On Apr 18, 3:17 pm, "Mark Freeland" <BnetOne...[at]sbcglobal.net> wrote:

- quote -

Mark, it will partially depend on the yet unknown facts. An annuity
does bypass probate, but is included in the taxable estate for estate
tax purposes. Even if the client is taking an income stream, the
remaining account balance is included. If the client dies,
unannuitized, with a $500k annuity, the $500k is added to his total
estate.

If the estate is smaller than the exemption amount at death, or the
estate tax is repealed (unlikely), then taxability won't be an issue.
There are also all manner of trusts to avoid estate taxation that are
at your disposal (CRUTs, CRATs, NIMCRUTS, ILITs, etc, etc). If the
estate is subject to estate taxation then it is possible the heir
could be left holding a large tax bill and a somewhat illiquid asset
with which to pay said bill. Death benefit options and products with
short (or no) surrender periods will help alleviate this potential
problem.

Annuities are as diverse and varied as snowflakes. It will depend on
the provisions of Mutual of America and the specific details of your
case.

On Apr 18, 3:17 pm, "Mark Freeland" <BnetOne...[at]sbcglobal.net> wrote:
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Mark, I haven't dug too deeply into the matter either. I was just
reporting the accusations that I THINK darkness was referring to. I do
not know the NASDs findings nor do I know if NW was really guilty.
Actually, the scheme that NW was accused of is quite a well known ploy
and before now I have never heard of it being attributed to any one
company (ie Northwestern Mutual).

An NASD background check of the company shows VERY limited info. They
have been cited for "Regulatory Events" but that could be the result
of a minor and unrelated infraction. I do know they were fined for not
reporting customer complaints to the NASD a few years back. That alone
would have triggered a "regulatory event."

"kastnna" <kastnna[at]auburnalum.org> wrote in message
news:1176816062.937560.289110[at]q75g2000hsh.googlegroups.com...
- quote -

In my cursory search, I did find some items alleging these (2003) selling
problems; but without finding matching settlement news items, I wasn't going
to automatically take the allegations as true (which differs from credible -
the fact that NASD instituted a probe says they were credible). Here's an
article I had run across that describes the same overpay/borrow scheme as in
your post:
http://findarticles.com/p/articles/m...5/ai_109737649
http://findarticles.com/p/articles/m...5/ai_109570310
(followup - agents' denial)

I'm not denying the accusation; I'm just stating that I haven't found a
settlement, though it is four years after the accusations (and six years
after NASD started an investigation on it.) Also, that I haven't looked
very hard.

- quote -

Thanks! The data seem to confirm some of the things I had seen as well as
provide more insight - that it is respectably profitable (and doing much
better than the industry as a whole with its underlying investments - though
beta is higher - it dos better than average in good years, poorer than
average in bad ones), that it focuses on group plans (as does TIAA-CREF).
It is almost exclusively focused on annuities (don't know whether that is
good or bad).

I expect I'll be contacting them. One thing that doesn't thrill me about
their policy (though this is true of most policies in the industry), is that
it can't be renewed past age 90. (Some go at least to age 95.)

On a purely planning note - what suggestions do people have for dealing with
tax on annuities? I believe they become taxable when inherited (obviously
before annuitization - usually nothing to inherit if annuitization has
begun). Few people annuitize (somewhere around 1-2% of policies), so does
one gradually bleed the policy over time (sort of like taking MRDs, to
spread the income over years), or take a lump sum, or leave it in the
estate, or ...?

Mark Freeland
BnetOnewsX[at]sbcglobal.net

On Apr 16, 5:48 pm, "Mark Freeland" <BnetOne...[at]sbcglobal.net> wrote:
- quote -


Northwestern mutual has been more recently accused of selling variable
Life insurance as a tax-free growth strategy (circa 2003) without
proper disclosure. They agents would also "promise" returns. That's a
HUGE no-no.

They would entice people to buy large policies ($1Mil +) and overpay
the premiums so that the cash value would build up. The policy owner
could then take up to 90% of the appreciated cash value back in the
form of a loan. Because it was a loan, it was not taxable and the
remaining 10% cash value was supposed to appreciate fast enough to
cover the cost of insurance and the loan interest. Excessive fees,
rising loan interest rates, and a number of other factors caused the
10% CV to be insufficient and policy owners were forced to dump in
more premiums to sustain the policies. They got angry and
complained.

