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jarhead

I Think We've Been Taken For A Ride By Axa

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Hello,

I am a new poster on this forum; I have discovered this place by doing some research about pros/cons of different types of life insurances. I will shamefully admit that I have little knowledge about managing finances and investing (go easy on me). I always trusted that the "advisors" will offer good advise. Even though my wife has no interest in getting educated, I want to correct the error of my ways. I have located a few sources reading this forum for the past few hours.

 

Heres' how the story goes: My wife (43 yo) is a teacher in NY state (Long Island) and contributes to 403(b). When she got a better paying job in the current school district, she was approached by an AXA advisor and told her that he manages 403(b) for a lot of teachers in the school district and advised her to go with AXA. He came over our house and by the time he left, I had purchased a $100,000 flexible premium variable life insurance and my wife had a $300,000 flexible premium universal life insurance.

Just to show how dumb we are, this is the first time that we opened our policy benefits booklets to see what the charges are for managing the policies.

 

Wife:

Annual premium - $2,640

Deductions from premium payments - 4% of total premiums paid up to $15,510, and 2% of premiums in excess of this amount.

Admin charges - will never be more than $10/month

 

Surrender charge (if she were to dump it now) - $5,553

Net Cash Surrender Value - $5,460 (means we'd be left with nothing)

 

Mine:

Annual premium - $630 quarterly

Premium charge - deduct an amount no to exceed 6% from each premium payment. They reserve the right to increase this %-age.

Admin charges - 9 cents for each $1,000 of initial base policy plus an amount not to exceed $10 monthly (total about $20/month)

M&E risk charge - deduct a monthly amount not to exceed 0.06666% - calculated as a %-age of the amount of the policy account.

 

Surrender charges (if I were to dump it now) - $1,834

 

There's more... at the time we met, I had to roll over my 401k (from the previous job) and he offered to roll it into AXA rollover IRA. I planned on closing it and rolling it over into my current employer's 401k (which AXA salesman advised against). Here's what it looks like now:

 

http://i73.p######obucket.com/albums/i232/jar...RolloverIRA.jpg

 

Hmmm, for some reason the word p-h-o-t-obucket is being flagged in the URL.

 

 

A couple of weeks ago, the adviser came over to discuss my wife's pension. After she retires, the maximum benefit (100% of her pension) provides the largest monthly payments to her for life, but provides no payment to a beneficiary (me) if she kicks the bucket before I do. There are options where she takes less that the max and I get a percentage of her pension for life. The link below explains it in more detail:

http://www.nystrs.org/main/library/max_option.html

 

Since I am 3 years older than my wife with higher cholesterol level, chances are that I will leave this world before her. Nevertheless, AXA guy advised my wife to take the max pension payout, lower her 403(b) contributions, and use the amount (which 403(b) was lowered by) to buy another life insurance from AXA. His logic was that 403(b) is funded by pretax dollars now but will be taxed once you tap into it. If my wife buys life insurance with taxed dollars now, with 10% average annual growth in life insurance investments will give us a lot of cash. He recommended that I do the same with my new employer's 401(k). My wife was about to go along with the plan but all kinds of bells and whistles went off in my head - why would we want to have another life insurance each as an investment tool at the expense of our 401k and 403b. I called the AXA salesman and started asking a lot questions. As of right now, he is coming over next week to answer my questions.

 

I would like to sever our relationship and close all the accounts. I realize that we will be losing a lot of money by paying the surrender charges. But I feel that in the long run, we will be better off with term life insurance until the mortgage is payed off and kids are out of college. Please offer this "uneducated" guy and his wife some advise. Thank you for reading my sob story.

 

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Hi Jarhead,

I was about your age when I was learning this too. You are not alone. Most of us on this site have gone through what you have. You have summed it up quite well and I think you need some encouragment to make the changes to get on the right track.

Stop putting money in AXA immediately.

Find out any no load fund companies on your employers list.

Think carefully about getting out of those annuities because of those surrender fees. I had two and got out of both of them. Glad I did it.

Read Dan Otter's book, Teach and Retire Rich to get started educating yourself.

Keep asking questions.

Best wishes,

Steve

 

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First of all welcome to the site. Don't be ashamed if you get the feeling you screwed up. Most of us have come to realize that we all did at some point in our lives. It seems you are suffering from buyer's remorse.

 

I find what you describe as extremely complex. He never did mention the charges to you did he? I am not sure you need all that insurance either BUT I am not an expert. I am just trying to lend support and I don't know you or your family situation.

