Annuities - Don't Put Your IRA In A Variable Annuity - Part 2

Last week I shared with you the real reason advisors push IRA accounts into variable annuities: the commission. If you?re getting ready to retire with a large IRA rollover, or your current IRA account is nearing the end of any surrender penalties, chances are you?ll be pitched this product. So this week I?m going to reveal more secrets about the truth behind the variable annuity sales pitch.

One of the biggest draws advisors use to get you to take the plunge is the promise of the big bonus. They?ll pay you 6%, 8% or even 10% extra, right up front, just for putting your money into their variable annuity. Sounds great, doesn?t it? Who wouldn?t want such a big boost to their nest egg, especially with the stock market returns of late? But remember, there?s no such thing as a free lunch.

In return for this lovely bonus, you end up paying higher recurring annual fees, usually .15% higher (or more) than regular variable annuities. These fees are charged on all of the money in the annuity and are a continued drag on performance. Surrender penalties are higher and longer, too. The truth is that when you take into account the increased fees and the extra years you have to stay in the annuity, you really aren?t getting a ?bonus? at all!

These bonuses aren?t just used to entice you to invest your original IRA rollover when you retire. They?re also used to encourage you to transfer out of an annuity you already own that?s still in the penalty period. Advisors will tell you that the bonus on this ?new-and-improved? annuity will ?pay you back? for the penalty you?ll pay to get out of your old commission-based investment. The truth is, by getting you to switch to the ?bonus? annuity, they earn a fat fee up-front. You end up with pretty much the same thing you had but now are locked into it for much longer. What kind of a ?deal? is that? The promise of multiple investment choices is another feature of the variable annuity sales pitch that doesn?t live up to its claim. It?s true that many variable annuities offer a multitude of mutual fund choices in various sub-accounts, including funds investing in bonds, small companies, large companies, international stocks and more. Surely out of all of these choices, anyone could create a balanced well-performing portfolio, right?

Not necessarily. It?s sort of like fishing. Who wants to fish in a pond full of minnows? Wouldn?t you rather drop your line where you have a greater chance of catching the big one? The mutual fund universe is full of thousands of choices. But only a small group of them are consistent top performers. Unfortunately, few variable annuities offer these big fish.

Some variable annuities feature a well-known fund already offered to the general public. But beware. This same fund will have much higher management fees within the annuity than it does outside of it, hampering its performance. I believe insurance companies make special deals with mutual fund companies to gain access to their management and then charge higher fees.

When you invest your money into a variable annuity, you?ll no longer have control over the choices at your disposal. The insurance company can change the investment choices whenever they want to and you have no recourse. Since your money is locked in for years, it will be very costly to change course a few years down the road should you be dissatisfied. What kind of choice is that?

So here?s the bottom line: variable annuities make big promises but don?t really deliver. Every feature they offer -- be it a big bonus, a multitude of investment choices, death benefit, or a guaranteed income stream -- comes at a very high price. High management fees and long, costly surrender penalties hinder your performance and rob you of your flexibility and control. The ones making the most money off of variable annuities are the advisors and the insurance companies. It turns out that variable annuities are a great investment?for them.

If you?d like free, clear, unbiased advice submit your questions to http://www.guardingyourwealth.com/askjeff.htm. Also, see answers to questions other readers have asked onthe Q&A page at http://www.guardingyourwealth.com.

Mr. Voudrie is a Certified Financial Planner, nationally syndicated newspaper columnist and President of Legacy Planning Group, Inc., a Private Wealth Management Firm in Johnson City, TN. He can be reached at jeff@guardingyourwealth.com

Nationally-syndicated financial columnist and Certified Financial Planner? Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He?ll answer your financial question ? FREE at http://www.guardingyourwealth.com

Annuity Rescue - How to Save Yourself a Bundle

Is Your Annuity Really Working For You? Annuity expenses have a significant impact on your potential returns! Tax-deferred investing

• An income stream in retirement.
• Insuring your principal in case of death.
• Unlimited contributions.

