Choosing an Annuity and Annuity company?

[Guest muckmail]

I talked to a bank investment broker today . He wanting to sell me a annuity from

a company called ING. He said I had the option to pick mutual funds but I

would get 7% if my funds went bad. He explained the plan to me and it

looked good but it seemed complex. It was at least a 1O year investment.

How do I find out about this company called ING or any annuity company.

How do I know if that company is not another Emron or whatver. How do I

begin go do my research on a company like ING? What happens to a annuity

if a company goes broke?

Thank you,

[GBurns]

ING is part of 1 of the worlds largest financial services company of similar name. I think they are Dutch.

You start by reading and understanding the details of what he told you. Not the sales hype but the contract fine print and required illustration. Get all answers to important questions in writing.

You also need to better understand the terminology used. For example you stated that it was a 10 year investment. Did you mean that you have to keep making regular deposits for 10 years or did you mean that they imposed a 10 year surrender charge period? BIIIG difference. How much was the penalty?

How does his proposal compare to other major companies?

Do not buy anything that you do not understand.

Check A.M Best, Moody's, Standard & Poors and Weiss for ratings nad write ups, but bear in mind that mainly the company has paid for these reports or provided most of the information, so it is not totally unbiased the exception probably being Weiss.

Check with your State Dept of insurance for the results of investigations, and reason for fines. Do not rely on telephone CSRs get to the Depts that handle Investigations and Market Conduct. Also see what they filed with the State regarding Disputed and Resisted Claims. I think this is Schedule F or S.

Do a Google search for complaints.

Do a Google search for lawsuits against them, annuities, variable annuities and against annuity companies. There are many and the reasons should be relevant to what is being proposed to you.

[david rigby]

I talked to a bank investment broker today . He wanting to sell me a annuity from a company called ING.

Hold on here. What do you want? What are you trying to accomplish?

What he is selling may or may not be good, safe, etc. But, the first thing is to get a handle on what you are doing or planning. Many factors involved, such as

- are investing for long-term?

- is this retirement income?

- your age?

- your other resources? income?

- dependents?

- your general health (for example, if you are 65 and expect to live to 85, that might differ from an expectation to live to 75)

- would this particular investment increase or diminish your diversification?

- is this an individual investment or part of a company plan?

[Guest muckmail]

My age is 49.

My objective is to find something with a better rate than a bank cd but yet

be reasonablly safe with my investment. The best ideal I have found is

laddering bank CD's so far.

At 49 I should be conserned about retirement income but I don't consider

this a retirement investment. Although with my age I think there might

be able to take advantage of retirement plans. 59 1/2 is not that far away.

Other source of income, work.

dependents none.

General health is good. No problems.

I think he is selling the safty of having the 7% return and the ability

to place my funds in a mutual funds. If the funds do bad I will have the

ability go collect on the 7%. After 10 years a person has the ability to

lock on an annual income benefit. The longer a person waits after 10 years

to claim an annual rate the better annual income gets. I don't understand all of it and he I think he is using numbers to his selling advantage. Probably he has some number calculating software that is provided by the company. The plan is called

the "ING goldenselect ES II". Overall there is a lot of rules and the plan

is somewhat confusing.

[david rigby]

I would get 7% if my funds went bad

I don't know what this means. At any rate, I have doubts about 7%.

My objective is to find something with a better rate than a bank cd

Probably an annuity is not the best vehicle for this.

I think he is using numbers to his selling advantage

Imagine that.

[AndyH]

A 7% guaranteed rate sounds like a free lunch. Do you beleive in free lunches? The tooth fairy? If the adviser left you with that impression, it is time to find another one. Fast.

[joel]

Take Andy's advice and run do not walk away from this broker who is simply interested in selling and not advising. People should not be taken in by the brokerage desk at their friendly bank. They are nothing more than commissioned salespeople are are "advising" you to invest in those products that give them a commission. If you need an annuity and that is a big if you can get one without paying a commission.

[GBurns]

"If you need an annuity and that is a big if ...." However do not get hung up on the commissions get hung up on the terms, conditions and return. Not every annuity feature is available in every product and not every feature is available in non commissioned products. Decide what you need then decide where you get it from and under what conditions etc.

Do you restrict your car buying to Saturn only?

[Belgarath]

There has been a good deal of good advice given to you - particularly to BE CAREFUL! Of course, this goes for any investment. And I agree that a 7% "guarantee" in today's interest environment is likely to be baloney. I'm not quite prepared to say the broker is a liar without full information, but I would tend to lean in that direction.

However, I'm not quite as ready to demonize all annuities as some other folks might be. At the risk of starting World War III, (and I won't respond to diatribes, if there are any - hopefully not) I do think some annuities are a reasonable investment, depending of course on your specific needs and circumstances, and the provisions of the specific annuity and company involved.

I'm neither an investment advisor nor in sales, so I have no axe to grind. But I am able to read and understand some annuity contracts. As I posted in another post several months ago, my own parents purchased a deferred annuity a few years back. They have no risk tolerance whatsoever. The annuity was sold by a reputable and highly rated insurance company, by an agent who I have known personally long enough to know he is an honest man. It had no front end load, and no (repeat NO) surrender or withdrawal charges, because they were age 62 when they purchased it. Unlimited withdrawals at any time, and a guaranteed interest rate of 4.5%. (Was paying, I believe, 5% when they bought it, but guarantee is 4.5%). They still have it, and it is still paying 4.5%, tax deferred. They are EXTREMELY happy with it, as it does exactly what they want with no stress. They are well aware that they could have made more in another investment, and also well aware that they could have received less.

Does this situation describe most annuities or people? Probably not. I don't even know if such an annuity is available in today's market. I'd just say not to automatically exclude them from consideration just because many people believe annuities are "bad." Some are, certainly - how many I'm not qualified to judge. And although I tend to be rather cynical, I do believe that there are at least SOME honest salespeople in the world, who will adequately and fairly disclose the provisions of a contract (although I wouldn't trust them and would read it myself!)

On a personal level, I don't get so worked up over commissions. I'd be more concerned about interest rates, loads, surrender charges. Every investment out there has expenses associated with it, and I personally wouldn't care if someone gets a commission, I'd be concerned with the bottom line for me. But if the commission is outrageous, then naturally the return you receive will be reduced.

Having said that, and based upon obviously limited information, I seriously doubt that the broker trying to sell you this annuity, and the annuity itself, fall on the favorable side of the ledger! And take my comments with a grain of salt, because I claim no expertise in the investment world. Good luck.

[joel]

Belgarath: Have your parents annuitized their annuity or are they still in the accumulation phase?

[Belgarath]

Still in accumulation. But they make withdrawals once in a while - I don't kow how much, because I only get involved in their finances to the extent that they ask me to. And they are, fortunately, young enough and in complete control of their faculties (to the extent that any parents are - after all, you have to be insane to become a parent in the first place) so that I don't have to get unduly involved.

Come to think of it, I read somewhere that insanity is inherited - you inherit it from your children. Worked that way with me, anyway.

[AndyH]

I'd like to hear Joel's point.

[joel]

Bel,

Do they intend to lifetime annuitize their balance?

[Belgarath]

Not planning to. The maturity date is still 15 years away, and if they are still kicking at that point, and haven't spent it all on trips to Scotland, then they will decide at that point. I expect they will have spent it by then - its purpose (for them, anyway) was not to accumulate lots of money for a future date, but to act as a high-yield savings account, from which they would withdraw money for any purpose desired. Has worked admirably for that purpose.