 

I would call the company and see if you can get out of it. I don't know how recently you signed papers but I think you do have a few days to opt out. I would be firm with them that you feel you were not given adequate information by the salesrep and you would like to terminate this arrangement. Be persistent. I know a few people who got the company to back down by telling them they would tell everyone they know

about their ordeal if the company didn't work with them on getting out of the contract.

 

If its too late to opt out and they won't work with you I would call the family attorney and see if he/she can intervene in this.

 

In the future I would not deal with any advisor other than a fee only advisor when buying insurance or investments unless you thoroughly know what you are doing. My personal feeling is that insurance is being oversold to folks who already have coverage as part of their employment pension plan. I bought mine for years from the state plan and it was dirt cheap and no exit fees. MY other advice is TO KEEP YOUR INSURANCE POURCHASES AND RETIREMENT INVESTMENTS SEPERATE. IN other words saty away

from annuity salesman and but only 403b(7) funds

 

Good luck and keep us informed how things go. Give it a fighting chance. You may have been screwed.

 

Tony

 

 

 

Also I would not meet with him again unless you have a super knowledgable person with you like an attorney. These guys are experts at sales and I am sure he will try and sooth your fears.

 

Yes , I think term insurance would have been a better choice in my opinion.

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...He never did mention the charges to you did he?

No, no charges were ever mentioned.

 

I would call the company and see if you can get out of it. I don't know how recently you signed papers but I think you do have a few days to opt out.
I will inquire, but doubt that I can since the policy was purchased about 3 years ago.

 

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Hello,

I am a new poster on this forum; I have discovered this place by doing some research about pros/cons of different types of life insurances. I will shamefully admit that I have little knowledge about managing finances and investing (go easy on me). I always trusted that the "advisors" will offer good advise. Even though my wife has no interest in getting educated, I want to correct the error of my ways. I have located a few sources reading this forum for the past few hours.

 

Heres' how the story goes: My wife (43 yo) is a teacher in NY state (Long Island) and contributes to 403(b). When she got a better paying job in the current school district, she was approached by an AXA advisor and told her that he manages 403(b) for a lot of teachers in the school district and advised her to go with AXA. He came over our house and by the time he left, I had purchased a $100,000 flexible premium variable life insurance and my wife had a $300,000 flexible premium universal life insurance.

Just to show how dumb we are, this is the first time that we opened our policy benefits booklets to see what the charges are for managing the policies.

 

Wife:

Annual premium - $2,640

Deductions from premium payments - 4% of total premiums paid up to $15,510, and 2% of premiums in excess of this amount.

Admin charges - will never be more than $10/month

 

Surrender charge (if she were to dump it now) - $5,553

Net Cash Surrender Value - $5,460 (means we'd be left with nothing)

 

Mine:

Annual premium - $630 quarterly

Premium charge - deduct an amount no to exceed 6% from each premium payment. They reserve the right to increase this %-age.

Admin charges - 9 cents for each $1,000 of initial base policy plus an amount not to exceed $10 monthly (total about $20/month)

M&E risk charge - deduct a monthly amount not to exceed 0.06666% - calculated as a %-age of the amount of the policy account.

 

Surrender charges (if I were to dump it now) - $1,834

 

There's more... at the time we met, I had to roll over my 401k (from the previous job) and he offered to roll it into AXA rollover IRA. I planned on closing it and rolling it over into my current employer's 401k (which AXA salesman advised against). Here's what it looks like now:

 

http://i73.p######obucket.com/albums/i232/...RolloverIRA.jpg

 

Hmmm, for some reason the word p-h-o-t-obucket is being flagged in the URL.

 

 

A couple of weeks ago, the adviser came over to discuss my wife's pension. After she retires, the maximum benefit (100% of her pension) provides the largest monthly payments to her for life, but provides no payment to a beneficiary (me) if she kicks the bucket before I do. There are options where she takes less that the max and I get a percentage of her pension for life. The link below explains it in more detail:

http://www.nystrs.org/main/library/max_option.html

 

Since I am 3 years older than my wife with higher cholesterol level, chances are that I will leave this world before her. Nevertheless, AXA guy advised my wife to take the max pension payout, lower her 403(b) contributions, and use the amount (which 403(b) was lowered by) to buy another life insurance from AXA. His logic was that 403(b) is funded by pretax dollars now but will be taxed once you tap into it. If my wife buys life insurance with taxed dollars now, with 10% average annual growth in life insurance investments will give us a lot of cash. He recommended that I do the same with my new employer's 401(k). My wife was about to go along with the plan but all kinds of bells and whistles went off in my head - why would we want to have another life insurance each as an investment tool at the expense of our 401k and 403b. I called the AXA salesman and started asking a lot questions. As of right now, he is coming over next week to answer my questions.

