No load insurance and annuities.

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BrklynMike
Posts: 33
Joined: Wed Oct 05, 2016 1:38 pm

No load insurance and annuities.

Post by BrklynMike » Sat Jul 14, 2018 6:12 am

According to this link, which I came across in the Kitces website, there may be a future with no commission insurance products.

https://www.fa-mag.com/news/here-come-n ... section=47

Will this change the boglehead view of whole life insurance and variable annuities?
"In a world of uncertainty, one should focus more on the consequences than the probabilities." - Benjamin Graham

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Cyclesafe
Posts: 684
Joined: Wed Dec 31, 2014 1:03 pm

Re: No load insurance and annuities.

Post by Cyclesafe » Sat Jul 14, 2018 8:18 am

Even investors who view initial loads as sunk costs wish they were out of investment annuities.

Vanguard doesn't charge a commission / load and doesn't impose surrender fees. Their expenses for total bond index and total stock are 0.44% and 0.45% versus .05% and 0.04% for VBTLX and VTSAX, respectively, and current investors STILL wish they hadn't pulled the trigger (usually with much higher fee products now 1035'ed to Vanguard). So the answer to your question IMHO is that even with no-load no-surrender charge investment annuities BH opinions wouldn't change.

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David Jay
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Location: Michigan

Re: No load insurance and annuities.

Post by David Jay » Sat Jul 14, 2018 9:07 am

The problem are that variable and fixed-index annuities are sold, not bought.

They are not a product that meets a natural need (food, shelter, transportation, etc.). Someone has to be out there “creating the need” with ads like “never lose a penny when the stock market crashes”. There has to be a way to compensate those who are creating the need or they will go sell something else.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Nate79
Posts: 3740
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: No load insurance and annuities.

Post by Nate79 » Sat Jul 14, 2018 10:44 am

It is not just the loads but the complexity. These products are multiple products mixed into one giant piece of cr*p product. The have buried costs that are difficult to peal out. And because they are multiple products in one they each affect each other making them difficult to fully understand. The other issue with mixed products is that if you find you do not need one of the products tough luck because you are stuck with the entire thing.

On the other hand if you invest separately and get the proper insurance product if you find you don't need the insurance or you want to change your investments as independent products you can do so.

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