Annuity IQ

Syracuse, NY (PRWEB) July 26, 2006 –- Annuity IQ, www.annuityiq.com, releases 10 variable annuity tips to the public. This short guide is designed to help people make an informed decision on the purchase of a variable annuity.

Annuity IQ, on the forefront of rating variable annuity contracts and benefits, has released another free information book. “We are dedicated to helping people and brokers find the best product for their needs or their client’s needs. 10 Tips is another extension of our efforts to educate and inform people on what to look for in a variable annuity. We released ‘Living Benefits Explained’ a month and a half ago and saw tremendous interest in that information. 10 tips is an expansion of that information,” Scott DeMonte, owner of Annuity IQ, said.

Mr. DeMonte went on to say; “We offer a lot of free and informative information on our web site, www.annuityiq.com, but we realized we were missing something and that is where 10 Tips came in. These are just basic tips on what to look for in a variable annuity product and designed to give the consumer an edge in examining variable annuities.”

Annuity IQ’s main line of business is rating variable annuity contracts and their benefits to help consumers and brokers locate the best variable annuity product for either their or their clients’ needs. Over the past 3 months, Annuity IQ has seen its popularity skyrocket with the main stream public and brokers. It is believed that their unbiased and independent approach in examining variable annuities is the main reason for the rise in popularity.

“We also believe that there is a lot of misinformation on variable annuities in the market place. Based on articles we have read, we concluded that most people write their opinions on Variable annuities and largely ignore the real facts behind these great products. Variable annuities are not perfect, but what investment is?” Mr. DeMonte said.

annuities have been shrouded in secrecy or myth over the last 15 years or so with no one place to view comparative, side by side, unbiased information. That all changed in April of 2006 when Annuity IQ went live and was greeted with open arms by the public and brokers a like.

10 Tips, as it is referred to by the people at Annuity IQ, is a short informative web based resource and available to everyone. The way the piece opens was of particular interest:

‘There are no devastating secrets behind annuity products. There are no “must have” Annuity tips. When you see these ads, the person responsible for them is simply trying to gather your information to follow up with a sales call.

Worse yet, if it involves some type of secret or hidden truths no one wants you to know about, it is a product that is geared to benefit one person and it is not you. We are not saying these people are trying to scam you, but they are trying to sell you a product, their product. They may then follow it up by trying to sell you an annuity product. In other words, all these “free e-books” are sales pieces designed to grab your attention and hopefully get more sales.’

“We felt we needed to open the book up in that fashion. We wanted to grab your attention and it has been effective. We see all of these must-have secret books being sold and it drives us crazy. If there were secrets so devastating to the industry, why isn’t the mainstream media on it instead of Joe Blow from Timbuktu writing about it? We want and do provide real information, honest information….’The annuity Report’ was not a project we sat down and hammered out over a weekend in our underwear. This project took a full year to prepare and implement.” Mr. DeMonte said.

It is clear that Annuity IQ and Scott DeMonte are passionate about what they do. It is also clear, based on sales and reach of the people visiting the site, that there is a strong need for an independent and unbiased company to review and rate variable annuity products. Keeping their work untainted, annuity IQ refuses to sell any Annuity product. They feel that if a commission is on the line, it is impossible to be truly unbiased and independent.

There have been a few changes in the variable annuities we cover. We are currently updating the database over the next few days, so we will not be posting much, if anything over the next few days.

We are updating the AXA contract, which has significant changes, and the Met Life product as there is a change there as well. We will also initiate coverage on a few new variable annuity contracts over the next couple of weeks. The most notable will be Lincoln Benefit, as they have added some interesting living benefits. If you subscribe to “The annuity Report” you will have access to all of the information currently being updated. If you buy the book then contact us for updates. Thank you Annuity IQ staff.

With all of the recent press on variable annuities lately, the issue many people have is over commissions paid to brokers. What is more important, the fact that the variable annuity is delivering what it promises and is doing what you want it to do, or your broker/agent earning a commission?

In a nut shell, who cares that the broker is earning a commission? We do not care, we focus on the product’s performance and if it delivers. We have a general idea of what these variable annuities pay in the form of commissions, but that is not a factor in our rating process. What commission your broker earns on a variable annuity sale should be of no concern to you either.

