So what’s the next the next biggest problems with annuities? Well, the next biggest problem with annuities in my opinion is that they are rarely designed with the consumer’s best interest in mind.
Oh, you can argue with me all you want but there are typically 2 types of annuities. One that is good for the agent and the insurance company, and one that is good for the consumer. The problem is, the one that is good for the consumer is usually the one that pays the LEAST commission. And the one that isn’t as good for the consumer (long surrenders, lower rates/potential, etc) usually pay the highest commission.
It’s only obvious. The longer the insurance company can get the money for, the more they will pay (entice) the agent. The agent now has a decision to make. Does he offer a shorter annuity with less commission or the longer one with higher commissions. Unfortunately, the agent often chooses the latter.
DON’T GET ME WRONG. There are agents out there who do their clients well. There are also many who are enticed heavily by the big commissions. Greed is a natural human emotion. It plays part big time in the annuity sales process. If you don’t think so, you are sadly mistaken.
And if you take a look at annuities, the benefits can be good, however, sometimes they are loaded with conditions. For example, there is a 7% guarantee put on some variable annuities. It’s all smoke and mirrors. If you look at the conditions to get the 7% guarantee, it turns out to be a minimal (sometimes 3% or lower) guarantee. It’s not designed with the consumers best interest in mind.
And this holds true for many of the benefits. The above is just one example. So therefore, it’s best for a consumer to be fully educated about their annuities. We are releasing a FREE version of the Shocking Truths called ‘Annuities: The Warning Report.’ I’ve come to realize that many people won’t pay for good information. Therefore there will be a free version. No, it’s not everything but it’s enough to get your mind thinking about if you should or should not buy an annuity. It will be available at Free Annuity Report (just click on the words).
Hope this helps.
What is the one of the biggest problem with annuities and the annuity industry? It’s simple. The training and requirements to become an annuity agent (for fixed annuities) are absolutely minimal. The barrier to entry is barely existen. I mean you can literally become an insurance agent over the weekend. Isn’t that crazy?
So why is that a problem? Well, it’s a problem because when you are dealing with an annuity, you are dealing with someone’s financial future. So what makes someone who can pass a simple insurance exam qualified to advise someone on their financial future? It is absurd to think that someone with so little qualifications has the license to do SO MUCH damage to someone.
This is one issue that needs to be addressed. In order to sell annuities, there has to be tighter regulations on what someone has to go through. There has to be a higher standard on the level of competency that is needed to sell annuities. The industry must raise the bar. The insurance industry must put agents through rigorous training before they are qualified to sell annuities.
Think about it. Doctors who advise you of your health have to go through YEARS of training in order to do what they do. There are many annuity agents who outearn doctors by multiple folds. Furthermore, they have the ability to do just as much damage to your future as an incompetent physician. And they don’t have to go through SQUAT.
I am pretty sure I could get a junior high student to pass the insurance exam in less than one week. If not, at a minimum I could get a high school student to do it. It is simply that easy and that is wrong!
So, if you wonder why your annuity agent didn’t tell you everything about the annuity he was selling you and how it would affect your financial future, maybe it’s because HE HAD NO IDEA. And that’s just the start. Stay tuned for Part 2 where I discuss another one of the biggest problems with annuities.
Ignorance ISN’T Bliss
Okay, let me start out by saying, whenever someone needs to make more money, they come up with a whacky idea for people to participate in. And this is one of them.
I ABSOLUTELY disagree with anyone who tells their client to get the cash out of their house to buy an annuity. It is absolutely stupid. LEt me explain. Yes, house money is tax deductible…yes, annuities are tax deferred. But when mortgage rates are low, so are interest rates on annuities. Their is simply not enough reward in beating the spread to make it worth it.
Now, for a younger client, MAYBE just maybe it may make sense. But for senior clients who don’t have a high risk tolerance, it is absolutely a bad move. Why oput yourself under added pressure and have higher payments. You retired to relax. And if you need to make more money, this may not be the best way to do it.
These are just my thoughts and I wanted to share them. I hope this helps.