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GarySpicuzza · #1 (**permalink**) 05-25-2008, 02:08 PM

Kiplinger - Timely - Trusted - Personal Financial Advice

I've found Kiplinger to be the largest collection of financial clueless clowns on the Internet.

THIS article titled The Great Annuity Rip-Off written by Kimberly Lankford is a prime example of just how utterly ignorant Kiplinger is on the topic of annuities in general and FIXED annuities in particular.

What's worse is the fact they allow absolutely false, misleading and inaccurate information to remain on their site.

Let's have some fun with Ms. Lankford by pitting her words against actual fixed annuity contract provisions.

We need to go no further than her opening remarks.

Kimberly Lankford wrote:

Quote:

Seven years ago, when Alice Bouchard was 85 and needed her money to be easily accessible, an insurance agent sold her a deferred annuity that tied up her money until she was 101. If she had needed to withdraw the money during the first five years after buying the annuity, she would have paid a massive 25% surrender charge.

Now I don't doubt the un-named annuity product had an "ANNUITY DATE" set for 16 years in the future and IF the un-named annuity product did in fact have a 25% surrender charge during the first 5 contract years it would have been because it paid an UP-FRONT interest bonus in the neighborhood of 10% perhaps for ALL new premium going into the contract during the first 5 years. We will never know since she doesn't say which insurance company product she's referencing,

Attorneys, News Media, Stock Brokers and Bankers simply cannot seem to comprehend the plain English meaning of Annuity Contract terminology.

Seniors over age 70 who buy the vast majority of annuities nationwide have no problem understanding:

The Annuity Date printed on the Contract Data page or the Surrender Charge schedule CLEARLY written in BOLD print on the Contract Data page or the plain English terms of the 10% FREE Withdrawal provision. Please click on the links to see these as they actually appear in most ALL fixed annuity contracts.

On the Contract Data page of a case I just wrote it shows the Annuitant's age 79 and an Annuity Date of 05/16/2034. She will be 105 years old on the Annuity Date.

But what does the Annuity Date mean and can it be changed?

The Annuity Date is the maximum date in the future the Annuitant can hold the contract in tax deferral. On the Annuity one MUST elect a settlement OPTION. The Owner/Annuitant can CHANGE the Annuity Date to ANY date after the first contract year.

So when this clueless clown Kimberly Lankford writes:

Quote:

"...an insurance agent sold her a deferred annuity that tied up her money until she was 101."

She's referring to the Annuity Date printed on the Contract Data page without an elementary understanding of what that term means in the contract and she either conveniently doesn't inform her reader's the Annuity Date can be changed or simply doesn't know the subject matter on which she's writing about.

Moving on to her next half truth, by the way, a half truth is a lie, also known as, a material misrepresentation:

Quote:

If she had needed to withdraw the money during the first five years after buying the annuity, she would have paid a massive 25% surrender charge.

Hmmmm, this gives the reader the impression that ANY money withdrawn during the first 5 years would incur "a massive 25% surrender charge."

Really? What about the 10% FREE Withdrawal provision. Did you forget about that Kimberly or do you just not know or are you purposely misrepresenting yourself again?

A person would have to go out of their way and do extraordinary research to find ANY annuity product sold by any Insurance Company that DOES NOT have a10% FREE Withdrawal provision.

Please review the actual fixed annuity contract provisions below.

Please read Ms. Kimberly Lankford's article in its entirety.

Then please post your questions about any of her absurd blanket condemnations regarding an entire insurance product line of which over $200 billion dollars are invested in each and every year and I will be happy to respond.

The Contract Data page:

The Annuity Date clause:

The 10% Free Withdraw provision:

Bradenton Ins. Group · #2 (**permalink**) 05-25-2008, 06:26 PM

Its ironic how Chris Hansen and company at Dateline will try to stomp on equity index products. However they won't do a follow up and say how everyone that owns one hasn't suffered any of the markets downturns over the last year.

GarySpicuzza · #3 (**permalink**) 05-25-2008, 07:31 PM

Not only that Bradenton Ins. Group...

Check out what Charles Schwab has to say about Equity Indexed Annuities accurately known in the business as FIXED Indexed Annuities.

Click Source Link.

Quote:

Looking for a retirement savings vehicle offering you higher earnings if the market goes up, yet guaranteed growth even if it doesn't? An equity index annuity from Schwab may be the answer. Index annuities let you participate in the potential growth of an equity index while protecting your savings with minimum guaranteed earnings. This makes them ideal for people who want to participate in the market performance upside without exposing their retirement savings to downside risk.

How do index annuities work?
You purchase an index annuity contract with a single premium payment. Earnings are linked to a formula based on changes in select equity indexes. If the index goes up, you share in the gains, up to the annual interest rate cap. If the market goes down, you're protected—your principal and credited interest can never decrease due to market declines.

Get the best of both worlds.
Index annuities are appealing because like traditional fixed annuities, your principal and credited interest can never decrease due to market declines, with all interest tax-deferred until you make withdrawals. However, index annuities also offer the opportunity for higher returns than many bank or traditional fixed rate vehicles by linking the interest rate to certain equity indexes. Then, when it's time to receive a payout, you can choose from a variety of options to set up a reliable stream of retirement income.

For clients looking to benefit from the performance of leading market indexes while guaranteeing principal protection plus minimum growth, Schwab offers a five-year and a ten-year contract. Choose either the S&P 500® or the Dow Jones Industrial AverageSM as your benchmark.

Charles Schwab & Co., Inc., a licensed insurance agency, offers annuity products that are issued by non-affiliated insurance companies.