by jhuntley » Sun Oct 31, 2010 01:27 pm
If you have an annuity contract with beneficiaries and contingent beneficiaries named and then you annuitize the policy do you get an all new contract which voids the original beneficiaries?
Posted: Sun Oct 31, 2010 04:16 pm Post Subject:
No, you don't get a new contract that voids the original contract. The original contract, once annuitized, performs according to the terms, provision, and conditions in the original contract. The issue of beneficiaries, upon annuitization is moot, unless the payment option includes a minimum or maximum payment guarantee (period certain, amount certain, refund).
Your other post ( http://www.ampminsure.org/life/about14796.html ) asked a similar question and was answered there. The situation you described may be a joint and survivor payment option, in which case the payments cease upon the death of the last surviving annuitant, regardless of the amount paid or not paid from the contract principal. That's just the way it works.
If the owner/annuitant was not satisfied with that option, there were several other options that could have been selected at the time the contract was annuitized. But once annuitized, the payment option selected in set in indestructible concrete.
Posted: Mon Nov 01, 2010 11:48 pm Post Subject: Thanks
Thanks for your information. I have also talked to an elder care lawyer and they confirm what you have said. However when I presented the information to the claims office of Baltimore Life they still refused to change their position.
Posted: Tue Nov 02, 2010 12:54 am Post Subject:
when I presented the information to the claims office of Baltimore Life they still refused to change their position.
What "information" did you present and what is "their" position? What type of annuity was purchased and what payment option was selected?
If you are attempting to get the insurance company to change the terms under which the contract was annuitized -- after the fact that both annuitants have died -- it just is not going to happen. Honestly, it wouldn't have happened even after your mother died.
Theoretically, all of the payment options and their ramifications were explained to your parents (a responsible agent or insurance company CSR will do that) at the time the contract was being purchased and/or annuitized. If they were uncomfortable with the idea of leaving money behind at the insurance company after both had passed away, they would not have chosen such an option.
This is the "hard part" when it comes to annuities. This is one kind of contract that does not permit "do-overs" once it has been converted into the pay out phase.
Posted: Thu Nov 04, 2010 01:21 am Post Subject:
but...but...but...WE HAD A WILL!
Sorry, couldn't help it. Financial literacy...it's a good thing.
Posted: Thu Nov 04, 2010 01:56 am Post Subject:
but...but...but...WE HAD A WILL! Sorry, couldn't help it. Financial literacy...it's a good thing.
Hahahaha... that was great.
Funny thing, I attended a committee meeting today at our state DOI about annuities. Max- you'll get a kick out of this.
I'm on way tooooo many state and fed committees that deal with various aspects of our industry, one of those being my own state's insurance rule making advisory committee. We make up the rules and the insurance division/legislature signs off on them and voila, we have a new rule on something.
Today was on suitability in annuity transactions and the NAICs Model Act #275 regarding this and other annuity issues, including mandatory annuity education.
Hey Max- sound familiar?? As those who are at all familiar with annuities, even the simplest deferred annuities, are aware that people get screwed every day by some unscrupulous agent, terms of the contract and who knows how many other things. California has one of the more stringent rules here- anyone selling any kind of annuity any time in Cali gets to take a one-time 8-hour course and then a 4-hour refresher every couple of years.
Oregon is now going to implement similar rules. This is all due to you loser producers who are more interested in making commission than taking care of your clients. You should all be forced to take your entire 401k holdings out, pay the taxes and penalties, and then take the remainder and put it into a market value adjusted annuity. Then you should be forced to withdraw the entire sum after the free look period has expired. One day after. You :twisted: :evil:
Now, understand that I have no problem whatsoever with these rules and mandatory education that comes with them.
The horror stories that come across my desk are nothing less than, well, hard-to-believe. The sad part? They're usually true. I sat down with the lead prosecutor and head of compliance today and learned, not surprisingly, that the vast majority of annuity flim-flams are on replacements and 1035 errors and not on new purchases. Confirmed, as I already knew, was the fact that most problems stem from surrender penalties, tax implications and health issues unrelated to the annuity itself, but causing the need to get the money out of the annuity to pay for those health expenses. That's a real problem and the annuity, in many cases, doesn't care.
Cali, I noticed, has "crisis waivers" that are applied within their rule. Max- gimme some info on that, ok? It looks pretty self-explanatory, and listed a number of issues considered a "crisis," but I need more info.
Finally, when an annuity has actually annuitized (which really doesn't happen as commonly as you might think), the continued payout of the annuity after the death of the annuitant(s) is completely dependent upon the payout option that was selected. That's it. If the payout option chosen was a pure or straight life annuity and the annuitant dies, that is the end of the ballgame, even if it occurs after only one payment being received.
Sorry for the rambling, but I am getting sick and tired of having to formulate legislation and rules for the majority when it's only the minority that are the problem.
Kinda sound like ObamaCarePlan.
InsTeacher 8)
Posted: Thu Nov 04, 2010 03:33 am Post Subject:
You should all be forced to take your entire 401k holdings out, pay the taxes and penalties, and then take the remainder and put it into a market value adjusted annuity.
I would RECOMMEND the current TIPS -- offering -0.55%. That should be SUITABLE for the scoundrels who really ought to get the DEATH PENALTY for abusing a senior (or anyone else, for that matter).
The so-called "Crisis Waiver" to which you refer is simply a LTC-Nursing Home/Terminal Illness/Hospitalization/Unemployment/Disability provision that permits surrender penalty-free withdrawals. Typically 30-60-90-180 day elimination periods apply depending on the circumstances.
As far as I know there's nothing specific in the Insurance Code that governs what an insurer may waive, it's just something most insurers are voluntarily including in their contracts as marketing devices. There may be some creatively worded contracts that permit other withdrawals, but again, it's at the insurer's option.
Send me your email address, and I'll forward the 8-hour Annuity Training Educational Objectives to you. Might help in the design of OR's own requirement.
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