Annuities

Qualified Longevity Annuity Contracts

By David Corwin, Annuity Sales Manager Many agents have yet to hear about QLACs, but most certainly many of their older clients need to be made aware.  QLACs can be a key piece to proper retirement planning and can help clients facing Required Minimum Distributions (RMDs) from their qualified retirement accounts and the associated taxes that go with those distributions.  QLACs are purchased within a traditional retirement plan and the annuity payments are deferred until the client is much older (they must begin payments the month following the month in which the client reaches age 85) and the value of the QLAC is excluded from RMDs and until payments begin.  Some benefits include:
  1. Potentially reduce taxes
The ruling allows you to use 25% of your individual retirement account, IRA, or $125,000, whichever is less, to fund a QLAC. That dollar amount is excluded from your required minimum distribution, RMD, calculations, which could potentially lower your taxes.
  1. Lessen your RMDs
As an example, if you have a $500,000 Traditional IRA, you could fund a $125,000 QLAC under the current rules. Your RMDs (Required Minimum Distributions) would then be calculated on $375,000.
  1. Plan for future income
QLACs allow you to defer as long as 15 years or to age 85, and guarantees a lifetime income stream regardless of how long you live.
  1. Spousal and non-spousal benefits
Legacy benefits for both spouse and non-spouse beneficiaries guarantee that all the money will go to your family, not the annuity carrier.
  1. Protect your principal
QLACs are longevity annuity structures, which are fixed annuities. Also referred to as deferred-income annuities (DIAs), the QLAC structure has no market attachments, and fully protects the principal.
  1. Add a COLA
Depending on the carrier, you can attach a contractual COLA (cost-of-living adjustment) increase to the annual income or a CPI-U, Consumer Price Index for All Urban Consumers, type increase as well.
  1. No annual fees
QLACs are fixed annuities, and have no annual fees. Commission to the agent are built into the product, and very low when compared with fully-loaded variable or indexed annuities.
  1. Contractual guarantees only
QLACs are pure transfer of risk contractual guarantees, and agents cannot project different proposal/illustrations.
  1. Laddering income
Because of the QLAC premium limitations, this strategy should be used as part of your overall income laddering strategies, and in combination with longevity annuities in non-IRA accounts.
  1. No indexed or variables allowed
Variable and indexed annuities cannot be used as a QLAC; only the longevity annuity structure is approved under the QLAC ruling.
  1. Compliments Social Security
QLACs work similarly to your Social Security payments by guaranteeing a lifetime income stream starting at a future date.
  1. Indexed to inflation
The QLAC ruling allows the premium amount to be indexed to inflation. That specific amount is $10,000, and should increase by the amount every three to four years.
  1. Only the big carriers play
Because of the reserve requirements to back up the contractual guarantees, only the large carrier names most people are familiar with will offer the QLAC version of the longevity annuity structure.
Long Term Care and Disability Insurance

Help your Clients Understand the Financial Pitfalls of a…

Presented by Leonard Berthelsen   Most consumers would be hard-pressed to explain what their real out-of-pocket costs would be if a major health issue occurred.  Deductibles, co-pays, primary doctor vs. specialist, generic vs. name brand are just a few of the costs and decisions that come up.  Then there are those expenses not really talked about or covered in their health plan such as travel, lodging, experimental drugs and procedures, not to mention time off work. Critical Illness and Cancer/Heart Attack/Stroke coverage can be a tool that financial professionals use to bridge the gap created by these out-of-pocket expenses.  Having a lump-sum check arrive while your client is undergoing cancer treatment or recovering from a heart issue can be a huge relief to them and their families. As their health plans have increased deductibles and co-pays in order to keep premiums down, this results in only “kicking the can down the road” because eventually the cost is going to come back to your clients in the form of payments for those higher deductibles and co-pays. Many people have limited disability coverage at work, if they have it at all, and it may only pay a portion of their salary or wages.  That loss of income potentially poses a huge financial risk to your client.  Having a critical illness plan can soften the blow from reduced or stopped paychecks. Critical Illness and Cancer/Heart Attack/Stroke coverage can be tailored to your clients’ exposure and are designed to have affordable premiums.  In addition, they potentially will pay for those expenses not covered by their health insurance plan.  These products have limited underwriting and great compensation. Contact your Financial Brokerage Sales Manager today at 800-397-9999 to find out how Critical Illness and Cancer/Heart Attack/Stroke coverage can help your clients weather the financial risk from a health crisis!
Life Insurance

Three ways for a Property and Casualty Agency to…

Presented by Brian Leising   Are you concerned about losing clients to your competition?  Looking for new ways to boost your retention rates and grow revenue?  The average client retention rate is 10% higher when agencies cross-sell products.  Many agencies fail to effectively cross-sell life insurance because they do just a few basic things the wrong way.  You need a plan.  Here is the third item that all successful agencies use to sell life insurance to their auto and homeowners clients: Use online applications.  You probably use these for your other lines of business already.  Nobody likes more paperwork.  You can be physically in front of your client, or speak with them over the phone.  Either way, the online process speeds up the underwriting system and eliminates paperwork errors.  Not familiar with this process?  Check out a how-to video and then listen to what a once-reluctant online app adopter has to say about the process.