Back on topic, here is a little more detailed financial outlook for
Mutual of America:

http://www.geocities.com/kastnna/mutual_of_america.pdf

<darkness39[at]yahoo.com> wrote in message
news:1176665560.516775.112150[at]l77g2000hsb.googlegroups.com...
- quote -

Looks interesting, but obscure - not in NetFlix's inventory.

- quote -

Next post, you clarified:
- quote -

I'm inclined to agree. I've been looking for listing by rating of different
insurance companies, and at least based on familiarity and size, it seems
that companies rated at or above Mutual of America seem fine, and ones rated
below are somewhat (or very) questionable.

Two bits of trivia about Mutual of America, one possibly slightly relevant
(I'm thinking ethics here), one a curiosity. It has at least one Nobel
prize winner on its board (peace prize), and it sponsored Bill Moyer's PBS
series for at least a decade (showing how little impact those corporate
sponsorship messages make :-)

http://www.thenation.com/doc/20010507/moyers (Moyer's citing Mutual of
America)

In terms of market, it positions itself as an alternative to TIAA-CREF, and
is structured as a mutual company (which should allow it to offer somewhat
higher returns than corporations that must make profits for shareholders).
It is a Fortune 1000 company, FWIW.
http://money.cnn.com/magazines/fortu...hots/3982.html

- quote -

I did a little searching. It seems that in the late '90s, it was under fire
for pushing annuities at people who shouldn't have been buying, or something
like that. (In the 90s, a lot of big insurance companies got caught doing
that, or selling variable life as investments; lots of settlements.)

Mark Freeland
BnetOnewsX[at]sbcglobal.net

On Apr 13, 9:14 pm, "Mark Freeland" <BnetOne...[at]sbcglobal.net> wrote:

- quote -

Mark

Maybe I was unclear in my other post. This rating doesn't look too
bad to me, but I wouldn't go below it.

There is a lot of controversy about Northwestern Mutual on the web, I
think about its sales practices?

D

On Apr 14, 12:00 am, "Mark Freeland" <BnetOne...[at]sbcglobal.net> wrote:
- quote -

I don't know if you are into computer software, but there is a famous
made for PBS movie, with James Woods (a very young James Woods) called
'Billion Dollar Bubble' about one of the first really big computer
scams-- I think the company was called Equitable Funding. To inflate
the earnings numbers, they kept feeding manufacturing new policy
numbers, and feeding them into the computer. It's a classic film.
This was when a billion dollars really was something ;-).

http://www.imdb.com/title/tt0074206/
http://www.thestreet.com/stocks/accounting/789337.html



- quote -

Mark. They are anything but perfect (the UK had an enormous debacle,
called the Equitable Life-- maybe we shouldn't invest in companies
that have an 'E' in their first letter? ;-).

Executive Life I think was heavily into junk bonds peddled by Michael
Milliken. Confederation Life (Canada) had option contracts.

It seems as if one should definitely go for the more highly rated
companies-- say the top few. I can tell you that Manulife in Canada
(the parent company of John Hancock) is almost certain never to go
broke, because it would be a political disaster for whoever was in
power in Ottawa (they're the largest insurer). However I don't know
if they could 'cut loose' a US subsidiary that was in trouble (I would
imagine they could).

Great West Life in Canada also has a high credit rating but is part of
a complicated corporate structure (a chap called Paul Desmarais and
Power Financial).

"Cal" <cal-lester[at]comcast.net> wrote in message
news:qKmdnSVcbPs3fr3bnZ2dnUVZ_veinZ2d[at]comcast.com ...

- quote -

I belive that is correct.

- quote -

Not so. They were given the option of doing a 1035 exchange to a new
contract, that would function according to the terms of that new contract,
which were substantially more onerous. It pushed out the maturity date, it
started a new period of withdrawal penalties (even if they ELNY contracts
had been held long enough that there were no surrender penalties remaining),
it provided rate floors that were lower than the floors on the ELNY
policies.

- quote -

See above, e.g. a forced exchange from a 4% floor policy to a 3% floor
policy.

- quote -

There's no "slightly incorrect" for an absolute statement that no policy
holder ever got less than the original contract provided. Once there is
even the slightest breach, one cannot laud the industry with "don't worry,
be happy". It's like saying that there's never been a money market fund
that's broken a buck. There has been (though not at the retail level),
which proves that the risk is real.

