Objective information about retirement, financial planning and investments



  1. Scott Frazee says

    “The major expense component of an annuity product is generally the mortality and expense charges on the contract.”

    I would modify this point with an important caveat. Mortality and expense charges are pretty universally present in variable annuities (VAs). VAs have these expenses to cover the liability gap formed by the potential gap between account value (which can go up or down with the market) and the death benefit (which is often a high water mark or the premium/principle) of the insurance company.

    Fixed annuities (which Professional Life seems to be offering) do not expose the insurance company to this same liability as the death benefit is usually the account value, so there is no need for an added mortality expense. What is extremely odd, though attractive, is the complete lack of surrender charges (and associated illiquid nature of the account), which are generally what allows the insurance company to structure their investments with the assumption that they get to hold onto the funds for a significant amount of time and can earn a decent return over that period.

    • Roger Wohlner says

      Scott thanks for your comment and for pointing out the expense issue. I have modified that section of the post accordingly.

  2. I read this article with interest. Living in Illinois, I too have heard this same commercial and wondered how the company could offer such interest rates.

    Your mention of the cited company’s low rating gave me pause — but brought up a related topic of what is happening right now with Aviva in Iowa and the potential takeover by Apollo/Athene Group. When I recommend an annuity concept, I emphasize the AM Best company rating, but if carriers can be gobbled up by lesser rating organization, what is the safety in entering a long term contract with surrender charges only to be locked into an equity group which may have different short term intentions? Not meaning to stir the pot, but I am now not sure that even AM Best ratings can be relied on as we go forward. It feels like switching out a marriage partner when I wasn’t looking….

    • Roger Wohlner says

      Carol thanks for your comment and I agree with all of it. If memory serves me Executive Life received solid ratings right up until their implosion some 20 years ago. My beef is with firms like this tempting seniors in this low rate environment with these types of commercials. If you and I have difficulty getting the true picture of an insurance company’s health the average consumer is likely not going to fare any better. I am not familiar with the Aviva situation but will check into it.

  3. This reminds me of the saying, “if it’s too good to be true, it probably is”. There is almost always something wrong when something seems like a great deal. Personally, I won’t invest in anything I don’t fully understand myself, so I probably would stay away from this offer.

  4. Roger Wohlner says

    Jake thanks for your comment. I always get ticked off when I hear ads like this one. So misleading to the investing public. You always need to look beyond the hype.

  5. Jeff Grossser says

    What is misleading about this advertising? This comment chain above took place 6 years ago, and here the company is still offering the same type of product at advantageous interest rates, I’m assuming conservative investors did ok here over the past six years. There is always some risk in investing, right?

    • Roger Wohlner says

      Jeff thanks for your comment. If you read the entire blog post, my issue was with their poor (or now non-existent) ratings from A.M. Best. Sure they are still in business and paying a competitive rate. I’m just not sure why anyone would invest in an annuity from a company with no rating, this is a red flag to me. The reward doesn’t seem to justify the risk, just one person’s opinion though.

Speak Your Mind


This site uses Akismet to reduce spam. Learn how your comment data is processed.