How important is a Variable Annuitys Insurance Company Rating
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Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date
How important is a Variable Annuitys Insurance Company Rating pal123 08-09-2007
Posted by pal123 on August 9, 2007, 6:06 pm
I am very interested in purchasing a VA offered by Jefferson National
Life called "Monument Advisor". This product is very appealing to me
for these reasons:

1)        You pay a flat fee for M&E expenses of $20.00 per month. This
is guaranteed to remain constant during the life of the contract.
2)        They offer about 165+ (and growing) funds as investment
options. Most of these funds are with well-known, well-established
fund families.

Obviously, this product is designed for someone like me who is just
interested in growing assets tax deferred and not interested in any
insurance features. After researching this product, the only possible
fly in the ointment that I can find is that the insurance company
itself (Jefferson National Life) has a B+ rating.

Should this concern me at all? My understanding is if the insurance
company should go belly-up, my funds will be safe because in VA
products they are held at the actual mutual fund institutions instead
of the insurance company. Am I correct on this or is there something
else that can bite me should something go amiss with the company? Your
opinions shall be greatly valued and appreciated.


Posted by joetaxpayer on August 9, 2007, 8:06 pm


pal123 wrote:

> Obviously, this product is designed for someone like me who is just
> interested in growing assets tax deferred and not interested in any
> insurance features.

I have to ask one question of you - by deferring the taxes, you turn
dividend and long term cap gain treatment into ordinary income. And run
the risk of this income putting you into the bizarre social security tax
bubble where an individual can pay a phantom 46.25% on net taxable
income of just $32K or so. I know that with such a low annual fee,
Jefferson National has no salesman about to put his kids through college
at your expense, that's a good thing, but I wonder what you feel the
benefit is. I've written some negative things about VAs, but still would
like to know if there is a specific scenario, i.e. pre-retirement age,
income, etc, and then post retirement details, which combine to form the
ideal candidate for whom the low cost VA is a clear benefit over post
tax accounts.

JOE


Posted by on August 10, 2007, 11:33 am
On Thu, 9 Aug 2007 19:06:53 -0500, joetaxpayer

>
>
>pal123 wrote:
>
>> Obviously, this product is designed for someone like me who is just
>> interested in growing assets tax deferred and not interested in any
>> insurance features.
>
>I have to ask one question of you - by deferring the taxes, you turn
>dividend and long term cap gain treatment into ordinary income. And run
>the risk of this income putting you into the bizarre social security tax
>bubble where an individual can pay a phantom 46.25% on net taxable
>income of just $32K or so. I know that with such a low annual fee,
>Jefferson National has no salesman about to put his kids through college
>at your expense, that's a good thing, but I wonder what you feel the
>benefit is. I've written some negative things about VAs, but still would
>like to know if there is a specific scenario, i.e. pre-retirement age,
>income, etc, and then post retirement details, which combine to form the
>ideal candidate for whom the low cost VA is a clear benefit over post
>tax accounts.
>
>JOE

It is important to note that I am NOT a "buy and hold" invetsor. Every
so often, I make changes to the portfolio which would trigger capital
gains taxes. That is why a VA works for me. I agree that for buy and
holders it may not make that much sense to go with a VA.


Posted by kastnna on August 10, 2007, 9:35 am
To the OP,

Are you maximizing 401k contribs, Roths, and IRAs if they are
available to you. Deferred annuities are one of the last stops (if not
the last) on the tax deferral train. How old are you?

Don't worry about the financial stability of the company until you are
sure its the right investment vehicle to begin with.

Most importantly, did you FULLY read the fine print on the Jefferson
National products? From the "monument advisor" page of their website:

* Jefferson National's Monument Advisor has a $20 flat insurance fee
on more than 97% of our underlying funds. Certain funds also have a
transaction fee ranging from $19.99 to $49.99 per transaction,
depending on the number of transactions per year. See the prospects
for details. Like other variable annuities, the customer pays fees of
the underlying funds selected (currently ranging from 0.23% - 2.72%;
except for Rydex VT Inverse Gov't Long Bond Fund which is currently
5.12%) plus the fees of any advisor hired. The range of underlying
fund fees reflect the minimum and maximum charges after contractual
waivers that have been committed to through at least May 1, 2008.


Posted by on August 10, 2007, 11:33 am
wrote:

>To the OP,
>
>Are you maximizing 401k contribs, Roths, and IRAs if they are
>available to you. Deferred annuities are one of the last stops (if not
>the last) on the tax deferral train. How old are you?
>
>Don't worry about the financial stability of the company until you are
>sure its the right investment vehicle to begin with.
>
>Most importantly, did you FULLY read the fine print on the Jefferson
>National products? From the "monument advisor" page of their website:
>
>* Jefferson National's Monument Advisor has a $20 flat insurance fee
>on more than 97% of our underlying funds. Certain funds also have a
>transaction fee ranging from $19.99 to $49.99 per transaction,
>depending on the number of transactions per year. See the prospects
>for details. Like other variable annuities, the customer pays fees of
>the underlying funds selected (currently ranging from 0.23% - 2.72%;
>except for Rydex VT Inverse Gov't Long Bond Fund which is currently
>5.12%) plus the fees of any advisor hired. The range of underlying
>fund fees reflect the minimum and maximum charges after contractual
>waivers that have been committed to through at least May 1, 2008.

>Are you maximizing 401k contribs, Roths, and IRAs if they are
>available to you. Deferred annuities are one of the last stops (if not
>the last) on the tax deferral train. How old are you?
>
Yes I have maximized all other vehicles available to me. This money
is what is left over from that. It is important to note that I am NOT
a "buy and hold" invetsor. Every so often, I make changes to the
portfolio which would trigger capital gains taxes. That is why a VA
works for me. I agree that for buy and holders it may not make that
much sense to go with a VA.


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