This company is selling a product and not disclosing vital information.
On X-XX-XXXX I took out a 6-year Annuity "FIXED" rate of 1.70%. Policy #XXXXXXXXXF Plan type - IRA. I get statements every year to update the "interest" it has accrued. It was sold as a "fixed rate" annuity, and now the interest rate has gone down to 1.45% as of 12-31-2014. I called my agent Dane Gigstead in Detroit Lakes,MN. on March 30, 2015 and asked him about the dropped rate. He called his higher up and they told him the only "fixed rate" that was guaranteed was "1%" any rate above that is "not fixed". His boss also told him if I wanted to guarantee 1.70% that I could put in $20,000 more!! Like I have $20k laying around. Well how can they sell this as a "fixed rate annuity" if it's not a "fixed rate". Just the other day I got a flyer in the mail from them selling annuities at up 2.40% fixed rate, and then on the back of the flyer it says "Listed rates are neither guaranteed nor estimated for the future". It also lists that certain dollar amounts are required to get certain interest rates, I understand that, but how can they say "rates are not guaranteed" if it's a "fixed rate annuity"? It was never disclosed to me at any time that only a certain part of the interest rate was guaranteed. What I want is that my interest rate of 1.70% be upheld throughout the 6 years of the annuity. I don't want my agent to get in trouble because he found out the same time I did that "only a certain % was guaranteed" (He wasn't happy either). If you could look into this matter and get back to me if you need more information that would be great. Thanks **** ********
The settlement I am seeking is that my "interest rate of 1.70% be upheld for the entire 6 years of the annuity. and any interest that has been lost during the period the interest rate was lowered be reimbursed.
It appears there may be some confusion regarding the terminology used to describe the annuity in question. While the consumer repeatedly refers to it as a "fixed rate" annuity, it is never described as a "fixed rate" annuity in any of the materials provided by Farm Bureau Life Insurance Company (FBLIC) to its customers. The product is instead called a Fixed Deferred Annuity. The word "fixed" in this context merely specifies that the company will pay no less than a minimum rate of interest, as opposed to "variable" annuities, where the customer's premiums are exposed to investment risk.
These terms are defined in the Buyer's Guide to Fixed Deferred Annuities, which is given to each applicant at the time of sale. The Buyer's Guide also distinguishes between the Current Interest Rate and the Minimum Guaranteed Rate. Additionally, our Fixed Annuity Contract includes a Disclosure Statement which states that "The Current Interest Rate will change from time to time but is guaranteed to never be less than the Guaranteed Minimum Interest Rate of 1.00%."
Policy Data page 3 of the contract specifies that the Guaranteed Minimum Interest Rate is 1.00%. The Policy Data also includes a description of Interest Rate Banding, which means that once the customer's accumulated value meets certain thresholds, such as $25,000 or $100,000, his credited interest rate will increase. This banding is not guaranteed and can change at any time.
By signing a Policy Delivery Certification, the customer attests that he has received the annuity. He indicates his understanding "that the credited interest rate may change from time to time but will never be less than the guaranteed rate of 1.00%." He acknowledges receiving the Annuity Disclosure Statement and Buyer's Guide to Fixed Deferred Annuities, and he attests he is aware that he has 30 days to review the policy and decide whether or not it fits his needs. At any time during that period, he can return the annuity and receive a full refund of premiums paid.
Our company's Statements of Account list the current interest rate and specify that "Interest rates are subject to change." This particular customer's rates have fluctuated from 2.40% to 1.45% during the time his annuity has been in force. To clarify a point raised in the complaint, the customer's agent knew the annuity had a guaranteed minimum rate of 1.00%; he was simply unaware that the credited rate was reviewed by our company on a monthly basis. This does not mean the rate will change each month. The complainant's rate, for instance, has changed 4 times in 3 years.
States have regulations governing the disclosures that annuity contracts must include. The products are submitted to the insurance department for review and must be approved before they can be sold in that state. The Fixed Deferred Annuity in question was approved for sale in the state of Minnesota.
Since (a) the Guaranteed Minimum Interest Rate was disclosed on the Disclosure Statement, the Policy Data, and the Policy Delivery Certification, (b) the contract was approved for sale by the Minnesota Department of Commerce, and (c) the current interest rates were clearly indicated on the Statements of Account, FBLIC unfortunately cannot approve the consumer's request for a guaranteed interest rate of 1.70%, as we can find no evidence of wrongdoing on the part of the company or the agent and granting such a request would be unfair to our many customers who own the same type of product. The complainant should bear in mind that his annuity has earned a rate higher than 1.70% in the past and may do so again in the future.
(The consumer indicated he/she ACCEPTED the response from the business.)
I accept the response, but "DON'T" accept the way they sell their policy! It is very misleading and should be changed. The very mention of the term "fixed rate" instantly misleads the customer. This is just another company selling something with "a lot of fine print" in order to get out of paying what is owed!! I will not be doing business with this company in the future. There is not need for the BBB to continue looking into this matter further.