 

I would like to sever our relationship and close all the accounts. I realize that we will be losing a lot of money by paying the surrender charges. But I feel that in the long run, we will be better off with term life insurance until the mortgage is payed off and kids are out of college. Please offer this "uneducated" guy and his wife some advise. Thank you for reading my sob story.

 

 

I am assuming from your screen name that you have some association with the conflict depicted in the flick or military branch of the same name.

 

You need to do two things:

 

1. Do not purchase any new contracts for LI or annuities. There is no way investments held in LI will return 10% a year after all of the charges are deducted (or even before deduction). LI is no substitute for retirement benefits and it may be illegal/improper for a salesman to make such a suggestion especially since the premiums will be paid after payment of fed and state taxes which will reduce the cash for premiums by 25-30%. Term ins is cheaper for death protection.

 

2. You need to consult with a financial planner, preferably a fee only CFP, who can objectively review your current situation and advise you on how to unwind the financial products you own with the least pain. Of course there will be some fee to be paid for the review.

 

If you give me your location on LI I will see if I can connect you with a local cfp chapter. You might check online to see if there is any local college, e.g., Hofstra, CW Post, Nassau County College, that provides financial planning courses for non professionals from which you will benefit.

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I am assuming from your screen name that you have some association with the conflict depicted in the flick or military branch of the same name.

 

Intruder, you're correct... I have served in the Marine Corps.

 

 

If you give me your location on LI I will see if I can connect you with a local cfp chapter. You might check online to see if there is any local college, e.g., Hofstra, CW Post, Nassau County College, that might provide financial planning courses for non professionals from which you will benefit.

 

I live in Syosset. Thanks for your kind offer.

 

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...He never did mention the charges to you did he?

No, no charges were ever mentioned.

 

I would call the company and see if you can get out of it. I don't know how recently you signed papers but I think you do have a few days to opt out.
I will inquire, but doubt that I can since the policy was purchased about 3 years ago.

 

 

 

Jar head,

 

If you purchased years ago I doubt you will get anywhere. If upon further investigation you feel its not worth the money you are paying for what you are getting, I would most definetly pay the surrender charge and get out. I have had to do that myself and even though you lose some money it does liberate

you from the mess and offers you a chance to start over-correctly. It. It irks me that these guys can not take the time to adequately explain ALL the costs. If they really had a product worth all the expensive

they wouldn't be so interested in hiding that information from people

 

Steve gave you good advice-Read Teach and Retire Rich. I've read it and its a very good read. You can buy it on the homepage of this site. Intruder also gave you good advice.

 

Please return to this site. You will learn more than you realize. WE don't want this to happen to you again and please spread the word to others not to sign up with annuity sharks unless they totally understand what they are doing.

 

Respectfully,

 

Tony

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I am assuming from your screen name that you have some association with the conflict depicted in the flick or military branch of the same name.

 

Intruder, you're correct... I have served in the Marine Corps.

 

 

If you give me your location on LI I will see if I can connect you with a local cfp chapter. You might check online to see if there is any local college, e.g., Hofstra, CW Post, Nassau County College, that might provide financial planning courses for non professionals from which you will benefit.

 

I live in Syosset. Thanks for your kind offer.

 

 

While I could not find the address of the LI chapter, you can search for CFP planners at www.cfp.net- look for search for CFP professional icon- then scroll down to radius search and enter your zip. Maybe your local phone co can give you the phone no. of the local CFP chapter.

 

I found 3 cfps under A including Thomas Addison in Syosset, Paul J. Aledort, melville and David E. Altschuler, Woodbury. There are others further down the list. You can check them out by entering their names and locations on the CFP site.

 

Good luck

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Hi Jarhead,

...Stop putting money in AXA immediately.

Find out any no load fund companies on your employers list.

Think carefully about getting out of those annuities because of those surrender fees. I had two and got out of both of them. Glad I did it.

Read Dan Otter's book, Teach and Retire Rich to get started educating yourself.

Keep asking questions.

Best wishes,

Steve

 

 

Steve,

My wife contacted her union rep to find out the list of vendors. Even though we'll have to pay high surrender fees, I think over the long haul, we'll make up the losses by going with a company that does not charge high fees. I will have to get in touch with CFP planner for advise on this. What if my wife's district does not offer the likes of CIAA-CREF, Fidelity, Vanguard, etc. - would it be wise to move the 403(b) into an IRA instead?

BTW, I ordered Dan Otter's book last night.

