Episode Transcript
Speaker 1 00:00:05 This is annuity straight talk since 2008. Your host Brian Anderson has helped clients nationwide navigate the complex market for annuities with Brian's assistance. Hundreds of clients have achieved a profitable and secure retirement. I would know because Brian has answered many of my questions concerning annuities and retirement planning so that you can benefit as well. Let's get started. Here's Brian
Speaker 2 00:00:49 Hello and welcome everyone to the annuity straight talk podcast, episode number 32. My name is Brian Anderson coming to you from Northwest Montana on a soggy rainy day. Got a dog that wants to get outside, but he's going to make a dang mess if he does. So we're going to have to keep him under wraps a little bit, a little bit, but he's got to run anyway. So anyhow, we're going to talk today about a messed up annuity. We're going to talk about an actual problem. Now I've seen a lot of messed up annuities in my career, but this is one that I actually sold that I thought was messed up for a little bit, listened through to the end. If you want to hear the whole story, we, it ended up not being that big a deal. Everything was just fine, but this is why kind of the purpose of talking about this is to truly understand the fine print.
Speaker 2 00:01:36 I've actually got somebody else to request it. I want to learn about all the fine print. So I'm probably going to do another episode on that coming up, but there's going to be a little research and a lot of writing for that, that one's going to be kind of boring for me, but very interesting for you anyway. So, but that's, it's a common theme with people or a common concern is that there's gotta be something in there that I don't understand. You don't know what you don't know. And if you, you know, a lot of people have called me honestly, information. I wrote they'll call and they say, they have no idea what they actually own or what the annuities meant to do. Or a lot of people think it's supposed to do something that it doesn't. And that's why we're annuity straight talk. So this, you know, when I was faced with the possibility that I'd screwed something up, it really shook me to the core because that's, I mean, I stand on, I take pride in the fact that, uh, we do a really good job here.
Speaker 2 00:02:22 So I'll set it up and tell you about this couple. That called a gentleman that called me about two and a half years ago. And he already owned a couple of annuities and his purpose was now you've got to have a goal with the contracts, right? And I talk about all sorts of different stuff, different strategies, different ideas. The point is just to show you a lot of different ways to use it, because you know, the way you use an annuity might, or some feature of annuity might appeal to you that just as irrelevant to someone else or even a strategy or a way to a way to use it. So that's why I give you a bunch of different ideas. There's nothing wrong with any of the purposes so long as it is exactly the goal that you have. And so in this case, the guy said, well, listen, I like he was 74 at the time.
Speaker 2 00:03:00 He's I like to work. I enjoy my job and I don't know what I'd do. If I retired, I'm totally devoted to and love my wife. She's five years younger than me. She's never had to worry about stuff. She doesn't like making big decisions. And when I'm gone, I want to make sure that she can just turn it on and we'll never, ever have to worry about money. So he's buying primarily buying the annuity for his wife, but there was a possibility, well, if I do decide to retire, if I stop early, maybe we will take joint life income. So the key was simple and I liked that he was very direct and to the point, and he told me at the beginning, he said, I do not care how much the fees are. I do not care how much you make or how much the insurance company makes, uh, don't need the money.
Speaker 2 00:03:37 They don't have any, the beneficiaries were all charities. So they didn't have any family that were going to give the money to anyhow. And he said, all I want is a guarantee. The rest of it doesn't matter. I'm not going to get bothered with that. And I thought that was really cool. He said, if you can show me the best contract and it will do all the things that I do, I don't care what you make, but I will buy it. And when somebody says that I'm willing to go to a lot of effort to do it because obviously the effort's going to be rewarded and I'm not, I don't want to beat up on anybody. Who's had me do a substantial amount of work and never done business with me, but there are a lot of people that have taken vast amounts of time.
Speaker 2 00:04:10 For me, I've never done business with me, which is okay, because again, I hope I'm able to, at the very least help everyone in some way, but I can't I'd have to make money sometimes, or I wouldn't be here because this podcast, it costs a fair bit to get this thing out there. Anyhow. So what I did is I looked up the contracts and we had a grid. I made a big spreadsheet and it was single life on him, single life on her joint life, different time periods over, you know, we looked at the maximum was a 10 year deferral. So every year you wait, the income amount goes up and we had a grid with the two top products. Okay. And so company a was, it was, I'll tell you, it was between AIG and Midland. And so AIG had the highest payout or no Midland had the highest payout in years.
