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Dan Otter

How Valuable Is The M&e?

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Guest Sierra
Joel, just to clarify: if you were right about the fixed annuities, I'd be happy to post it here. To the extent that I feel any personal animus towards you, it's because I don't feel you were truthful in our previous discussions. But if you were right about this issue, I'd happily say so here. It's just that, so far, I haven't found anyone who agrees with you, including the experts that others have cited, and now TIAA-CREF.

FT: Do you still stand by your position or would you like to take this opportunity to change it?

 

Joel

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Hi,

Joes states: "Also fixed annuities have a guaranteed interest rate often at or near 3.5% so unlike bond funds there is no risk that they will lose money and you will always make at least the guaranteed min."

 

NO RISK! I find that difficult to believe. It may be unlikely that an insurance company will go under, but I believe it has happened. One always need to check the rating of the insurance company before giving them money.

 

Larry Swedroe says, "Don't treat the unlikely as impossible." Best Wishes.

 

Joe

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Guest Sierra

The 13th largest life insurer went belly up in 1995. It was the Mutual Benefit Life Insurance Company headquartered in Newark, NJ.

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The 13th largest life insurer went belly up in 1995. It was the Mutual Benefit Life Insurance Company headquartered in Newark, NJ.

 

Sierra, is it possible that you have the name of the company wrong or something? I googled "Mutual Benefit Life Insurance Company" and couldn't find any references. Would like to read more about the failure of this company.

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Hi,

Joes states: "Also fixed annuities have a guaranteed interest rate often at or near 3.5% so unlike bond funds there is no risk that they will lose money and you will always make at least the guaranteed min."

 

NO RISK! I find that difficult to believe. It may be unlikely that an insurance company will go under, but I believe it has happened. One always need to check the rating of the insurance company before giving them money.

 

Larry Swedroe says, "Don't treat the unlikely as impossible." Best Wishes.

 

Joe

 

I agree that we should not treat the unlikely as impossible...but neither should we treat the unlikely as likely. Joes (no relation, right?) may have overstated his case when he referred to fixed annuities as riskless, but the "going under" of an insurance company is a fairly rare event, and seldom comes out of the blue. You're absolutely right that a check of the company's rating is usually sufficient to have confidence in all their stated guarantees.

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Guest Sierra

Of note: Just prior to its collapse the Mutual Benefit Life Insurance Company was rated AAA by each of the three major rating agencies.

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Guest Sierra

To FT's CFP representing ING: Would you please tell FT that he is wrong in his assertion that the ME fee does not apply to fixed annuties.

 

Thanks,

Joel L. Frank

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Hey, a few pages ago, you asked me to go to him for his opinion. Well, here it is. If you don't like it, just do what you do with all the other dissenting opinions you're presented with and ignore him!

 

 

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Guest Sierra

Let him come on these boards and talk for himself----like I've said you have a poor habit of talking for others who are quite capable of talking for themselves.

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Hi,

FT: "I agree that we should not treat the unlikely as impossible...but neither should we treat the unlikely as likely."

 

I don't think in today's world you can take anything for granted anything. We have witnessed in the past few years things that were not expected from airplanes flying into buildings, the collapse of high tech and the stock market in 2000, the Enron bankruptcy, the Orange County bankruptcy, and the loss of retirement and health benefits for many workers in different industries. I am sure that I could think of more things that have caused economic hardship for large numbers of people.

 

There is real risk in many different areas. That is why it is necessary to diversify. So I think that the collapse of a large insurance company is very much a possibility.

 

I live in a condo. Each year the insurance agent for the master policy of our building comes to a meeting and talks to us about our insurance. He is a State Farm agent. He told us about when the big hurricane a few years ago came close to Miami. He said that if the hurricane had actually hit Miami itself, State Farm would had gone under. They wouldn't have been able to handle the loss. So I agree with Larry Swedroe, you can't treat the unlikely as impossible. Best Wishes.

 

Joe

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Let him come on these boards and talk for himself----like I've said you have a poor habit of talking for others who are quite capable of talking for themselves.

 

He chooses not to participate. You did, in fact, ask me to ask him his opinion on this question. I've done nothing more than provide it. What a shocker that you malign him...after all, since he disagrees with you, he must be little more than a "shark"! No doubt you'd be quite satisfied with me quoting him if his reaction had been more like "Actually, he's right."

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