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GSCalifornia

Getting Out Of National Life Group/life Insurance Company Of Southwest

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Congrats on your move. It's worth whatever it costs to get out of that plan. When informing colleagues about this info be prepared to get little response at first. People will be grateful for the information but their interest will fade or they'll think it's over their head. Share whatever info you find useful and offer help when needed. Good luck

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GS,

Thank you for posting this information.  I just wish I had found it sooner.  I've been contributing a little ($1820/year) to a National Life Group (Elite 5) Fixed Annuity - 403b.  It's earned me $375 in interest over last 5 years and I would have to pay an 8% surrender fee ($627) to move it to Vanguard.  It's frustrating when you think you're doing the right thing by "having a 403b", to later learn that not all 403b's are the same and there are far better vehicles to put your money into.  I've started a shell IRA with Vanguard and will work with NLG tomorrow to begin moving that money.

 

Thanks to all that have contributed to this post.  Very helpful!

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20 hours ago, carrjar said:

GS,

Thank you for posting this information.  I just wish I had found it sooner.  I've been contributing a little ($1820/year) to a National Life Group (Elite 5) Fixed Annuity - 403b.  It's earned me $375 in interest over last 5 years and I would have to pay an 8% surrender fee ($627) to move it to Vanguard.  It's frustrating when you think you're doing the right thing by "having a 403b", to later learn that not all 403b's are the same and there are far better vehicles to put your money into.  I've started a shell IRA with Vanguard and will work with NLG tomorrow to begin moving that money.

 

Thanks to all that have contributed to this post.  Very helpful!

We have all, or mostly all, of us made the same mistake. It is criminal that these products are STILL being sold each and every day to our public k12 403b plans. $375 dollars after the last five years is criminal! I was in my middle 40s when I had to pay an 18% surrender fee to get out of two horrible fixed annuities, but I did it in 1994 and was happy I did. I was so angry at the time, that I vowed to write a book, and I wrote two books to try and inform our colleagues to stay away from the "nice" guy or gal in the cafeteria.  

You might be able to take it out over five years, but depending on the contract, you might not get any interest. But in your case, assuming you have 20 years until retirement, I would pay the $627 so you can invest it in genuine stock and bond markets. 

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On 7/12/2017 at 7:17 PM, GSCalifornia said:

Thank you all for your help! After many hours on the phone, I figured out the process of how to transfer the money and I set up an account with Vanguard (their customer service was much better than National Life Group and the third party administrator, Envoy). I am so grateful that I found this forum to confirm my skepticism of National Life Group and indexed annuities.

 

Ed, thank you for the Investing 101 link. I'm a rookie when it comes to investing so your overview was very helpful. Any advice on choosing to do 3 total market funds vs a single target retirement fund? Any further advice/resources for Vanguard funds to select?

Thank you for your question. I am in the exact same situation with National Life Group and  Vanguard. Were you able to move your money from NLG to Vanguard? Did you have to pay fees? I am so glad that we have this forum with very helpful info!  Thank you! 

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18 hours ago, californiateacher1 said:

 I am in the exact same situation with National Life Group and  Vanguard. Were you able to move your money from NLG to Vanguard? Did you have to pay fees? I am so glad that we have this forum with very helpful info!  Thank you! 

This thread started by GSCalifornia is 3 years old, but you are certainly welcome to add to it with your own questions (or start a new thread?). If you send a personal message to GSCalifornia, it will generate an email to them, and they may respond to your query. I have no doubt that the transfer was completed, and that there was the surrender fee, and probably an account closing fee.  

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I am in a similar situation. I'm in Georgia, and I have a 403b plan through Midland National that I've been contributing to for about 5 years. I stopped contributing last month after listening to Clark Howard and finding you guys at 403bwise. However, I haven't moved the money yet. My school district doesn't offer ANY companies that are not high fee, etc. All are through insurance companies. What now? Should I leave it where it is or pay my surrender fees and taxes and just pull it out?  Can I initiate a transfer  to another company like Vanguard or Fidelity and then would it have to be in a ROTH IRA or traditional? I'm learning but still limited in knowledge regarding all of this. I just wish I'd never signed up for that 403b but was talked into it!! Ultimately it's no ones fault but my own but would love some help getting out of this mess!

