ChemEng, your inflation argument pointed toward a traditional
FIXED annuity which is a
SAFE money savings instrument is absurd.
I thought I made this point relatively crystal clear with the graphic I posted but I have obviously failed.
If three (3) separate people had each invested $100,000 on Aug 31, 2000:
One directly in an
S&P 500 index fund;
One in a
Fixed Indexed Annuity;
On in a Traditional
FIXED annuity:
On Aug 31, 2001, S&P 500 indexed fund would have been worth
$74,690.
The Fixed Indexed Annuity would have been worth
$100,000.
The Traditional FIXED annutiy would have been worth
$105,000.
Yes, I know, the market will come back, it always does.
E - v - e - n - t - u - a - l - l - y.
Maybe?
The market would have to return 17.6% for the next 3 years just to stay even with a
SAFE money savings instrument that's just limping along at 5% per year.
Now for a rhetorical question:
If
YOU were the investor in S&P 500 indexed fund who lost
25.31% of his money and now only has $74,690 left would you like to trade places with the person who was in the Fixed Indexed Annuity who still has her $100,000 SAFE and sound?
For those of you who just can't seem to wrap your head around why
$$$-BILLIONS-$$$ of dollars are poured into Fixed and Fixed Indexed Annuities each year it's because of the Safety of Principal aspect that is inherent in ALL annuities EXCEPT the infamous bloated pig with lip stick our stock broker competitors love to sell known as a Variable Annuity.
By the way, did I post a graphic on what type of returns a client
may get in an up cycle year in a
Fixed Indexed Annuity
WITHOUT risking one penny with day traders playing stocks like a flea market swap meet....with
your money.
See graphic below:
wv-girl asked:
In addition to ChemEng question, I have one. And no I am not interested in purchasing, but I would like to know how you make your money. Do you get a percent of what you sell? How are you compensated for your efforts?
wv-girl, Insurance Agents are paid a commission on each and every form of insurance they write.
The insurance companies have a problem when it comes to agent commissions on annuities.
They have to pay an agent about the same amount of money for about the same amount of time and effort spent the agent would have earned anyway by simply selling other forms of insurance.
If you are wanting to know what the averages are, the "
average" annuity writing agent commission is 5% paid
ONE-TIME-ONLY and the
average annuity premium is $40,000.
On "
average" I make way more money with life insurance and long term care than I do with annuities but the news media loves to pay attention to annuities. I guess it's because it's simple math.
They must get hung up on figuring 90% first year commission and 10% renewals on Long Term Care Insurance or 105% target commission for life insurance. But if you did the math you'd find the agent made on a $4,000 annual premium for LTCi, $3,600 first year commission and $400 renewal commission every year the policy stays inforce and renews.
I just wrote a $3 million dollar, Second-to-Die Life Insurance policy to fund an Irrevocable Life Insurance Trust and the "target premium" was $35,000.
Do the first year commission math on that, then let's talk about the chump change that's paid on annuities.
Do you understand now the point I made above about how the insurance companies
HAVE A PROBLEM when it comes to agent commsissions on annuites?
