We need to dive in to this subject so that you can see first hand just how difficult it can be to deal with some of the people selling annuity products.
For example, one online resource on annuities sends a free booklet when you enter your contact information.
Because of their claim to be a trusted, reliable source for information on annuities, we took them at their word and expected nothing quality information.
We found something completely different.
As we're not looking for a libel suit, we won't name the site here, but almost any Internet search on annuities will return this site near the top.
We sent a request for the free booklet and found the information to be fairly accurate but spun in a way that made some products look better than they actually are.
It is no secret that the book does not really inform a consumer about annuities in general as much as it directs people to fixed-indexed annuities specifically.
Where is the unbiased information? It is quite apparent that you will really only get a product specific sales pitch from the website in question.
Here's why:
- The booklet reveres fixed indexed annuities as a 'no lose' proposition without mention of other types of annuities on the market.
- The booklet states that a long surrender schedule may give you "more contractual benefits.
" Absolutely false!!! - The booklet refers to minimum fixed rates of 3% within fixed indexed annuities, yet the featured product insert provided with the booklet promotes a product with a 1% minimum.
Sounds exciting, doesn't it? (sarcasm intended)
Fixed indexed annuities can offer returns that match the market while eliminating the potential for loss.
The fees on these contracts are substantial and there is no promise of solid returns, and they tell you to only expect 60-70% of market yield.
With historical averages around 10%, this would leave you with a return of 6-7%.
With market volatility, who knows how you'll really profit.
Did you know that there are guaranteed minimum rates in fixed annuity products available that will give you 6%, that bypass the market risk? Why assume the risk, then? It's a real long shot to call this booklet 'unbiased information.
' 1) Long surrender schedules NEVER provide you with additional contractual benefits! You are loaning the insurance company money and they are assessing serious penalties if you want your money back in a reasonable time frame.
The product they promote has a 14 years surrender schedule.
I guarantee you'll find another use for your money before 14 years has passed.
Long surrender schedules only benefit the insurance company directly and the agent indirectly.
2) A guaranteed minimum rate of 1% is laughable.
What kind of assurance is that? Especially when you have to wait 14 years to get your money back.
You will find yourself far behind the crowd of people who actually found some unbiased advice.
The 3% mentioned in the book is what you really need to look for if in fact a fixed indexed annuity is what you want.
In my opinion, this is a serious contradiction.
These are a few of the concrete examples we found in the free booklet.
The booklet also falls far short of the amount of information needed to understand annuities in general and how they may fit in your situation.
There is also some ambiguous language that makes it hard to call this anything other than a sales pitch.
Obviously, during the verification phase, you would find that these guys do not deserve your trust.
On another important note, the sales commission paid to the agent is disturbing.
If you purchased this annuity, your 'trusted agent' would receive 9% for his/her trouble.
No wonder the product has such a miserable guarantee and a binding surrender schedule! The lack of information in combination with the sales pitch tells us that these guys are just out to make a quick buck.
Each person who considers an annuity needs to be able to objectively determine why sales tactics like this are dishonest, misleading or just plain ignorant.
No matter how you look at it, it is dangerous to do business with these kind of people.