 |
My husband and I (ages 74 & 68) are considering investing in
An index annuity with American Equity. It is a term of 10 years
And will pay a 74 yr. old 6%. After the first year, one can begin
Drawing out monthly payments if desired. You get a bonus of
10% when opening it. It is called Retirement Gold. Is there
Anyone else who has invested in this company; if so are you
Satisfied with your returns, etc.
please check the name of the company, American Equity Insurance company stopped writing new policies in 2002.
There is a company called American Equity Investment Life Insurance company
If so, they have had some law suits filed for fraud.
American Equity Investment Life Insurance Lawsuit
It also shows a negative rating with AMBest ( rating service)
from BB to BBB ratings
A.M. Best Affirms Ratings of American Equity Investment Life Holding Company and Its Subsidiaries; Maintains Negative Outlook | Earth Times News
It appears that that 10 percent is to the cash value ( have you asked to see the cash value during the first year, not 10 percent of the money you pay them. It will be less than the amount you pay in. also there is a penalty ( I think 20 percent) if you withdraw the money the first year.
Just ask the question if you had an emergancy and had to cash it in, in 6 months how much would you have.
If you had to cash it in within 3 years how much would be there.
Also only 1 percent interest appears to be promised, so anything above that is merely what they hope will be earned.
** that is possible, I have a plan that guarantees 3 percent min and I have been averaging 7 percent on it right now.\
http://annuitybrokers.com/i/u/982487...t_Brochure.pdf
My opinion it is better than many life insurance annuities. I believe there are better options than life insurance companies, and would talk to a investment planner who does not sell anything on commission as to better options.
But if you want an insurance annuities plan, this one is OK
The salesman is making a commission, so a percentage of your investment is gone the minute you give them the money, paid to the salemas for selling this to you. At your age, they get what appeared to be an additional one percent commission also
American Equity Investment Life Insurance Company - Retirement Gold (RG-FIA-09) - Annuity Provisions, Rates, Riders and Illustrations
It appears their commission rate is 12 percent from what this article says
Davis Life Brokerage News 1st Quarter, 2009
so the salesman gets 12 percent of your money when you give it to him ( If I am wrong, I am going on a sales publication
This review of the product is costly at the price of free! The rating of the company is A- as stated on the brochure you referenced. You have had your annuity for years for the guarantee on a fixed indexed annuity to be 3% (most companies have cut that percentage or removed it from newer contracts). To bad mouth the agent for making a commission on this product (which is way less than you quote) is almost as stupid as leaving her money in a 1.5% CD (which the bank makes money upon). The agent is offering a service and providing a safer product than market returns have been producing and giving her access to an income she can't outlive and will not go down, not matter how long she lives.Quote:
Originally Posted by Fr_Chuck
Bad information can be worse than intentional evil. If you, through your own ignorance, mislead this lady to not do this you my have adversely affected her standard of living for the rest of her life. Live with that!
Great product, Great Company, ask questions and understand. Also, if you are spending more than 10% your retirement (the free yearly withdrawal amount after the first year) you will ruin your retirement.
Hi iambigbob,
Want to thank you for your
Response about American Equity.
It sounds like you have had some
Experience with them. Do you
Have an annuity with them and
If so, how is it doing?
My husband and I decided to
Invest $50,000.00 with them,
But in the beginning we were
Thinking of putting in $100,000.00
Since it was a new company we
Were unfamiliar with, we decided
That way, but perhaps will take
Out another annuity later.
Thanks again for your help.
He didn't bad mouth the agent. He was commenting on how high the commission is, and I don't know for sure, but may have be referring to the fact that commission-based is not always the best way to go, versus fee-based. We understand the agent has to make a living and is doing a service. I'm making a living and doing a service, but I'm not charging commissions. It IS possible to charge in another manner besides commissions. It is not "stupid" to bring this up.Quote:
Originally Posted by iambigbob
And where did the 1.5% in a CD come from? How the heck do you know where her and her husband have their money. Maybe it's in something better than this. How do you know?
Most of what Fr_Chuck said was just pointing out certain information, even included that this one seemed OK (but also pointed out the down sides), and is stressing the idea of looking into it, which is what he did. OP needs to look into too.
I'd be curious why you are trusting this particular response and completely ignoring the other one?Quote:
Originally Posted by brann385
In the end, have you looked into this thoroughly, or did you just go off iambigbob's good word? How do you know he doesn't work for the place or something? The only thing he said was "great company," look into it. The rest of his post just cut down everything the other post said. I'm not saying he's wrong -- he just really didn't provide you with any information - did he?
brann385: Every customer has different needs and concerns. To answer whether this product is ideal for you or not without knowing more information about you would be irresponsible. While one cannot address everything here, I'd be curious to know your overall liquidity position right now and how you've managed your assets overall. Perhaps your total net worth is a combination of equity in real estate and qualified money (ie, IRA, 401k type assets). Without considering your income and balance sheets as well as a conservative forecast of your net earnings over the next 10 years from various assets (pensions, 401k's, interest income, even perhaps income from a job still) - again, it's difficult to answer.