Speaker 2 00:04:52 One through three AIG had the highest payout in years, four through six or seven. And then, you know, 7, 8, 9, 10. It was back to Midland. And he thought that four to six year range was the most appropriate. That was the most likely where he, they would take the income, you know, four to six years was most likely. So that's why he chose American general AIG. And then it came to get the contract. I'm going to read through every part of it. And we're going to go through, and I'm going to ask you a lot of tough questions. So we actually read through the contract and we wanted to know that we had the options. Now, a lot of like old, especially old variable annuities and some annuities still to this day, when you buy the contract, you have to elect what your payout options going to be.
Speaker 2 00:05:30 So if you want single life or joint life, you have to do that when you buy the contract and you can't change it down the road. I know a lot of people with variable annuities, especially who set them up a long time ago with a guaranteed lifetime payment. And they might've had a single life. And now they're getting to the point where they want to use it. And they can't change that option to a joint life. So having the optionality was very important to these guys. And so we had to make sure that that was possibility. So, and it came down. So we read the contract, we looked at all the stuff. He asked a lot of questions. We got confirmations from American general. Now, in this case, I don't get to talk to American general. This is where the insurance marketing organizations come in.
Speaker 2 00:06:07 So I do all of my work with a brokerage company and the brokerage company communicates with the insurance company. And so I was getting essentially secondhand information, but we confirmed that we could do everything that he wanted to do. He bought the contract, put the money in, it was a nice, a fairly sizeable premium and piece of cake. He was set. He was ready to go well, about almost two weeks ago, he called me, I was getting ready to have dinner with my dad and my grandma. And he called me and he said, Hey, I'm looking at the statements for the contract. And you know, it kinda doesn't make sense. I'm just wondering if we can confirm the payout rates. I said, sure. I'll, I'll confirm those. And I said, I'll log in later tonight and get the documents. And then I'll call the company tomorrow.
Speaker 2 00:06:47 So I downloaded the contract and the most recent statement, and the statement had a payout for based on him single life, which was what was shown on the statement. And I said, well, which doesn't immediately worry me. Right? Because I knew we could change things around. And I was kind of scratching my head. Why do they have that in there? Because the contract was written as joint. It was him as the owner. Her's the joint owner, no distinction. They're just joint owners. And then she was the annuitant. So doing that, that's how we were told to do it so that she would be put on the rider. And then if they wanted to add him, they could anyway. So I said, yeah, sure. I'll call back in. And another part of it, he said, well, I'm actually thinking maybe retirement is closer. I might do another one.
Speaker 2 00:07:29 When he bought the first one. I remember at the end, he was considering putting more money into it. And we went back and forth and added up all of his income sources. And I said, no, I really think you're okay with this amount. And I said, because you can always do another one if you change your mind. And so he's there where he's thinking, maybe you'll do another one. And I don't know if that's possible, but so the next day I called the company and this is another reason why it's good to have an agent that's involved because I know what questions to ask. Right? When I get on the phone, I had to sit with American general. I call three times the first two times I spent about 15, 20 minutes on hold, nice elevator music. And then obviously I'm busy. I have things going on the phone and ring or something else would pop up.
Speaker 2 00:08:11 I'd have to get off and I'd call back. So finally, the third time, about after 15, 20 minutes, I finally got somebody on the line and I said, okay, I just want to confirm that income payouts. And so we confirm what was on the statement, but it was based on his age. I said, okay, well, how about single life on his wife, the joint owner? And the guy said, you can't do that. Well, that's not true. I said, that's not true. That's why we bought it so that it could be either, or, and by the way, we have the application was set up those so that she was single life anyhow. And he said, well, I'm sorry. You can't change that bigger for red light buzzer going off in my head, this is going to be terrible. I said, what about joint life? What's a joint life payment.
