Date posted: March 31, 2010
The Los Angeles ABC affiliate’s Ric Romero just did a piece about why “Annuities are perfect for some investors.” The story describes a California woman whose husband died on Christmas Day, leaving her struggling with the thought of paying the bills without him. After seeking advice from an investment advisor, she found that the best annuities for her would not only protect the principal money left by her husband, but also give her a lifetime stream of income and avoid the stock market risk she didn’t want. The main advantages for investing in annuities are the lifetime income stream, protection against inflation, and protection of your principal. Annuities are not perfect for everyone though because your money is locked in and you may not get as high a rate of return as with other investment products.
But the California woman highlighted believes that her annuity is the best product to make her money last the rest of her life. Her adviser from Kennedy Wealth Management said that an annuity was right because of her age and the fact that this was the money she had and she needed to make it last and protect it. With immediate annuities, the principal is locked up forever and you receive payments like a traditional pension plan. Variable annuities are linked to the stock market and can have higher fees than other types. Fixed or fixed-index annuities have a stated rate that is usually a touch higher than bank rates. They also can be linked to a stock market index, giving the potential for higher returns. While annuities are perfect for some investors, they are not right for everyone and a decision should be made to purchase after speaking with an expert about your situation.
Date posted: March 30, 2010
Wells Fargo’s SGI Wise US Index equity linked CD is a great investment opportunity. In comparison to a fixed-index annuity product, this wise indexed CD has more of what we recommend. One of the biggest differences between these investment products is FDIC insurance. Equity linked CDs are covered by FDIC insurance while fixed-index annuities are not. While both products guarantee your principal, the minimum guarantee varies with fixed-index annuities. The participation rate for Wells Fargo’s equity linked CD ranges from 90-110% which is a very good rate. Rates range with different fixed-index annuity products. There are no caps, spreads, averaging or moving parts with the wise indexed CD, but fixed-indexed annuities have all of those.
Investors have limited liquidity with equity linked CDs inside of their set time frame, while fixed-index annuities have a 10% free withdrawal. You will not lose potential gains on withdrawals with the wise indexed CD, but you can with the fixed-index annuity. Both products have some type of tax deferrals, but the wise indexed CD is the only one without a 10% penalty for withdrawals before age 59 1/2. Compare equity linked CDs and you’ll see that with no contribution limits and a simple and transparent product, you have yourself a good investment. Fixed-index annuities are not always transparent and have a $1 million limit on contributions. Wells Fargo’s SGI Wise US Index equity linked CD is definitely a product worth speaking with an expert about.
Date posted: March 28, 2010
In a press release from A.M. Best Company, they affirmed Nationwide’s financial strength ratings of A+ and aa-. In “A.M. Best Affirms Ratings of Nationwide Financial Services, Inc. and Its subsidiaries; Outlook Negative,” the ratings are summarized. Nationwide Financial Services, Inc., owned by Nationwide Mutual Insurance Company and Nationwide Mutual Fire Insurance Company, and its subsidiaries operate out of Columbus, Ohio. Subsidiaries Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company had affirmed financial strength ratings of A+ (Superior) and issuer credit ratings of aa-, partially due to sales of their best annuities. The parent company’s issuer credit rating of “a-” and all of its debt ratings were also affirmed. According to A.M. Best, the outlook is negative for all of Nationwide’s ratings.
Nationwide’s business profile is diverse with many product lines, has wide-ranging brand recognition and a leading position in the market of public retirement plans. Their net flows in retirement and individual annuities are stable and improving. Their financial leverage is within the guidelines judged by A.M. Best. Some factors offsetting the ratings include a large exposure to mortgages, mortgage-backed securities and bonds that are below investment grade. While there are still moderate levels of impairments going forward due to these factors and an industry hit hard with the economy, they have been able to combat the impairments with a decline in individual annuity outflows, mainly due to variable annuities, and good net flows in the public 457 retirement market.
Date posted: March 25, 2010
Sunday’s vote passed the health-care reform bill, upsetting an insurance coalition made up of five organizations. Insurance News Net posted the letter sent to federal legislators by the insurance associations. They are not protesting the actual bill, but an annuity tax included in it that consists of a 3.8% Medicare contribution collected from individual annuity income. Americans use annuities to secure their retirement, which the coalition argues is even more important since we have just suffered the largest economic crisis after the Great Depression. We no longer have access to the pension plans of past generations that provided a lifetime of retirement income. Because of this fact and the consequences of people living longer lives, many Americans use annuities to guarantee a lifetime income from their retirement savings.
While President Obama’s Middle Class Task Force chose to compare annuities to other retirement options as one of the best out there, the insurance coalition wonders why this health-care bill’s annuity tax seems to contradict that. An added tax on annuity income will surely discourage Americans from using this retirement tool to secure lifetime income. The coalition asks legislators to create more incentives for retirement vehicles like annuities, similar to the recent Retirement Security Needs Lifetime Pay Act & the Lifetime Income Disclosure Act. They may not rest until the tax on annuity income is removed from the bill and another solution is found to fund the health-care reform bill.
Date posted: March 24, 2010
According to Fran Matso Lysiak’s article “American National’s New N.Y. Life Subsidiary Targets the Fixed Annuities Market” from Best Week, this new subsidiary is looking to penetrate the fixed annuities market in New York. American National Life Insurance Company of New York plans to expand its parent company, American National’s fixed annuity business in New York State. Over time, the New York subsidiary will sell the entire portfolio of American National Life Insurance Company. American National currently uses career agents and independent national marketing organizations to distribute their fixed annuities. As they’ve expanded to nationwide distributors, selling their annuity products in New York made even more sense.
American National had $2 billion in sales of fixed annuities in 2009, an increase from 2008 sales. Last October, American National Life Insurance Company of New York was incorporated partly in hopes to increase those fixed annuity sales. Just this month, the subsidiary was licensed to sell annuities, life insurance, health insurance, and accident insurance. The New York subsidiary has future expansion plans that include sales of life insurance and pensions. American National is based in Texas. It’s companies sell annuities, life insurance, health insurance, credit insurance, and many branches of property and casualty insurance. With a profitable 2009 and an A.M. Best rating of A (Excellent), American National Life Insurance Company and it’s New York subsidiary plan to excel at more than fixed annuities in the future.