I will say from the literature I've reviewed, (I'm an attorney by the way) there are quite a few different aspects to this "retirement gold" product that you should understand. Before I delve briefly into that though, it's important to note that any investment planner who sells life insurance products will always collect a 'commission' on the sale of the product. Fee based planners generally refer to creating a plan and servicing accounts that generally maintain investments like equities, fixed income (bonds), options, etc. The actual manager of those accounts could be an entirely different firm. Anyway so the point is, if you purchased this product from this agent, they'll get a commission as would anyone else who sold an insurance product. The commission is not 12% (referencing the Davis Life Brokerage link FR_chuck provided above). That 12% is in reference to a 'Premium Bonus' on your purchase of the product. From the current literature though, that bonus is now reduced to 10% which I have also received. I've asked my agent how much the commission is and consulted the insurance company directly. It seems the breakdown is generally that the agent works through a servicing firm that supports their business. They earn 7% +/- a percentage of which they give the agent 6% and take the remainder as their cut. At least it's in this ball park if these numbers are not completely accurate. That said though, the commission is obviously built into the product so it's 100% incorrect to say the value of your account will be reduced by that exact commission in the first year. In fact my account value increased in the first year because the markets performed well and I received some nominal earnings from that growth knowing that if the markets went down, I'd lose nothing, which is the most important factor in my consideration. I've lost thousands with 'investment brokers' in the past who gave me the whole song and dance about growth and value where my insurance agent taught me about 'protection' and 'capital preservation'. I couldn't care less if they were fee based or commission based - I want a product that's suitable for me and if there are no guarantees, at my age, it's not worth considering. Please note also, I've read a lot of literature and have done my own research on all these products for many years now so ensure that I'm making the right decisions for my family.
Now getting down to this product. If you and your husband are not dependent on the funds you're contributing to this annuity or the income that can be derived from it, for a period of 10 years, then perhaps this is an appropriate solution for you. (Perhaps!) Now Bramm - you mentioned 6%. It is important you understand where this figure comes from. You have a 'rider' on this product which basically says - irrespective of how the actual account performs - the Insurance company will provide an 8% growth on your "income benefit" per year. This is 'compounded', not 'simple' interest - which makes a big difference and positively in your favor. But the "income benefit" is the tricky part. The ONLY way you can take advantage of that 8% compounded growth is if you choose to take the 6% of your "income account value" for the rest of your life. So let's make it clear with a practical application and I'll give you my situation as an example.
I invested $200,000 into this product. I received a 10% bonus so my account started with $220,000. My account value has grown since then, the first year it did well because markets were up. This is my second year so I won't know until later but so far it is looking good. If the market went down though, I wouldn't lose a dime. Makes sense though right? Markets go up, I make some money but not tied 100% to actual market returns. Markets go down, I'm protected. For this 'protection', the insurance company is making me hold my money with them for 10 years. I can sustain that period without these funds so it is appropriate for me personally.
But there is another piece working for me here as well - which is the "income benefit" that I really purchased this product for and it seems like from what you were attracted to - is why you and your husband considered this as well. In that piece of the product, American Equity is growing my 'income' account by 8% a year. In 10 years, my $220,000 (including that 10% bonus) will be nearly $475,000 in the "income account" and from THAT - the ins co. will pay me $28,500 for the rest of my life. How did they get the $28,500? It's 6% of my "income account" at the end of the 10 years. Now if my spouse and I BOTH owned the policy together, I believe we would receive 5% of the "income account" for as long as the 'survivor' lives. Personally when I did the math, the 6% sounded better to me.
Now if for whatever reason I need money, I can always take out 10% of the funds and it is a 'penalty free withdrawal'. I can only do this once a year though. So basically I can only take $20,000 a year out of it, if I desperately need it. I don't foresee that happening though but anything is possible. I'll end up paying a surrender penalty if I do need to take the funds out in the next 10 years, which decreases over time, but I thought about it and really, I could have easily lost that much money in a mutual fund years ago. At least the insurance company is telling me the MAX I could lose if I took out the funds at a certain period. No broker would ever tell me. They told me - 'you could technically lose 100% of your money but that's not realistic. Perhaps 10% or 20%. Meanwhile I lost 40% in 1 year. I got wise after that and did my own research but I still trust many of these professionals. You just need to talk to the right ones and do your homework!
I hope that clears up your concerns. I am happy with the company overall but I have put some other funds in different products with other insurance companies so I don't have all my eggs in 1 basket. I own an Allianz product and an Aviva product as well. The Allianz product is called the Masterdex X. I liked it (even after all the research I did online which has a lot of bad and good reviews). Basically in 10 years I get my money back and can walk away. I don't have to take income from it to take advantage of the 10% bonus. But there is no 'income benefit' like what American Equity offers. Or if there was one, it's not as good. The American Equity product will pay me the highest income benefit I could receive compared to all the other alternatives I researched.
By the way - I compared this investment to buying municipal, corporate, and treasury bonds. Municipals in my state of PA were the most attractive because I can get tax free income but even at 4% tax free compounded annually - in 10 years, I wouldn't have nearly as much to withdraw 6% from to last me my entire life. The upside to those other products though is I could sell most of it and let the bonds mature and get most of my money back. In this market with what I keep hearing about a possible bond bubble, it is also possible when I sell my bonds I won't get my money back. I'd have to wait till they mature at least. The annuity sounded much better to me so most of the money I don't need right now is in annuities. I have some in Municipal bonds, checking, and savings.
I forgot to mention one more thing - say your 'account value' goes to zero while you're taking '6% for life' from the income benefit. Even if the account is zero, you will still get paid as long as you. Since there is a decent age gap between you and your husband, I would consider the spousal income benefit.
I hope this clears a lot up for you and sorry for the very long winded messaged but I think it's all helpful and good to know! Good luck out there!
- Mark
| All times are GMT -7. The time now is 08:38 AM. |