For all these reasons and more, annuities offer a world of promise for investors in search of growth and/or income investing opportunities. Unfortunately, annuity purchasers don't always spend enough time understanding the real costs of the annuities they purchase. Do you know whether your annuity is low cost or high cost? Or the effect these costs may have over time? First, it's important to understand that every annuity carries an administration charge known as M&E (mortality and expense). There are also costs associated with the mutual fund investments found within the annuity. In addition, most insurance companies charge a surrender penalty of 5% to 10% if an investor wants out of the contract before a designated period of time is up. The bottom line: annuity expenses can have a substantial impact on your potential returns. In fact, your investing success and the resulting stream of income at retirement are greatly affected by the administration fees of your annuity - similar to the mortgage rate of your home loan.

To see what a difference lower fees can make on the potential growth of your annuity policy, visit one of our favorite tools: the Ameritas Annuity Cost Comparison Calculator at the Ameritas Direct website.

http://www.ameritasdirect.com/services/lowfees.htm To compare costs accurately, enter your current annuity expenses, an investment amount and time horizon, and other expense assumptions you'd like to consider. Keep in mind that all variable products have some investment risk, including possible loss of principal.

Also, investment returns will fluctuate over time due to market activity and an underlying portfolio's objectives - so that investor shares, when redeemed, may be worth more or less than their original cost. Also, if you're considering switching annuities, be aware that there may be penalties and surrender charges which can be substantial. It's your money. Ensure that your annuity is working for you and your retirement nest egg, not for the insurance or fund company.

Article reprinted with permission of Ameritas Life Insurance Company

Steve Hood

LifePlan Advisors, Inc.
A Registered Investment Advisory Firm

For help or answers to your questions call 541 549-1154

http://www.allweatherinvestors.com

"Your Guide to Lifetime Financial Security and Independence"

26 years of helping our clients and friends meet their retirement goals

Is it Possible To Sell Annuity Settlements For A Lump Sum of Cash?

You can sell annuity payments for a lump sum of cash rather than wait for your monthly payments if you are in need of a significant amount of capital for an investment, large purchase or other purpose. Whether you have a structured settlement from a lawsuit or your annuity is just a personal investment, there are experienced, professional note buyers who will purchase all or just part of your annuities.

The idea of a tax-free steady source of monthly income is appealing for many people, as it allows them to pay various bills and it is is something that comes in month after month, usually for many years. Some individuals invest in annuities on their own or through work, and annuities are quite common when it comes to structured settlements in injury cases.

But many people find themselves in a position where they need or want an immediate source of cash and they'd like to sell annuity settlement. There are many reasons for this. They might have come across a huge investment opportunity. They might be looking to retire. They might want to make a big purchase. Perhaps they just don't want to wait for a small check each and every month, or don't want to assume the risk of the payor defaulting for one reason or another.

Whatever your own personal reason may be, you can quickly and easily sell annuities without any headaches or hassles. You can usually do this within 10-14 days, especially with an experienced, reputable note buyer. He or she will let you know what your options are so you can make an informed decision. Some individuals choose to sell annuity settlement in its entirety which would yield the largest amount of cash. Others sell just a portion of their annuities, retaining some of their monthly payments.

How much will you get when you sell your annuities?

There are many factors that your note buyer will take into account when evaluating your annuity. Some of these include: balance and time remaining, regularity of payments to date, inflationary concerns, financial stability of payor and other details. Remember, it has to make sense for them financially otherwise it's not worth buying.

The best way to get top dollar when you sell annuity settlement is to keep careful notes of all transactions, and retain a copy of all paperwork from when the annuity was first set up. The more you are able to provide to the note buyer the better off you'll be. Don't forget that you have options, so you don't have to sell the entire annuity. There are several ways to structure it so you get a lump sum and continue to receive some of the payments each month.

If you do decide to sell annuities, make sure you find an experienced note buyer who can offer you a competitive rate for your annuity settlement. Discuss all of your available options and decide what's best for you.

Jamie has been working in the finance industry for many years and is a contributing editor to http://www.selling-your-note.com. Learn how you can sell annuities and other debt instruments on our site as well as get a free, no obligation quote from a professional note buyer.

