"living annuity" fund

[murraybiscuit]

my father had a life insurance policy. it was reinvested in a "living annuity" fund posthumously. this fund hasn't performed great imo and, more importantly, i'd rather not be getting the annuity income as it's currently eating into the invested capital at the current monthly payout rate.

1. i can't find a way of reducing the drawings in the online client portal. is it possible to stop the drawings on this kind of policy?
2. are there normally fees attached to moving the cash out of this policy and adding it to an alternative investment vehicle?
3. am i missing something in the way this kind of investment is structured?

 

[Shayd]

PM me your details and I can arrange for the changes you want. You cannot stop the drawdown but it can be reduced significantly. Sounds like it was badly structured.

 

[LancelotSA]

my father had a life insurance policy. it was reinvested in a "living annuity" fund posthumously. this fund hasn't performed great imo and, more importantly, i'd rather not be getting the annuity income as it's currently eating into the invested capital at the current monthly payout rate.

1. i can't find a way of reducing the drawings in the online client portal. is it possible to stop the drawings on this kind of policy?
2. are there normally fees attached to moving the cash out of this policy and adding it to an alternative investment vehicle?
3. am i missing something in the way this kind of investment is structured?

I am not big on people soliciting business on this forum so rather than PM someone just contact the company with whom the annuity is held and ask what your options are. The better option would be to contact the advisor who sold him the product and make him work for the money he earned when selling it!

Legislation dictates you are entitled to choose drawings of between 2.5% and 17.5% on a living annuity. This used to be 5% and 20%. This is usually done for the year in advance and you are allowed to change this percentage every anniversary. Usually a letter is sent out prior to the anniversary informing the investor of their current drawings and advising them as to whether they are higher than recommended for the client's age. Well at least this is the case with the companies I recommend.

If you are not satisfied with the returns then take a look at where the money is invested (ie which portfolio). Remember it may actually be the large drawings rather than poor returns that are diminishing the capital. Living annuities usually provide you with a choice of portfolios. It may well have just taken a temporary knock from the market turmoil recently and you may be better off leaving it where it is for now instead of turning paper losses into real losses.

This may help you understand the product better : http://www.persfin.co.za/index.php?fSectionId=&fArticleId=280011 (The basics are the same although as stated the percentages etc have changed)

 

[Shayd]

I am not big on people soliciting business on this forum so rather than PM someone just contact the company with whom the annuity is held and ask what your options are. The better option would be to contact the advisor who sold him the product and make him work for the money he earned when selling it!

Legislation dictates you are entitled to choose drawings of between 2.5% and 17.5% on a living annuity. This used to be 5% and 20%. This is usually done for the year in advance and you are allowed to change this percentage every anniversary. Usually a letter is sent out prior to the anniversary informing the investor of their current drawings and advising them as to whether they are higher than recommended for the client's age. Well at least this is the case with the companies I recommend.

If you are not satisfied with the returns then take a look at where the money is invested (ie which portfolio). Remember it may actually be the large drawings rather than poor returns that are diminishing the capital. Living annuities usually provide you with a choice of portfolios. It may well have just taken a temporary knock from the market turmoil recently and you may be better off leaving it where it is for now instead of turning paper losses into real losses.

This may help you understand the product better : http://www.persfin.co.za/index.php?fSectionId=&fArticleId=280011

Lancelot what you say about the drawdown is true, but if it is the fund then he is in trouble as the market has recovered all losses by and large, at this point.

While I don't want the forums full of those who are soliciting for business, if somebody asks for help I see no problem in offering it. Saying contact the product provider is not being very helpful.

 

[LancelotSA]

Lancelot what you say about the drawdown is true, but if it is the fund then he is in trouble as the market has recovered all losses by and large, at this point.

While I don't want the forums full of those who are soliciting for business, if somebody asks for help I see no problem in offering it. Saying contact the product provider is not being very helpful.

The solution can be provided on here without the need to solicit business. It will then also provide answers for those who stumble across this thread with the same issues one day...

I did mention that the fund can be changed. I also recommended that he contact the advisor who earned the money on this. If he wants further advice on here he is welcome to post the portfolio his dad is invested in once he has found this out.

 

[Shayd]

I disagree about the quality of advice that can be provided on a forum for what is effectively a custom built product. I will agree that product rules and restrictions can be posted but how this fits into the remainder of his financial life it does not help with.

Lets agree to disagree. I feel the personal touch and getting an in depth look is important.

BTW I don't feel dirty in anyway promoting my business, I believe the service I provide is invaluable and has to be tailored to each client.

 

[murraybiscuit]

thanks for the advice gents.
the drawdown percent is an issue and i am now clearer on the procedure, although i (my mother) don't remember receiving any communication from the admin regarding annual changes. i'll give them a call.
this makes a lot more sense, as somebody had mentioned this to me already, but hadn't explained it as clearly.
the fund has been underperforming for a few years now, and there are a LOT of other funding options.
i will need to chat to familiarise myself with these and get some advice around which ones could be preferable.
the problem is that the original financial advisor was a bit of a drunkard and has gone off the rails a bit, so i took over the admin of the policy in his absence of presence and mind.
which is why i find myself here.
no offense, but i'm trying to teach myself a bit as i was a bit naive in accepting financial advice before

 

[Shayd]

Fair enough murray, unfortunately there are many lazy sharks out there.

 

[LancelotSA]

i will need to chat to familiarise myself with these and get some advice around which ones could be preferable.

no offense, but i'm trying to teach myself a bit as i was a bit naive in accepting financial advice before

Cool. Feel free to ask any further questions which may arise. If you so desire you could also mention the product and the current portfolio choice if you would like some feedback on these.