire or
ice?
Questions for you;
1) Are you looking for an immediate, fixed annuity or variable?
2) If fixed, the expenses are buried within the product, i.e. you are
buying an income stream only, and are choosing between companies to get
the right terms and rate.
3) If variable, read my (rant) page at
http://www.joetaxpayer.com/annuity.html (note, my spreadsheet is no
longer working. I will update my page to download the sheet instead of
an online version)
as well as the writings of Scott Burns. For Scott, just Google on Scott
Burns Variable Annuity, and read. If you still believe there are reasons
that you want/need one, why not look at http://www.jeffnat.com/index.cfm
they offer a remarkably cheap product suitable for those who insist on
owning a VA.

On a lighter note, I looked at the expenses of the first company you
mention. Their Mortality and Expense risk fee is 1.4%/year. They also
charge an 'Administrative fee' of .25%. Fortunately, this is in addition
to the fees charged by the funds held within the VA. Those fees seem to
go up to 1%/yr depending on the fund.

So if you were looking at a VA to 'save on taxes', it would appear that
any savings through deferral are quickly eaten up by fees/expenses.
JOE

I'm deciding between these two annuities. Any feedback would be
appreciated, as would any suggestions of what you might like better.
Thanks!