That's the point here. Quantify the risk, don't deny it. How does one
assess that risk?

FYI: http://money.cnn.com/2003/01/20/reti...uity/index.htm
("Is Your Annuity Safe" - check the section on rehab, which mentions cases
where contract withdrawal provisions were violated, payments cut *post
maturity*, rates reduced below floors, etc.)

Mark Freeland
BnetOnewsX[at]sbcglobal.net

"Mark Freeland" <BnetOnewsX[at]sbcglobal.net> wrote in message news:W_TTh.16609$Um6.4434[at]newssvr12.news.prodigy.net...
- quote -

Mark, it was my impression, that ALL of the policies of EXECUTIVE LIFE, were taken over by finacially stable companies. The policyholders were given the option of allowing thier Annuities/Life policies to function as intended, and at maturity, would be provided what had been in the policy. Some (many) polcyholders chose to surrender thier contracts because the interest being offered was To Low.
Those policholders suffered losses.

It occured almost 20 years ago, so I just might slightly incorrect ! ! ! ! ! ! ! ! ! !
Cal Lester CLU

"Cal" <cal-lester[at]comcast.net> wrote in message
news:RfSdnYsAkevzYYLbnZ2dnUVZ_t6qnZ2d[at]comcast.com...
- quote -

The ELNY policy holders were contractually promised access to their money.
They were given a choice - take a fraction of the money, or give up that
access for years. They did not get everything that the CONTRACT provided.

Mark Freeland
BnetOnewsX[at]sbcglobal.net

"catalpa" <catalpa[at]entertab.org> wrote in message
news:shSTh.37$xL6.23[at]trnddc05...
- quote -

Nice site. The big failure I remember (not quite as large, but same
ballpark), was 1991 ELNY - Executive Life of New York - failing in sympathy
with the Executive Life (California) failure.

So how much should one trust insurance company ratings? They don't seem
incredibly reliable, but what else is there to go on?

Mark Freeland
BnetOnewsX[at]sbcglobal.net

"catalpa" <catalpa[at]entertab.org> wrote in message
news:shSTh.37$xL6.23[at]trnddc05...
- quote -

Although the individual companies may have failed, and their STOCKHOLDERS
may have suffered, there has NEVER been a Policyowner who did not receive
everything that the CONTRACT promised,
Cal Lester CLU

- quote -

To the best of my knowledge, other than the debacle in California
a few years ago with a company that was "floating" life policies, there
has NOT been a company the "failed" since life insurance began.

It is true that not every company has survived the years, but in EVERY
CASE, the policies were taken over by other companies, so that the
PolicyOwner suffered no LOSS.

In the case of the California company, ONLY THOSE POLICOWNERS
THAT SURRENDERED POLICIES suffered a loss (as provided in the
contract), PLUS they did NOT receive the "high interest earnings" that
they had been promised (not in writing).

Those polcyowners that stayed the course received EVERYTHING that
was promised (in the contract) plus a guaranteed interest(and in some
cases even more).

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:XMydnYhsQoF6d4LbnZ2dnUVZ_tadnZ2d[at]comcast.com...
- quote -

Multiple insurance companies fail every year. Reliance Insurance was a large
one that failed in 2001. Go to
http://www.weissratings.com/company_failures.asp and see failures listed by
type of insurer.

Mark Freeland wrote:

- quote -

Other, higher rated companies show a bit lower rate, under 5% in many
cases. I believe it was stated here that no insurance company in the US
has failed in the last 100(?) years, or something to that regard.
JOE

Given that I am looking for a well-paying, secure, fixed annuity (not for
myself, and not subject to discussion), do people have thoughts/knowledge
pro or con about Mutual of America? I'm looking at their Flexible Premium
Annuity (FPA) - current yield of 5.25%; it does also offer separate
accounts - not interested, not relevant.

5.25% is about as good as I can find. There are no lock in periods - rate
is subject to change at any time. But there are no lock in periods - money
can be transferred out at any time without penalty.

Company is rated A+ by A.M. Best, AA- by S&P and AA- Fitch. That's lower
than a premier company like Northwestern Mutual (A++/AAA/AAA), but only
slightly below MetLife (A+/AA/AA), and virtually on a par with The Hartford
and Prudential (A+/AA-/AA). An example of a company rated lower would be
Mutual of Omaha (A/AA-/?)

Thanks,
Mark Freeland
BnetOnewsX[at]sbcglobal.net