Monthly Averaging vs. Monthly Point-to-Point

Presented by David Corwin Today I’m going to share the difference between two common crediting methods in indexed sales. In order to help you understand monthly averaging, we will compare it to monthly point-to-point, or as some carriers call it, monthly sum.
  1. Calculate twelve monthly percentage changes in selected stock market index.
  2. Apply the product’s cap rate to each of the twelve monthly percentage changes.
  3. Add the twelve monthly capped percentage changes together to determine the annual interest amount to be credited.
As with all indexing methods, if the result is zero or negative, no interest is credited during that contract year. There are four steps used with the monthly average indexing method, as follows, with the first step identical to the monthly point-to-point method:
  1. Calculate twelve monthly percentage changes in selected stock market index.
  2. Add the twelve monthly percentage changes together.
  3. Divide the total by twelve.
  4. Apply the product’s cap rate to the result.
Now, from all the material that I’ve seen, it is – drum roll please . . . monthly averaging that wins.  If you had $100,000 under the monthly averaging model in the beginning of 2000 you would have roughly $160,000 fourteen years later.  In that same time frame you’d only have $154,000 under the monthly point-to-point model.

Financial Surprises of Retirement Paychecks

Presented by Richard Mangiameli When we started working, one of the biggest surprises of our young adult life was the difference between our gross and net paycheck!  We were introduced to the world of Income Tax withholdings. Forty or so years later, we get the next biggest surprise – not having enough money to retire with!  Again, the difference between our gross and net retirement paycheck.  Retirees are concerned about their retirement income being under siege with expenses, mandatory medical spending, lifestyle and outliving their money.  This is an area where you, as an insurance professional, can protect your clients and help them with product solutions. A clear view of the current trends in the retirement landscape will take you a long way toward finding the product to provide the solution.  For example, the big focus today is the need for guaranteed income for life, without the fear of losing control.  With fewer company pension plans and increasing life expectancy, retirees face a growing gap between income they can count on and expenses they expect to face.  Fixed Index Annuities can offer predictability, no direct downside market risk, and the potential for guaranteed income for life – an attractive benefit to clients searching for ways to leverage assets and build a more stable future. After the 2008 market crash, many people found their financial foundation was not as sturdy as they once thought.  With the risk of longevity, medical expenses and inflation affecting retirement income calculation, many are looking for ways to supplement their income, accumulate assets and cover basic living expenses in the future.  The opportunity to have upside potential, with no downside risk, provides your clients with peace of mind for long-term financial security, asset accumulation and can provide guaranteed income for life. Fixed Index Annuities with an Income Rider can offer the “peace of mind” benefits that retirees are looking for today.  If you need to know more about how the Fixed Index Annuities with Income Riders work, call Richard Mangiameli, LUTCF, FSS, at 800-397-9999.

What’s Your Client’s Risk Tolerance?

risk-tolerance Everyone has a different point of view when it comes to risk tolerance.  Over the years, I have found there are things that clients may need to make them comfortable when investing their hard earned money.  It always helps to have the following characteristics to persevere in the market place: Patience = To be able to ride out the market and give it time to work properly. Courage = To allow yourself to stay with your conviction of doing the right thing with your money. Confidence= Knowing you have made the right choice! Fixed annuities are a great fit in so many different situations and can give your clients tremendous confidence in their decision.  Call me today to discuss how you can give your clients the confidence they’ll need in their financial future. Deb Strong, Annuity Sales Manager – 800.397.9999

Are Your Clients Losing Sleep Over Their Portfolio?

Presented by Deb Strong, Annuity Sales Manager Will Rogers famously said “I am not so much concerned with the return on capital as I am with the return of capital.”  See the hypothetical example below that you can share with your clients comparing stock market fluctuations with a fixed annuity, which helps them to understand the true value of what we can offer.  

When evaluating and comparing retirement products and their most visible features, it is easy to lose sight of the most compelling benefit offered by fixed annuities – their stability.  It is difficult to overstate the advantage of being able to enjoy the peace of mind that comes with knowing your nest egg is not vulnerable to market volatility. Let’s look at an example. First, we have a volatile market with returns of 7% for the first two years, then a downturn with a 7% loss in the third year.

END YEAR

HYPOTHETICAL RETURN

YEAR-END VALUE

$100,000

1

7%

$107,000

2

7%

$114,490

3

-7%

$106.475

 Next we have a fixed annuity with a fixed rate of 2.25%.

END YEAR

HYPOTHETICAL YIELD

YEAR-END VALUE

$100,000

1

2.25%

$102,250

2

2.25%

$104,551

3

2.25%

$106,903

The fixed annuity has a higher accumulation value over the three year period!  The example clearly shows the powerful force of stability offered by fixed annuities.  Call me today at 800.397.9999 to learn more!

   

Sell Solutions, Not Products

Presented by Richard Mangiameli Most customers respond to problem resolution or how a solution can meet their needs and provide benefits. For example, while some annuities (like Fixed Index Annuities) offer no direct downside market risk to their money and the opportunity to create guaranteed income for life, it can be more effective to set the stage in relatable terms. If your clients are concerned about losing money due to a potentially unstable market or afraid they may outlive their savings when they reach retirement, you can show a solution that provides peace of mind and no direct downside market risk, while offering an opportunity to grow their assets. Show how supplementing a retirement plan with a Fixed Index Annuity can help them in a language they can understand and that feels personal to their situation. Understand Customer Behavior While each person is different, getting in the mind of the average customer can help you be more successful and effective professionally. One important aspect of many consumers today is that they like to explore a topic before making a decision. Whether it’s by reading information on-line or speaking to friends and family, they know that they’ll want to have an active role in their education and decision making. Customers will also make decisions based on comfort. This means painting a clear, personal picture for each client that shows their issues and goals, their options and the solution each option could produce. Mapping out information and showing how a Fixed Index Annuity can meet various needs can create the framework necessary for clients to make educated decisions.