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3 hours ago, Deana said:

I am in a similar situation. I'm in Georgia, and I have a 403b plan through Midland National that I've been contributing to for about 5 years. I stopped contributing last month after listening to Clark Howard and finding you guys at 403bwise. However, I haven't moved the money yet. My school district doesn't offer ANY companies that are not high fee, etc. All are through insurance companies. What now? Should I leave it where it is or pay my surrender fees and taxes and just pull it out?  Can I initiate a transfer  to another company like Vanguard or Fidelity and then would it have to be in a ROTH IRA or traditional? I'm learning but still limited in knowledge regarding all of this. I just wish I'd never signed up for that 403b but was talked into it!! Ultimately it's no ones fault but my own but would love some help getting out of this mess!

Welcome to the forum, Deana! 

Your story is decades old. Most of us regulars here have similar stories. I was sold two annuities 35 years ago and the same thing is still happening.

You did the first step correctly by stopping immediately!

Do NOT pull the money out! Just leave it there for the time being and we can guide you along about what to do moving forward. But we need more information. Now provide the other companies that are available so we can take a look. There might be one gem in the rough.  

Steve

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Deana, welcome to the forum! Don't be too hard on yourself, as there are lots of others that should share in the blame, like school districts which take no responsibility for the crappy products they allow to be sold to their employees! And the teacher unions, and the federal and state regulators. 

If you will post the list of your district's 403b vendors, we can check for any hidden low-cost vendors. Sometimes an insurance company has a decent product which isn't pushed because it doesn't make them much money. 

No, don't cash it out. Let it just do its thing while we figure out what options you have. It is an equity index annuity that will probably earn maybe 2% per year. Sort of like a bank savings account some years ago. These days savings accounts earn less than 0.5%! You can not move the balance to an IRA unless you move to a different district, that is change employers, or you are 59.5 years old. Hopefully we can find a lower-cost vendor on the district's 403b list that you can transfer your balance into.  

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4 hours ago, Deana said:

My school district doesn't offer ANY companies that are not high fee

That may be true, but you may be surprised. List the approved 403b vendors and the approved 457b vendors. If you don't have that information then tell us what district you're in and together we can try to track the information down.

15 minutes ago, sschullo said:

Should I leave it where it is or pay my surrender fees and taxes and just pull it out?  Can I initiate a transfer  to another company like Vanguard or Fidelity and then would it have to be in a ROTH IRA or traditional?

I want to make sure you understand the different types of accounts.

At the highest level you have taxable accounts and tax advantaged accounts. As the names imply, the former doesn't give you tax breaks and the latter does.

Within the tax advantaged accounts umbrella you have accounts that are associated with an employer (403b, 457b, 401k, etc.) and accounts like an IRA that are not associated with an employer. Tax advantaged accounts, whether associated with an employer or not, often come in two varieties: Traditional and Roth. This specifies exactly how the tax break is applied, but I won't get into the details of that.

Within all of these accounts you can buy specific investments.

Now more to the point for your specific situation...

When an employer offers a 403b, 457b, 401k, etc. you have to keep your money in that account. If your employer has multiple vendors for these accounts then you're allowed to transfer the money between vendors (fees may apply), but you cannot transfer the money to an IRA.

Some important questions:

  1. How much are you investing per year?
  2. How long do you intend to work for your district?

After answering those questions your course of action should be to enumerate all of the vendors your district has approved and then we can give additional input.

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Oh wow - where was this forum when i started years ago! Thank goodness I found you now!!

 >>>HI everyone. well idk if there's any help at this late date for me, but here goes...

I have a similar story only even longer, im afraid. I have 3 products with NGL: 457(b) ELITE, IRA ELITE 5, and a 403 (b) ELITE 5. 

I did EXACTLY as stated in NYTIMES article I came across tonight >> and even though it's an older article - it is still VERY TRUE!

Quote

"She took the agent’s word over the years, including in 2015, when he told her to transfer her money from one so-called fixed indexed annuity, purchased in 2007 through the Life Insurance Company of the Southwest, to another, from the same insurer, to qualify for a bonus."

I started w/Paul Revere in 1988 at the advice of older teachers when I started as a brand new teacher. I just thought "that's how it is" since (like so many have already described) these people come to our school through an arrangement w/our district HR. AND  they are given access to our work emails and more. So, I figured our district allowed them to give us additional options to supplement our CALSTRS! Plus, 'everyone' or at least so many colleagues also have them! Still, that's so naive, yes.

