Evaluating The Carrier

At SFG Annuity Marketing, we believe that any product can only be as strong as the company issuing it. And we’re not alone. According to LIMRA’s Deferred Annuity Buyer Report in 1999, more than 8 out of 10 annuity buyers rated the financial stability of the carrier as the most important purchasing factor.

During our due diligence process we review ratings assigned by each of the following independent ratings analysts.

• A.M. Best Company for Statutory Financial

• Standard & Poor’s for Financial Strength

• Moody’s for Claim Paying

• Fitch Ratings for Financial Strength

These ratings provide us with a convenient reference point from which to judge the financial health of a company. But because there is no standardized scale among these analysts, we believe the Comdex is a more objective method of measuring financial stability.

The Comdex is not a rating itself, but a composite of all of the ratings that the company has received. The Comdex gives the company’s standing, on a scale of 1 to 100, in relation to other companies that have been rated by the above services. For example, the Comdex for ING USA Annuity & Life Insurance Company is 92. That means that 92% of carriers are ranked lower than ING. Not too shabby!

While the majority of our carriers have Comdex ratings in excess of 80, carriers with Comdex ratings less than 70 are purposely excluded from our portfolio.

Screening The Annuity

If you’re the kind of advisor who deeply values your clients, you’re probably pretty discriminating when you select products for them. You have to be! Choosing unsuitable products could have severe repercussions; the least of which is losing a client. At SFG, we understand the value of building strong client relationships. That’s why we carefully screen each product before adding it to our portfolio. If a product fails to rise up to our standards, we purposely exclude it from our portfolio.

• We purposely exclude products that do not offer the option of paying the full-accumulated value to beneficiaries upon the death of the annuitant/owner. With a spike in beneficiary litigation against advisors, we believe it is important to carefully evaluate the suitability of selling annuities that levy surrender charges when the beneficiary elects to receive the proceeds in lump sum. Because annuities have a long-term nature and fixed annuity buyers tend to be older, we believe that front-end benefits, like bonuses, could potentially be negated by beneficiaries who elect to incur an all-too-often lofty surrender charge, which is levied against the entire cash value.

• We purposely exclude products that require annuitization. These are commonly referred to as “two-tiered” annuities. While the benefits of annuitization cannot be refuted, we believe consumers deserve the option of shopping for the most competitive payouts. Two-tiered annuities take this privilege away from the consumer. Besides, what client-oriented advisor wouldn’t want the opportunity for repeat business?

• We purposely exclude products built on excessive surrender schedules. By design, annuities were intended to be long-term accumulation vehicles to help Americans supplement retirement. But carriers are testing these boundaries by creating products with surrender schedules that extend out as far as 17 years. That’s potentially four new presidents…and that is just too long! At SFG, you’ll quickly discover that the products we recommend are built on shorter surrender schedules and rarely, if ever, exceed 10-years.

At SFG, we’re passionate about selecting products that discriminating advisors can feel good about recommending. Of course, the decision to sell any product is ultimately up to you. With SFG, we don’t prohibit you from selling a carrier’s product but try to direct you to products that meet, or exceed, our standards.