Is there any GOOD reason to sell an 82 yr. old woman a

[diddlysquat]

variable annuity? I have found lots of reasons NOT to do this but not a one that makes sense FOR doing this except to line the pocket of the salesman. This happened to my mother. She is well off and hopes to leave her $$ to her two children. Right now I am searching for a possible reason that will redeem this salesman. Is there something I am not seeing?

[flvegan]

1. Not unless you consider the death benefit to be a good investment.

Sorry if that came across as a little unfeeling or morbid, considering.

[diddlysquat]

3. What death benefit?

In this case her beneficiaries inherit all and pay their full level of income tax on everything made inside the annuity but at THEIR rate not hers. Also they get no step up in basis which they would if inheriting mutual funds (her other choice. They actually losequite a bit in taxes that would not be lost if in mutual funds.

[flvegan]

4. The one that most of them come with

"If you die before the insurer has started making payments to you, your beneficiary is guaranteed to receive a specified amount – typically at least the amount of your purchase payments. Your beneficiary will get a benefit from this feature if, at the time of your death, your account value is less than the guaranteed amount."

[Coyote_Bandit]

2. I used to work

as an investment portfolio manager. There is no good reason to sell an annuity to an 82 year old. The sale does typically generate substantial income for the broker/salesman.

Read the fine print and see if there is any possible way to reedeem the thing early. Consider contacting the licensing board (or any other relevant professional organization) and filing a complaint agsint the schmuck that sold it since it is clearly an inappropriate investment vehicle for the client.

[scarletwoman]

5. I'd add filing a complaint with her state's attorney general as well. (nt)

[diddlysquat]

8. Thanks

I have called the annuity cmpany and she can get out of it at any time. That part is good news. What I am working on now is convincing her to do just that. She just "loves" this guy that sold it to her. Final straw is that she signed over her rights to make decisions about it to me yesterday but I am trying not to upset her and would prefer it if she thought it were her idea. I'm also trying to get my brother to support me. If he would just say to her something along the lines that I am right (he has the ability to understand this but has aspergers so he may not say anything) then she would probably ok the deal.

[Coyote_Bandit]

15. Beware

of penalties and costs for cashing out early. They can be pretty steep.

[A HERETIC I AM]

6. How long ago? If she is still inside the "Free Look" period, she can back out of it.

http://www.sec.gov/answers/freelook.htm

As far as the answer to your question, here are some links that speak of the cons of VA's
There are pros but it seems pretty hard to justify a VA for an 82 year old. An IMMEDIATE Annuity perhaps, but a VA tends to be geared for younger investors. Think of VA's as a do-it-yourself pension sort of thing. I wouldn't think your mom would fit that profile.

http://www.smartmoney.com/retirement/investing/index.cfm?story=wrongannuities

http://www.smartmoney.com/retirement/investing/index.cfm?story=buyannuities

http://www.variableannuityfacts.org/

If the salesman/advisor/broker has intentionally sold her something inappropriate, you can and should lodge a complaint against him/her with his firm. You or your mom would probably prevail in such a claim.

[diddlysquat]

10. She's been in it for over a year

but I just found out about it.

[A HERETIC I AM]

12. Does she live near you?

The reason i ask is because here in Florida, because of the large elderly population, the regulations and rules dealing with fraudulent and inappropriate investment vehicles fall on the side of the consumer to a larger degree than in many other states. If i am not mistaken, Arizona is similar and New York has among the strictest regulations in this regard in the country. So much so that companies that offer annuities have specific ones for NY state.

[A HERETIC I AM]

11. As a followup, here is a site that can tell you if the agent has ever had a complaint filed against

him/her;
http://www.finra.org/InvestorInformation/InvestorProtection/ChecktheBackgroundofYourInvestmentProfessional/index.htm

All you need is the agent/brokers name. If there is more than one person with the same name, it will list them by company and branch location. That website gives you information on what is known as a "U-4" document which is a record that will follow the agent for his/her entire career, regardless of how many times he changes firms. If the agent has ever had a complaint lodged against him in the past, it will show up on the U-4.

[diddlysquat]

13. I can not find him at this site.

Now I am beginning to wonder if he is REALLy what he claims to be.

[A HERETIC I AM]

14. If the Annuity is from a major issuer.....

like Pac Life or Hartford or John Hancock, it is extremely unlikely (on the order of zero percent) they would allow their product to be sold by someone not a registered representative.

If it is an obscure company......you never know.

[BlooInBloo]

7. Are their inheritance tax ramifications?

[diddlysquat]

9. Yes, very much so.

I am attaching an article that explains just the inheritance tax part.

http://www.efmoody.com/estate/badplanning.html