Speaker 2 00:08:47 He said, you can't do joint life either when you start the contract, that's what you get. I'm like, that's not true because I could pull it up. And I've got it in writing from various sources where you can. So he goes and gets the manager of the service department on the phone and confirm the same thing. Nope. It's single life on him only. That is the only option. And I thought, all right, this is a big problem. So I'm not kidding. I didn't sleep a whole lot that night. And that was a Thursday. So Friday morning I called the brokerage company, reminded my internal sales guy, what the case was. And he looked at it and he said, yeah, that seems odd. But that's how the company works. I mean, maybe I said, if that's true, what they said, I have us probably a surrendered contract, a really unhappy client as he should be.
Speaker 2 00:09:34 Okay, I'm going to lose another sale. Definitely of even. I mean, that one may not even happen to lose another sale. And it's probably an Eno claim, errors and omissions. That means I made a mistake. So I looked at this and I said, I know that I didn't do this intentionally. I know it's not my fault because I looked up the emails and all the information I got from the broker, which was, came from the company. And I had several quotes in writing from the company itself because I save all that stuff. I knew it wasn't my fault, but I was going to have to take the blame because I'm the only person the client knows. And I'm ultimately responsible for it. So this is why annuity straight talk is so important because you have to be able to read the contract. We did read the contract, but I don't remember what I read two and a half years ago.
Speaker 2 00:10:19 I mean, it's long. So I'm going to show you something. Anyway. So on Friday I called the brokerage company and said, you know, we do not want any of this. Like you have to call them and fix it. And I'm going to find it where they set it in writing and we're going to hold their feet to the fire. So I was ready to raise holy hell to fix it. And I thought about all of their options. So I spent Friday, I looked at some other options. I hadn't told them yet because I didn't have an answer as to what could be done. And I chose to like, just not worry him over the weekend because you know, he wasn't taking income right now. Anyway, we had some time to figure it. I wanted to have a solution before I told him. So I was talking to a show about it over the weekend.
Speaker 2 00:10:55 I started reading the contract and uh, Shokes said, just pull up the contract and read it to answer the question yourself. It was a you're right. I've done it before. I'll go do it again. So I read through it and that's what I'm gonna show you thinking that I'm going to get sued. And I probably am better off not being in this business. Right? Okay. So here is, this is the annuity contract. As you can see, it's 102 pages. I'm going straight to the guaranteed lifetime income rider. And that's about 15 pages explaining all the stuff available in the contract. So, first thing I'm going to tell you right now covered persons. The persons whose lives are used to determine the amount and duration of lifetime income. If there are two covered persons, they must be each other's spouse. So there's your definition. So the person that's getting the income as a covered person, I was told that you couldn't change that at all, or do anything about it.
Speaker 2 00:11:45 So I'm moving down the next page, new covered person, a spouse of the covered person that is added to this writer. After the writer effective date writer, effective date is the date. The contract is issued, but on them before the activation date activation date is the time you elect to take income. So after it's issued, before you take income, you can add a new cover person. All other terms and conditions described in this rider apply to the new covered person. So I'm thinking, well, did I get bad information? Because they caused an awfully big scare. And I was worried. I told some other clients the story I even told the new guy I had a meeting with because I was stressed out. I had a meeting that Friday and I just, he said, how was your week? I said, you know, it was fine, but now it's not so great.
Speaker 2 00:12:29 I guess I shouldn't tell, you know, a guy who's thinking about buying an annuity cost a problem, but I don't know. I felt pretty bad about it. It was a lot of money too. So I, you know, I didn't want to screw it up, but here I'm looking in the contract. So the point is I want to information from the company. I know that I've got some options in the contract so far, but I don't want to litigate it when he decides to take income. So if they call and say, you can't do that. And then I got to Sue them and take this to court for crying out loud. It's ridiculous. Anyway, so we're going on going on. And I'm going to show you that, that put a nail in this coffin and be done. Okay. Changes permitted on the activation date. Remember effective is when it's issued activation date is when you take income.
Speaker 2 00:13:14 You may make one of the following changes in writing on our form with your activation date requests. If there is one covered person, add a new cover person. If there are to remove one, if there are two covered persons on the page, change, one of the covered persons to a new covered person, you get a divorce or, and maybe remarried. Then you can put your new spouse on there if you want. Okay. This change is permitted only once in the activation date. So that basically says that I can do anything that I want, and which is exactly what we thought. So this is once I read these things, I'm like, oh yeah, I totally remember reading this cause this, this was the key to the contract. Was this part right here? Does he have the option to pick or choose who takes income? So again, I've proved it in the contract itself.