Life Insurance Settlement Finds Hidden Cash For Annuity Purchase

A life insurance settlement may hold the hidden source of cash to fund your next fixed indexed annuity sale. Every agent on the planet who is actively selling annuities has heard the objection from a prospect, "I love your concept, but all my money is tied up." Of course, your comeback is to motivate Mr. & Mrs. Prospect to move at least some of their funds into the safety of an FIA. But if and when you find yourself out of bullets, please do not part company without taking a final shot with something like, "One last thought before I go. We sometimes find that retirees may have an old life insurance policy they're still paying on, or that may even be paid up. Oftentimes the reason for taking it out so long ago has changed because life circumstances change over the years. I have a way to 'repurpose' this kind of dormant asset for usually more than its cash value, and apply the money toward your retirement needs today..."

Eureka! Suddenly your dying sales interview springs back to life with the prospect of using the settlement on a life insurance policy as found money.

Actually, before life insurance settlements (also known as viatical life settlements), there were two options when a senior had a life insurance policy that was no longer needed. He or she could either let the life insurance policy lapse or cash it in for its surrender value.

Now seniors have an excellent opportunity to capitalize on their current life insurance policy using a life settlement solution. Such life insurance settlements allow seniors to cash in their insurance, but in a new way. Instead of cashing in their policy with the issuing life insurance company, they can work with a bonded life settlement broker to cash in their policy with a financial institution that will pay more.

Simply put, the transaction is a buy-and-sell exchange between a policy owner and an investor, facilitated by a bonded life settlement company or broker. The policy owner deals directly with the broker who negotiates on his or her behalf. There is no fee to the seller. The broker's job is to package and present the deal for competitive bidding. Financial institutions bid for the best portfolio investments. Once limited to the terminally ill, senior life insurance settlements have evolved into a unique opportunity for today's mature market. And it works for individuals, businesses and charities.

Dollar amounts are based on the death benefit, not the cash value. Ideal life settlements are a percentage of the net face value (death benefit minus outstanding loans and accrued interest) and are always greater than any cash surrender value. For example, one recent case involved a 74 year old male with a $420,000 term life policy, no cash value. The life insurance settlement broker converted the policy to whole life. The purchasing investor took over premium payments. The happy client tucked a tidy $68,000 into his equity index annuity. And the agent socked away $12,600 commission on the life insurance settlement (3% of the policy death benefit) plus $6,120 commission on the FIA. Not a bad day's pay.

When your prospects need a little prompting on the reasons for using a life insurance settlement to fund an equity indexed annuity, suggest the following:

* Beneficiary is deceased and coverage is no longer needed, or beneficiary is financially well off and no longer in need of death benefit for survival

* Premiums are no longer affordable

* Estate size has changed and policy coverage amount is too large for estimated estate taxes * People are living longer. Retirement income needed over longer period

* Better quality of life with greater cash flow

In its simplest form, your clients can receive more money in the secondary market than from their life insurance company. They avoid paying surrender charges from the insurance company and no longer need to make premium payments.

All of this may sound simple, but resources, time, and experience are essential. A bonded life insurance settlement company should have all the tools to make sure that your client's settlement is completed properly and efficiently. While InsuranStar.com neither endorses nor recommends any life settlement solution or senior life insurance settlement broker, as an annuity producer and Wholesale Distributor I've worked with one bonded life settlement broker whom I can recommend with confidence. Please feel free to contact me for a trustworthy reference.

http://www.Free-Insurance-Leads.com Gary Le Mon is a wholesale distributor of fixed indexed annuities for Allianz, American Equity, Sun Life Financial, and ING. Author and developer of the Safe Money Seminar, a financial planning seminar for Seniors, Gary serves as guest speaker on behalf of agents and agencies nationwide. He is coach, mentor and motivator to

Annuity Appointment Setting: Super Sales Techniques

When it comes to annuity appointment setting, the most effective technique by far is the Drop-By System. However, if you've totaled your car, broken both legs and must resort to a phone call, I've always taught my agents that the best way to engage your prospect on the phone is to open with a statement that is anything but your typical warm fuzzy, "How are you today?" Your statement must (1) <u>make them sweat a little</u> and (2) <u>pose a problem</u> which is at the same time a benefit of owning an annuity (without saying the word 'annuity'). Note: This formula works with any product.