 

 

While I could not find the address of the LI chapter, you can search for CFP planners at www.cfp.net- look for search for CFP professional icon- then scroll down to radius search and enter your zip. Maybe your local phone co can give you the phone no. of the local CFP chapter.

 

I found 3 cfps under A including Thomas Addison in Syosset, Paul J. Aledort, melville and David E. Altschuler, Woodbury. There are others further down the list. You can check them out by entering their names and locations on the CFP site.

Intruder,

I searched cfp.net and found quite a few in our area. Thank you.

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Jarhead --

 

You may want a CFP, but BE CERTAIN THAT YOU ARE TALKING TO SOMEONE WHO ONLY DOES FEE-ONLY PLANNING! CFPs are a dime a dozen, but fee-only types are somewhat rarer. Lots of CFPs sell, sell, sell, but if you find yourself in that position, don't buy, don't buy, don't buy. You have time. There is no point in rushing.

 

It does sound like you had one of those experiences that MOST of us here on this site have had... one last salesman, realizing that we had been taken yet again, and most importantly, realizing that we were going to have to take the financial bull by the horns. You can do it... stick around, develop your summer reading list, and you will learn a lot.

 

If you run out of things to read, you can find some more at the Recommended Reading List at www.bobbrinker.com

 

Welcome to our world!

 

JudyS

 

 

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Jarhead --

 

You may want a CFP, but BE CERTAIN THAT YOU ARE TALKING TO SOMEONE WHO ONLY DOES FEE-ONLY PLANNING!

Judy,

Thank you for your tips. Funny you should mention... I requested a quote online for term life insurance on insure.com and the very next day started getting bombarded with calls. I had no idea that besides an online quote, I am going to get so many calls. The sharks are in the water... LOL. One insurance salesman called and also said that he has a CFP in the office who can go over my financial needs. He normally charges $300/hour but will waive the fee. No thanks.

 

-Alex

 

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Guest Sierra

Jarhead: Stop and think for a second: If the salesman's "suggestions" were so great why are they not universally known and accepted to be great suggestions? In other words if they were great suggestions you would be calling the insurance company to sign up--not the other way around.

 

If you knew about the availability of Term Life why did you purchase this crap?

 

Having said that, I advise you to write a letter to the Chief Executive Officer of the insurance company with a copy going to the NY State Department of Insurance. Demand that you be made whole inasmuch as this product is UNSUITABLE BASED UPON YOUR FINANCIAL AND PERSONAL PROFILE. Demand a refund of all premiums less the value of the pure insurance (TERM) protection the salesperson should have advised you to purchase in the first instance.

 

FYI: The State of New York's 457 Plan is available to all local public employers, including school districts, in the State. The Plan is one of the finest in the nation. Does your wife know about its availability? Spread the word.

 

Joel L. Frank

Pension Columnist

The Chief-Civil Service Leader

277 Broadway

New York, NY 10007

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If you knew about the availability of Term Life why did you purchase this crap?
Joel,

Out of stupidity... trusted the guy and paid dearly for it. I never had any interest in learning finances on my own (how dumb of me) and always thought that these "advisors" will offer sound advise. How wrong was I!

 

I advise you to write a letter to the Chief Executive Officer of the insurance company with a copy going to the NY State Department of Insurance. Demand that you be made whole inasmuch as this product is UNSUITABLE BASED UPON YOUR FINANCIAL AND PERSONAL PROFILE. Demand a refund of all premiums less the value of the pure insurance (TERM) protection the salesperson should have advised you to purchase in the first instance.
I think I will do that. Prior to mailing it out, I want to show the letter and my intent to the AXA salesman when he is at my house this Thursday to see if he will waive the surrender charges. Worth a try?

 

BTW, I searched the NYS Insurance Dept. web site for their mailing address - there are a few of them. Would it be the one in Albany, One Commerce Plaza?

 

FYI: The State of New York's 457 Plan is available to all local public employers, including school districts, in the State. The Plan is one of the finest in the nation. Does your wife know about its availability? Spread the word.
No, she is not aware of this. I will definitelly look into it.

Is there a way to transfer 403(b) into 457 w/o incuring penalties?

 

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Jar head

 

 

I hope you make that guy sweat. There is simply no excuse for him not giving all pertinent information verbally to the customer about fees. If you are looking after the best interest of the customer fees and charges should be mentioned.

 

Let us know how it goes. Don't let him smooth his way out of it.

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Jarhead,

Don't beat yourself because you trusted these guys. Most of us have done the very same thing and paid the price too. Now, you are on the road to recovery.

Best wishes,

Steve

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