Getting Real Information on Variable Annuities from The Internet

Chances are you came to Annuity IQ because you were searching for annuity information. You probably came here via a search engine like Google, Yahoo or MSN. These search engines have redefined how we look for information on the internet. If you search Google alone using the term ‘Annuity’, there are roughly 13 million results. All of those websites are competing for your business or your visit to their website.

The differences among all of those websites vary depending on what type of annuity you are looking for, variable, fixed or immediate. We specialize in variable annuities, specifically variable annuity living benefits. There are, of course, other websites who specialize in variable annuity living benefits, but there are some key differences between Annuity IQ and these other websites that you need to know about.

The biggest difference is how we make our money versus how other variable annuity websites make their money. We make our money by providing you unbiased, independent ratings and reviews of the best selling variable annuities in the USA. Other websites make their money from either trying to sell you an annuity product or by gathering your personal information to sell as leads to brokers who will try to sell you an annuity.

Every other variable annuity websites, besides Annuity IQ, will provide you with ‘free’ information as long as you provide them your email, phone number, and name and address. The secret is that they are merely giving you the same sales literature that you can pick up from any advisor who sells annuities or from the insurance company’s website. In other words, the information you are getting from these annuity websites is nothing special or different than what you would get during the sales process from your hometown broker/agent.

The latest craze is that some of these sites are providing ‘ratings’ on variable annuity contracts. Besides the site looking silly doing this, we can assure you that they are not using any scientific basis for their ratings or reviews of the contracts. In fact, the ‘ratings’ they provide are based on what they feel is the best contract in the market place. That means the rating is little more than their opinion on the contract, nothing more.

The reality is that there is not one single “best” variable annuity that fits everyone’s needs. Also, how in the world are you supposed to know that they ‘rated’ the contract on its merits and not on the commission it pays or if they are being paid ‘marketing’ dollars for promoting that specific annuity contract?

What Annuity IQ does is completely different in its scope and depth of the reviews we perform. We start with the prospectus, interpret the information, make the information as user friendly as possible and then rate the contract and benefits as compared to its peers and run the benefit through specific scenarios to see how it performs. Based on that criterion, we then issue a rating on a one to five star basis. (See About Annuity IQ for more details).

We also let you know who we are by name, location and that we are not advisors and we do not sell annuities of any kind. These other websites do not tell you that they are brokers trying to sell you a product and their services, or that they may sell the information that you provide them.

Many of these sites do not even give you the common courtesy of telling you the name of the owner of the website unless you tell them who you are first and provide all of your contact data. That is because they do not want you to know exactly who they are or that they may be selling your information to other brokers who may be at a different firm. In other words, some of these firms cherry pick the biggest cases and sell off the smaller prospects as leads to other advisors.

One of these online sites has made some claims that they cannot back up. We only found out they were untrue after we tracked down the owner and pulled their NASD report. Their claim is that they have over 10 years experience, (only one of the people has more than that much experience), and that they have had no customer complaints filed on their records.

In fact, the person running the site has two customer complaints, both annuity related and settled via arbitration or proposed settlement. This, in itself, is no big deal, but to make a claim that you never had any complaints when it is a flat out lie is wrong. All they are doing is playing the odds that you will not know who they are and that you will not pull their NASD records. If they are going to lie about the little things, why would they tell the truth about the important things?

The point we are trying to make is you have absolutely no idea who you are dealing with because they do not tell you. We do not mean to say that every site out there operates in this fashion, there are some good ones out there, but their whole existence is about selling you a product which is different from our goals.

Here are the rules you need to follow when shopping for an annuity online.

1. If the website does not tell you who they are or where they are located or their broker/dealer information, do not give them your information.

2. If the claims seem too good to be true, they are, usually.

3. If the website is one page long and filled with emotional buying sales tactics trying to get you to buy something, save your money.

4. If they are recommending that you invest in their ‘pick’ on the website, ask what other contracts are available and why they are picking that contract. Remember there is no one size fits all-- no matter what type of investment you are talking about.

5. Call them, if possible, before giving them your information. This way you may not get sales calls when you just want information.

6. After you know who you are dealing with, run an NASD Broker Check report on them. If they claim to never have had a complaint and they do have a complaint, then they misled you. Do you want to do business with someone who is not upfront with you?

7. Compare all annuity websites. If they are all preaching the same products, you have to ask yourself why. Is the commission the highest, is it simply the easiest contract to sell or are there marketing dollars for promoting that contract.

8. Do not just buy a bonus (a contract that pays between a 2 and 6% immediate bonus to your investment) because it is recommended to you. Those are ‘easy’ sell contracts that involve higher fees and possibly longer surrender charges to you. In some cases, those contracts make sense, but overall we would avoid them.

9. If you do buy from one of these websites, make sure that the application you get is for your state! This is a big deal and we have had a recent inquiry about this situation from a client of ours. If you do not live in the same state as the application you are signing, the insurance company can reject the guarantees. It is also a violation of state insurance laws and it is not ethical. (We will post excerpts from the actual emails I received from a subscriber about this situation)

10. If you are in doubt about what you are being told, call the insurance company that is being recommended to you.

11. It is your money, ask the questions! You, as an investor, are interviewing the broker/agent so treat it as if you were hiring an employee. Ask direct questions and get direct answers, be advised by your advisor, not sold by them.

12. There are no secrets that no one wants you to know about the products. Websites that make that claim are just trying to sell you hype.

13. If you are going to be shopping for or are buying an equity index annuity, do not just take someone’s word on how the product works. These can be very complex investments with hidden dangers, so ask questions and read the materials. It also never hurts to get second or third opinions on those products. If the EIA has a bonus of say 10%, chances are it is too good to be true.

14. You should never pay an additional management fee, over and above the M&E and sub-account fees, on a variable annuity. There should be no additional wrap fees or asset management fees on the contract. This is especially true if you buy a Vanguard, T. Rowe Price or Fidelity variable annuity. There are limited investment choices and unless you are constantly buying and selling the sub-accounts, you are better off buying the contract direct from the aforementioned companies as it would be cheaper that way. With a traditional broker sold variable annuity the rep collects a commission to begin with and no other wrap or advisory fees are really worth the expense.

15. Personal finance writers usually know nothing about annuities and how they work. You should never take what they say seriously until you examine the facts for your own personal needs. Sorry guys, but you know it’s true.

As you already know, there is never a free lunch and it is your responsibility to know who you are dealing with. The resources to know who you are working with are readily available to you, so use them.

We chose to be independent and unbiased by providing information only, other sites cannot really make that claim honestly. We want you to make an informed decision about variable annuities, and we could not do that if we were trying to sell you a product.