For example, "HELLO, MRS. JONES? MY NAME IS _______, FROM THE _____ AGENCY DOWN THE STREET, AND I'VE BEEN TRYING TO REACH YOU BECAUSE I FIND THAT SOME OF MY RETIRED CLIENTS ARE PAYING INCOME TAXES ON THEIR SOCIAL SECURITY, AND THEY DON'T NEED TO. I'M A FINANCIAL ADVISOR IN THE AREA AND I CAN SHOW YOU HOW TO REDUCE OR ELIMINATE INCOME TAXES ON YOUR SOCIAL SECURITY. I'LL SPEND 10 TO 15 MINUTES WITH YOU UNLESS YOU KEEP ME LONGER. THERE'S NO CHARGE. I'VE GOT WEDNESDAY MORNING AT 10:00 AVAILABLE, OR WOULD 2:00 ON THURSDAY AFTERNOON BE BETTER FOR YOU?"

Your prospect's responsibility at this point is to say, "No thanks, I'm not interested," or maybe something not so kindhearted. You've just interrupted her world. However, you'll do much better at annuity appointment setting if you understand that a 'No' is simply a latent reaction from childhood. In our formative years, the one word we heard more than any other was the dreaded, "No!" It's what we got almost every time we asked for something:

"Mommy, can I have a cookie?"

"No."

"Daddy, can I drive the car?"

"No."

Your job as a professional salesperson is to understand that humans are hardwired to respond to practically any proposition with the word, "No." It's how our circuits work. Negative responses can range from a simple 'no' to a blistering harangue. Your steadfast, automatic response must be to pull the plug, short-circuit the connection, neutralize the way your prospect's mind works.

Try the old 'feel, felt, found': "I CAN CERTAINLY UNDERSTAND HOW YOU FEEL, MRS. JONES. A LOT OF PEOPLE I TALK TO INCLUDING A FEW OF YOUR NEIGHBORS FELT THE SAME WAY AT FIRST. BUT AFTER THEY UNDERSTOOD THE PROBLEM AND HOW SIMPLE THE SOLUTION WAS, THEY FOUND THEY WERE SAVING HUNDREDS OF DOLLARS A YEAR IN UNNECESSARY TAXES." By pouring water on your prospect's natural resistance, you weaken their response and, at the same time, maneuver the phone call into a back-and-forth conversation.

Now you've earned the right to continue: "...YOU SEE, WE FIND THAT A LOT OF PEOPLE SIMPLY DON'T REALIZE THAT A PORTION OF THEIR ESTATE THAT THEY WANT TO LEAVE TO THEIR CHILDREN AND GRANDCHILDREN WILL BE EATEN UP IN PROBATE COURT, AND IT DOESN'T HAVE TO BE THAT WAY. I'M A FINANCIAL ADVISOR IN THIS AREA AND I CAN SHOW YOU HOW TO FIX THAT. I'LL SPEND 10 TO 15 MINUTES WITH YOU UNLESS YOU KEEP ME LONGER. THERE'S NO CHARGE. I'VE GOT WEDNESDAY MORNING AT 10:00 AVAILABLE, OR WOULD 2:00 THIS THURSDAY AFTERNOON BE BETTER FOR YOU?"

Get ready for it. Here it comes again: "No thanks," she says, "we've already got a financial advisor who's been with us for years." Mrs. Jones is only playing her part in this annuity appointment setting rivalry. At the same time, she's telling you exactly how she wants you to get her to say yes. Pay attention to her words. This time you're going to, first, neutralize her objection, then use her exact words to identify "... THE PEOPLE WHO BENEFIT THE MOST FROM OUR SERVICES."