Recently I started looking on youtube or daveramsey, the moneyguy etc. AND then, I realized>>> WHOLLY MOLELY!!! I got INSURANCE ANNUITY!! ...and that's what has put me on a search or how to get out of it?? Or What is the BEST investment for me at this such later date?!!! I am thinking of retiring within about 5 years or less from teaching, but then working in another field, starting another career/job so as to not touch my funds until I am 70. I am virtually 60 at this point.

For the last 2 weeks, the young man who always works with me around my contribution, well, he and one of his friends, who has his own financial business, have been explaining Universal LIfe Insurance to me so that I buy yet another product. I had to STOP because I needed to do some serious research. WHY IS ALL THIS SO HARD TO UNDERSTAND OR TO FIND INFO ON?!??! It really should be a crime. I have worked hard and kept to a very simple lifestyle, own no property, raised 3 children, and as I approach the end of my ed career>> I want to make sure I have the BEST plan possible given my circumstances (Including, 2 children still living at home). I did not get years of service credit for many years I worked bcz I took off many years and/or taught less than 75% to raise my children (and drained my first annuity until it was only about $7-8K left) because I did not know any better or that taking a loan would have been better! And then I started to 'build it up' all over again thinking I was safeguarding my retirement!

I'd just like straight forward information so I can do the most with my funds. Please, can you offer and help or questions for me to consider or suggestions about any of the 4 products I mention? (The three I have w/NLG: 457(b) ELITE, IRA ELITE 5, and a 403 (b) ELITE 5 AND the 4th one: Universal LIfe Insurance) Even when I go to NLG's website to look up my accounts and their details, information on fees, commission rates or service fees, etc. >> i can not find anything!

Thank you in advance either way!

PS ~ IT SEEMS THAT ALL THIS WOULD BE ILLEGAL?? Is it?? FEELS like a set-up, teachers are easy prey. Every year, these reps come around >>always pushing for more and more, or talking about some new deal, some special product, or a new "bonus": you can get by signing on the line! To date,  just this month I was contacted by 5!!! Sometimes I make appointments just to see if I can get myself schooled a little more on all this>> but NOW I realize there is SO MUCH that I was never told, so many details I missed. No wonder I never really could wrap my head around it!

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Roberta, welcome to the forum. I'm glad you finally found us! The products of NLG are usually their Fixed Index annuity or Equity Index annuity, the same sort of thing I think. I know a bit about them and will cover that, but first, please tell us the 403b and 457b vendors that your district allows you to use. You may be able to find the list by just googling "your district, 403b plan". Your HR office should have it, or refer you to their third party administrator (TPA) who usually maintain the lists. Hopefully we can find a low-cost non-annuity vendor on the list, and suggest a transfer of your NLG balance. You may have to pay a surrender fee to transfer out, but it's possible you have had the account long enough to avoid the surrender fee? You should call up the 800 help #, not the local rep, and ask for the surrender fees on all your a NLG accounts.

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Your Equity Indexed Annuity (EIA) is a very complex insurance product that is VERY hard for anyone to fully understand. It is sold as a way to get the benefit of stock market returns while avoiding the downturns that the market experiences from time to time. Although I think you won’t loose your contributions, the positive market returns are severely restricted. Only part of your contributions are tied to market gains, there’s a limit on how much market gain is allowed, and stock dividends are not counted. So while the rate of return of the full S&P 500 Index has averaged over 13% over the last 10 years, and is over 20% some years, the return of an EIA is usually in the 2% to 3% range. You haven't lost your contributions, they haven't grown like they would have if they had been invested in a custodial (non-annuity contract) account. 

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My wife has an Elite 5 403B with NLG/LISW.  Issue date was 4/9/2012. She will probably retire this year at age 56. Total balance is 92k. Surrender value is 89.5k. Bonus accumulation value is 4600. Can't get to BAV until years 11-15. What should we do at this point? Lost in FL.....

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My wife has an Elite 5 403B with NLG/LISW.  Issue date was 4/9/2012. She will probably retire this year at age 56. Total balance is 92k. Surrender value is 89.5k. Bonus accumulation value is 4600. Can't get to BAV until years 11-15. What should we do at this point? Lost in FL.....

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I started a NLG/LISW Elite 5 403B in April 2012. I stopped contributing this past January.  I have 92K total balance. Surrender Value is 89.5K. I have a Bonus Accumulation value of 4600. that is accessible in the 11-15th years. I will retire this summer at 56 years old.  Do I sit tight or make a move?  Lost in FL.

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