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Regarding masterdex 10 withdrawal policy
http://www.annuityreg.com/interviews.htm
Executive Director of the IIPRC ( Interstate Insurance Product Regulation Commission )
"The SEC left the definition of “investment advisor” very vague, the states have left it vague, is there a way for the NAIC and the NASAA and all the folks to work together to create a safe harbor on what an insurance agent can say?
Borg: It’s not that they need a safe harbor. Let’s back up a little bit. The problem with the index annuity is not with the policy or the disclosures – in the Allianz MasterDex 10 it clearly says if you ever, under any circumstances, take the money out at anytime without annuitizing you’re not going to get your bonus and you’re not going to get your full money. The problem is at the kitchen table sitting across from that agent when he says “At the end of ten years you’ll have $241,000 of annuitized value” and it stops there. What was said may be technically correct but what the customer heard was “at the end of ten years I’ve got $241,000”. The agents know that’s the impression they left. There is no doubt in my mind because that is where the complaints come from.
If the insurance regulators have passed on a product I don’t have jurisdiction. I may not like the product, but I’m not going to argue with it because it isn’t my area of jurisdiction. Likewise, I don’t have a problem with what is in the disclosure. The problem is all the advertisements and all the seminars and all the discussion is “trust me and don’t worry about the documents, I’ll take care of you”. And the agent isn’t telling them to get that $241,000 not only must you leave it there for ten years but you must take the money out over the next 10 years, and you can only take out 10% a year for the next ten years. If consumers knew they were really locked up for twenty years they would start to drift away from the product, and so that end of the conversation is left unsaid.
The way to fix it is to give the agents sufficient training so that when the agent is sitting at the kitchen table the agent is giving complete and full disclosure. Not in writing, but in the sense that the consumer understands they’re starting out with a cash surrender value of 87% because the agent has to get paid and the consumer understands they have to leave it in for ten years.
What really galls me about the MasterDex 10 product is for the folks that are buying it to leave the money to their kids they find out at death that the estate has to annuitize the annuity to get full value – they’re going to take the cash. It would be interesting to take Allianz’s financials and look at the profit they made from products that made it to maturity and at the profit from folks that cashed in early. How much do you want to bet that Allianz makes more profit on the policies that are surrendered early? "
~~~~~~~~~~~~~~~~~~~~~~~~~Regarding surrender terms of Masterdex 10 and
Fees/"Spreads" on yearly growth
http://articles.moneycentral.msn.com/...ot-opportunities-to-avoid.aspx?page=2
"I looked at Allianz Life's MasterDex indexed annuity to analyze the risks and rewards.
With MasterDex, you get to choose the stock indexes you want to track -- big U.S. stocks, small companies, foreign equities or a blended index that tracks a broad array of stocks and bonds. You can switch the index you want to track once a year. Your "participation rate" is 100% of the index growth, according to the marketing materials.
Earnings are added to your account either monthly or annually -- you choose. Once locked in, they can never be taken away. If the market crashes, the worst you can do is a 0% return while it's down.
Now the fine print:
Caps: Your index may jump 20%, but your return may be subject to a predetermined cap limiting how much interest will be credited to your account. The cap can change each year, but Allianz promises its cap will never fall below 3%.
Spreads: There's another deduction called a spread that's subtracted from the return before you get it. The spread can also be reset year to year, but Allianz promises in its contract that its spread will never be more than 8%.
You cannot be subject to both a cap and a spread in a single year; which one applies depends on the type of crediting method you choose, said Dan McDonald, the company's vice president of business development. He conceded, however, that those limits could result in paltry returns even in an otherwise good year. Indeed, if the stock market produced its historical "average" return of 10%, you could take home just 2%, after deducting the maximum spread.
Fee to flee: McDonald said it would be rare for Allianz to take full advantage of its contract terms, but if it did and you wanted to get the heck out, there's a cost for that, too. It's called a surrender fee. Cash out in the first year and you'll pay 10% of the annuity's value. If you had invested $100,000, you'd get back $90,000. Surrender fees diminish with time but don't evaporate until year eight. "
~~~~~~~~~~Masterdex 10, its Fees on your gains, etc
http://www.articlemonster.com/finance...uities--the-investment-from-hell.html
"Annuities: Equity-Indexed Annuities: The Investment From Hell
by: Jeffrey Voudrie (72)
If you were nearing the edge of the cliff and didn't know it, would you want someone to warn you before it was too late? Of course you would. That's been the guiding principle of this column, to inform everyday investors of the pitfalls that could cause them and their nest egg irreparable harm.
I've been hearing from many of these investors lately. Some of them got the message before they stepped off the cliff. For others, the warning came too late.
Over the past several years I've been sounding the alarm bell due to the inherent dangers found in equity indexed annuities (EIAs). And the message is being heard. I've recently issued detailed reports on EIAs in general and one specifically on the most popular EIA on the market, the Allianz MasterDex 10. In these free reports, I explain the risks and pitfalls to you that the person selling them doesn't. Too bad that Greg's grandpa didn't know the truth. Greg explains: "Back in 2000, my Grandpa was talked into buying one of these by an agent. He was planning on just withdrawing the interest each year to live on. Well, for the first 6 years, they distributed 10% of his initial investment. Recently, he has come down with terminal cancer, and wanted to get out.
"He asked for a full withdrawal, knowing that he'd have to pay the 4% (surrender) penalty. Well, his total withdrawals over the seven years came out to less than 90% of his initial investment! Reading through the contract, it looks like he wasn't supposed to start receiving distributions until 2015, when he would 98 years old! Does this sound right to you?"
No, Greg, it doesn't sound right to me. But unfortunately, that's how some of these EIAs work. The truth is written in the fine print of the contract, which most people fail to read, much less understand.
Fortunately, Jim read his contract, and just in time. Jim said, "I meet with an advisor. He recommended the Allianz MasterDex 10, since at the time they were offering a 12% bonus up front. After he went through his talk it sounded good so I rolled my IRA over into it. That was the first time I saw the booklet, when he laid it out for me to sign, and I did. Upon getting home, I read it and saw I had messed up, thank goodness for the 'three day cooling off period.'
"I called him back and stopped the deal. I get cold chills when I think how close I come to really messing up. I thought he was on my side and was trying to help me out, when all he was trying to do was help himself to my money. I'm glad I got on the internet and found you. You answered even more questions."
Not all agents are unscrupulous. As Mark found out, some of them are just as ignorant to the truth as most investors are. After reading my free report, Mark forwarded it to his advisor. The advisor replied, "I printed the report, talked to the Allianz representative and hit him with each point. I can't believe that they could have BSed me so well. This is a lousy product. You shouldn't buy it and I don't plan on EVER showing it to anyone else again."
I'm glad Mark has an advisor that doesn't put the profit motive above doing what is right for his clients. That wasn't the case for Phil and Donna. Here's their story, in their own words: "We were stupid enough to be swayed into turning my husband's entire 401k into an EIA. Obviously, if we would have understood what we were getting into, we would have run, not walked, away from this! This is really the Investment from Hell!
"We would like to find out if there is anyway out of this mess, without losing almost 25% [in surrender penalties]. This policy made 0% the first year." Even though the market went up almost 15% in 2006, Phil only made 1.5% that year! "
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