For example, "I CAN CERTAINLY UNDERSTAND HOW YOU FEEL, MRS. JONES (neutralize). HOWEVER, THE PEOPLE WHO BENEFIT THE MOST FROM OUR SERVICES ARE THE ONES WHO ALREADY HAVE FINANCIAL ADVISORS. SEE, A GOOD FINANCIAL ADVISOR, JUST LIKE A GOOD DOCTOR, WILL OFTEN ADVISE YOU TO GET A SECOND OPINION. I'M A SPECIALIST IN THIS AREA AND I CAN SHOW YOU HOW TO AVOID THE EXPENSE AND DELAYS OF PROBATE. I'LL SPEND 10 TO 15 MINUTES WITH YOU UNLESS YOU KEEP ME LONGER. THERE'S NO CHARGE. I'VE GOT WEDNESDAY MORNING AT 10:00 AVAILABLE, OR WOULD 2:00 ON THURSDAY AFTERNOON BE BETTER FOR YOU?"

At this point, if you don't hear a click and a dial tone, you may hear a slight wavering in her voice. Her "We-already-have-a-financial-advisor" line worked with the last salesperson. What's up with you? Now she has to either think about her response or default to the old standby, "I'm not interested." If she responds with anything but "I'm not interested," she'll be telling you how she wants you to get her to say yes. These responses can include,

"I'm too busy right now."

"Our son-in-law takes care of those things."

"We've already got all the insurance we need."

"I don't have any money."

"I never accept telephone solicitations."

You must stay one step ahead of your opponent by preparing your script for all possible scenarios. Sit down and write them out in your own words. Use the above script as an outline and insert the gist of her response in the appropriate places. Then follow up with another problem for her to worry about which is also a benefit of owning an annuity. Don't be afraid to get creative. Annuity appointment setting is a game of wits and circular logic. The more you differentiate yourself from the last three telemarketers she sent to the insane asylum, the more successful you'll be at appointment setting and, ultimately, selling annuities.

Finally, if you're dealing with an indifferent, uncreative type who just can't come up with anything but, "I'm not interested," try this:

"MRS. JONES, IT'S OKAY IF YOU'RE NOT INTERESTED. I JUST WANT TO ASK YOU ONE QUESTION. WORK WITH ME HERE. IMAGINE THAT EVERYTHING YOU'RE WORTH - YOUR HOME, YOUR SAVINGS, YOUR INVESTMENTS, EVERYTHING - WAS GOING TO BE TAKEN AWAY FROM YOU FIRST THING NEXT WEEK. AND LET'S SAY I CALLED YOU JUST LIKE I'M DOING TODAY, AND TOLD YOU I COULD PROTECT YOUR FINANCIAL FUTURE IN A RESPONSIBLE WAY SO THAT NONE OF THOSE BAD THINGS WOULD HAPPEN. WOULD YOU STILL TELL ME YOU'RE NOT INTERESTED, OR WOULD YOU LET ME SIT DOWN WITH YOU AND SHOW YOU HOW IT WORKS BEFORE ANYTHING LIKE THAT HAPPENS? YOU SEE, WE KNOW THAT MANY PEOPLE, MAYBE EVEN YOU, HAVE A LOT OF THEIR LIFE'S SAVINGS SITTING IN THE BANK, OR IN STOCKS AND BONDS, OR IN REAL ESTATE, WHERE IT CAN BE ATTACHED BY A JUDGEMENT IN A CIVIL COURT OF LAW ... AND IT DOESN'T HAVE TO BE THAT WAY. I'M A FINANCIAL ADVISOR IN THIS AREA AND I CAN SHOW YOU HOW TO FIX THAT. I'LL SPEND 10 TO 15 MINUTES WITH YOU UNLESS YOU KEEP ME LONGER. THERE'S NO CHARGE. I'VE GOT WEDNESDAY MORNING AT 10:00 AVAILABLE, OR WOULD 2:00 THIS THURSDAY AFTERNOON BE BETTER FOR YOU?"

Get the picture? You need to eat, sleep and breathe annuity appointment setting.

http://www.Free-Insurance-Leads.com Gary Le Mon is a wholesale distributor of fixed indexed annuities for Allianz, American Equity, Sun Life Financial, and ING. Author and developer of the Safe Money Seminar, a financial planning seminar for Seniors, Gary serves as guest speaker on behalf of agents and agencies nationwide