Speaker 2 00:13:58 So whoever the moron was that I talked to at American general, I apologize. I did say some fairly unsavory things to you, but you do need to get better at your job because you could have avoided this altogether. Now, in fairness, the guy, first guy I talked to, they were having some problem with their system. He was not able to pull up his contract. So he might've had limited information in front of him, but it caused a lot of stress and anxiety on my part. It wasn't till Sunday afternoon that I got into this part of it. And I thought, no big deal. But again, I want in writing from the insurance company, right? There's a couple other little things in here as well, but I want it in writing from the insurance company, because I don't want to have to fight this and do this again, you know, in a year or two or three, or maybe next month when he says, you know what, I'm going to take income.
Speaker 2 00:14:46 I want to know that it's seamless. Okay. So I sent this to my broker, got it on. And Monday was president's day. So we didn't get anything Monday, but Tuesday we got on it. And the regional vice-president from American general was kind enough to put it in writing with a stamp letter, reference the contract said here, no, you're fine. They said, do you remember who you talked to? Cause we might have to do a little extra training with that person and said, I'm sorry. I did not get a name, but all that to say, careful what you look for in a contract. I'll tell people these types of things about a contract, right? And I'll say, you know, that specific contract is it's no good. And they they'll disagree with me. Well, the agent said that this is the truth. This is how I know it because I've read these contracts, ask Rob in North Carolina, who was, he was my first client from the website was Robin, North Carolina.
Speaker 2 00:15:36 He's a buddy of mine. Now he's a good dude. He's getting ready to retire. So all his stuff is working just right for him. But Rob came to me early days of annuity, straight talk. Somebody was trying to sell him a variable annuity. And I had to, he sent me, I spent a long weekend reading a 190 page variable annuity contract from MetLife. Whew. That's what I did. But the thing is when I did that, you know, I did it for Robbie, asked me to, and I believe, you know, and we've done business together and we're friends and, and everything's good, but I believed it was. I learned so much when I did it. I learned stuff when I first sold this contract because I read the details to a greater depth than I normally do. Just simply because I, I work with a handful of different contracts that I've known for a long time.
Speaker 2 00:16:19 So I'm not worried about any of those things in there. You know, if you're getting into a competitive, guaranteed income scenario, those things change all the time. I mean, American general is the top right now. And then there's Symmetra national Western. And if somebody is looking for one of those and I'm going to find guaranteed income, I might end up selling a contract. I've never sold before I read the contract. And especially now, that's why it's important. You got to know what you're getting into, but don't, if I tell you that a contract's a bum deal, or if it's not suited to your purpose, believe me, because I that's how I know it. That's what I've read. And unless you've read the whole thing, then you can't take anyone else's word for it. Even at times the insurance company itself. So there it is. A messed up annuity is not messed up at all.
Speaker 2 00:17:00 If you have a messed up annuity or if you're confused about what you've got and how it works, give me a call and set an appointment. Schedule a call on annuity, straight talk top right corner. Schedule a call button, easy, click the button, set your time zone. Pick a day, pick a time, write some notes. Yeah, it's easy. Anyway. Subscribe to the podcast. YouTube for the videos or any of your favorite podcast platforms it's hosted on Casto is available on apple, Spotify, Google, all that stuff it's out there. And if you want to see it, go get it. So anyway, thank you for joining me. The number here is 804 3 8 5 1 2 1. My name is Brian Anderson. I appreciate you. Stop by and have a great day. Okay, bye.
Speaker 1 00:17:55 You've been listening to annuity straight talk. The proceeding for patient is for informational and educational purposes only and does not represent tax legal investment. And the views expressed by guests on this program are their own and do not necessarily reflect the views of the nerdy straight talk or its partners. No information presented today should be acted upon without meeting with a qualified, licensed professional. It is important that you read all insurance contract disclosures, carefully making a purchase decision guarantees are based on the financial strength and claims paying ability of the insurance company.
