There are few (if any) things insurance agents sell that are simpler than fixed annuities, particularly immediate ones. These are instruments that are used to provide an inexhaustible (or nearly so) stream of income to folks who need one.
One of my clients is a law firm which represents a local company which had a defined benefit retirement program for some long-time employees. Such programs are designed to provide a fixed, usually small, retirement income. The company has a number of folks who have reached retirement age (or are approaching it), and wanted to offload the administrative details. A Single Premium Immediate Annuity is an ideal vehicle for this, because it provides a guaranteed income for the retiree, and zero effort (past writing the check) by the company. The law firm wins, because they provide the resource (that would be moi) to handle the transaction, and I win because there's a nice (although not outrageous) commission check for my efforts.
I've done a few of these for the firm, and in July, they asked me to do another one. I use a "wholesaler" that provides me with quotes based on criteria I provide (the monthly benefit amount, age and sex of the annuitant, A M Best rating of the carrier, etc) as well as the paperwork I'll need to write the case. I trust them to get me accurate information and proper forms.
Until now, I've had no complaints.
The wholesaler (whom we'll refer to here as XYZ) gave me the three quotes I requested, and we settled on a carrier. I received the quotes and forms via email (which is very convenient), we completed the paperwork, and I overnighted the completed case to XYZ on August 7. We had requested a payment date of August 31, which I presumed wouldn't be a problem (annuities such as this aren't underwritten like a life or health insurance policy; it's more enrollment than application). Case closed, or so I thought.
Mid-September, I get a call from the law firm, asking where the check was. Turns out, the retiree ("annuitant") hadn't received it. That didn't sound right to me, so I sent off an email to XYZ (the wholesaler) inquiring about it. The answer I received did not bode well: apparently, there were several forms missing, which would have to be completed before any check was cut. The carrier was firm: unless and until they had all the forms, they would put a hold on all funds.
As one can imagine, this didn't sit well with me; after all, I had counted on XYZ to provide me with all the proper documentation, and had in good faith secured the information, signatures and check. It seemed to me that XYZ had an obligation to supply me with all the necessary paperwork, and they had two opportunities to make sure all was in order: once when they emailed the forms to me, and again when they received the FedEx package I had sent back. I had no way of knowing what was missing, because I don't work directly with the carrier. I explained this to a number of folks as I made my way up the corporate ladder, becoming more and more frustrated as I did so.
In Part 2, we discuss how problems like this get resolved.