Frankly, does it matter if a product pays your broker a 1% commission or a 7% commission? As long as the fees are inline and the variable annuity is not over priced, it should have no bearing on your decision to buy or not buy the annuity. We do not believe a broker should intentionally sell the highest paying product, but we, as a firm, see the commission as being irrelevant to the over all performance of the variable Annuity.

The commission paid on a variable annuity is designed to compensate the broker, either with an up-front commission or a mixture of an up-front commission and a trailing commission for servicing your account and your investment needs. This is no different than a fee based planner who has you pay a wrap fee for mutual funds, or this is no different than an “A” or “B” share mutual fund. The fees and commissions paid on those products compensate the broker for servicing your account.

Managed money will pay the broker anywhere from 1%, or more, a year and mutual funds can pay a broker as much as a 5.75% up-front commission with a .25% trailing commission. At the end of the day, the broker can actually make less from the up-front commission of a variable annuity compared to these other options over the long term.

Did you know that some REIT’s pay as much as 10% commissions? The fees can be higher than a variable annuity, and you typically have to hold on to the REIT for as long as 10 years. We never hear anything negative about this, and we find that odd. For some reason, people have a bone to pick with insurance companies or they just plain do not understand how variable annuities actually work. Therefore they concentrate on how much commission they pay.

When people start talking about how much compensation the broker gets for selling annuity products, keep in mind that annuities, for all intents and purposes, pay the broker less over the long term than other investment products. Use ‘The Annuity Report’ to find the best product for your needs and forget about commissions…..We did. Get an honest third party evaluation of variable annuities.

In order to know what annuity is best for your needs, you first need to understand the different types of annuities available. There are various different types of annuities available. There are 4 types of major Annuity contracts available; variable annuity, fixed annuity, index annuity and immediate annuities.

Knowing the difference between the 4 different types is crucial for you to find the annuity that is right for you. Here, at Annuity IQ, we concentrate on variable annuities as they are more complex and what we know best. We will discuss the 4 types of annuities available below.

variable annuity:

A variable annuity is one of the more popular investment vehicles in the market place. With a variable annuity you have all of the investment risk, but the insurance company may offer living benefits to reduce your overall risk. You will have the option of investing your money in sub-accounts (which are mutual fund clones inside of the variable Annuity). These sub-accounts will all have different objectives and risks and your rate of return will be dependent on how these sub-accounts perform.

A variable annuity will have different kinds of guarantees attached to them. The most talked about, and the most criticized, are death benefits. These death benefits guarantee your heirs either your initial investment back, high water mark (annual step-up death benefit) or account value whichever is greater minus any withdrawals. You may also purchase additional and completely optional death benefits such as; enhanced death benefits (this pays out either 25% or 40% on your earnings on the annuity to your heirs) or a compounding death benefit (this is a guaranteed increase in your death benefit every year, regardless of market performance).

Death benefits used to be a big reason why people bought variable annuities, besides the tax deferral. In recent years living benefits have become more popular and the main reason why people buy Variable annuities, besides the tax deferral. To learn more about living benefits please visit http://www.annuityiq.com/variable_annuity_free_book.html. Living benefits can guarantee current income, future income or your money back. Each living benefit meets a specific need and you should know how they all work before investing in any annuity contract.

Fixed annuity:

A fixed annuity is the simplest of all Annuity contracts. This type of contract allows you to invest, tax deferred, into a contract that is guaranteed never to go down in value. In other words the insurance company assumes all of the risks, not you. These contracts typically have a minimum guaranteed interest rate. The guaranteed minimum interest rate will vary from company to company and state to state. This minimum guarantee is typically 2.5% to 3% and is guaranteed for as long as you hold the contract. Some fixed annuities pay out “teaser” rates to get you to invest with that contract. Do not fall for the best “teaser” rate out there. Look at how the company continues to pay after the contract is issued. A good rule of thumb is if CD rates are at 3% and a fixed annuity is offering 8%, the renewal rate, or the rate you will get next year on the contract anniversary, will be horrible. Things that are too good to be true usually are.

Equity Index annuity:

Depending on who you talk to an equity index annuity is either the simplest investment in the world or one of the most complex, we vote for the latter of the two options. Basically, you will invest your money with an insurance company and the insurance company will guarantee you a portion of the indexes, typically the S&P 500, return. They guarantee no downside risk, in fact they guarantee a minimum rate of return, incase the index does not perform.

How exactly do they work? Good question and that answer will vary widely from company to company and state to state. In a nutshell, the company will guarantee you, say, 80% of the S&P 500 index rate of return for a specified number of years. They can guarantee you this 80% return for one year or for the length of the contract. So if the S&P 500 returns 10% you will have an 8% rate of return, in theory. The exact rate of return will depend on how the interest is credited to the contract.

For example, monthly averaging of the S&P 500 will return lower than annual calculations. There may also be a spread or monthly cap on the contract. The spread is a fee, if you will, and is shaved off of the rate of return of the index. A cap is the most amount of interest you may receive over specific time period.

We could go on about these types of products, but we won’t. You just have to be careful with equity index annuities. Read the small print and remember if it sounds too good to be true, it probably is.

Immediate annuities:

An immediate annuity is a contract that will immediately start payments to you. You will, at the time you sign up for the contract, choose the length of time you will receive payments for. You will have several different options to choose from.

You may choose a lifetime payout; this means for as long as you live the insurance company will continue to pay you. You may also choose period certain, this means you can choose payments that will stop after a specific number of years, for example a 15 year period certain will stop paying out after 15 years.

If you choose a life time option, typically, if you die prematurely than the insurance company will keep whatever has not been paid out. If you choose a period certain than you heirs will continue receiving payments for whatever time remains in the contract. If you choose a lifetime option many insurance companies offer some type of spousal protection. This means your spouse will continue to receive either all of or a portion of the payments for the rest of their life.

Immediate annuities have grown in popularity over the last few years, but you have to remember that these are irrevocable decisions. Make sure you understand that before you invest in these contracts, after the free look there is no turning back. You may be able to accomplish your goals using either traditional fixed annuities or even with a variable annuity living benefit. Do you research to make sure you are getting what is best for your needs.

If you want real facts on annuities than you are on the right site, just go to our home page and get the information you want. If you want specific information on index annuities than go to Jack Marion’s site. For fixed annuities there are several internet sites to visit, just shop around and find not just the best teaser rate, but find the companies that pay great rates after the contract is issued. Use Annuity IQ for variable annuity information, no pressure, no sales people and real unbiased opinions.

You need to understand your variable annuity. It makes no sense to invest a large sum of money into a product you do not understand. Different actions, such as withdrawals and additions, can impact your annuity benefits.

This is what I am trying to help the public understand. The better you understand your variable annuity; the better off you will be in the future. Making an informed decision will, literally, save you thousands of dollars in the future.

You need to know what contracts are the cheapest and that offer you the best guarantees. Beware though you may get what you pay for. Just looking at cost alone makes no sense. You must examine how the actual benefit works. Some benefits will go away if you take out more than a specific amount of money. That is not a good thing; after all, you bought the annuity for the guarantee.

You need to identify what your ultimate goal for your annuity is. If your goal is to generate income from your Annuity then forget about death benefits. All but a few death benefits are hurt by withdrawals from your annuity. If you are looking for death benefits then for get about living benefits, why pay the extra cost.

If you are looking for both, then you will need to get “The annuity Report” to find out which are the best. Like I said, there are only a few contracts that offer good living benefits that will not impact your death benefit when you make withdrawals. Although these contracts are not the cheapest out there, they will meet those goals.

What about Medicaid friendly contracts, do they exist? No they don’t. In a few areas some annuities are not classified as assets under the Medicaid rules. These are mostly immediate annuities and even there you have to be careful. The language in the contract has to be specific. If the language is too generic it will do you no good. In any event do not fall for that sales pitch, it is generally not accurate.

Like I always say there are many ok annuities being sold, but don’t you want a great annuity, right? Of course you do. That is my goal behind my book, to help you find great annuities for your needs. Why believe someone who just wants to sell you a variable annuity? They maybe offering you the best product for you, but don’t you want to be sure?

When you make other decisions don’t you like a third, unbiased, opinion? This is why I am here, to give you a third party evaluation. I do not care if you buy an annuity or not, I want you to get the facts. There is only one way to get the facts, “The Annuity Report”.

Research, compare and evaluate variable annuities, without the pressure of a sales person. Get the facts; don’t get taken for a ride.