Annuities

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
Annuities

Create Your Own Pension Plan

Presented by Jim Guynan An annuity can be a great way to save for retirement on a tax-deferred basis, in effect creating your own personal “pension” plan. As with any investment, however, there are also potential disadvantages that should be evaluated before purchasing an annuity. Advantages:
  • A fixed annuity protects against a decline in asset value during market downturns.
  • Earnings on your annuity premiums are tax deferred so long as they remain in the annuity.
  • An annuity can be used to provide a steady source of retirement income that you cannot outlive.
  • Unlike an IRA or employer-sponsored retirement plan, there are no annual contribution limits to an annuity…you can contribute as much as you want.
  • Subject to the terms of the contract, there is no required date by which you must begin receiving annuity income payments, providing you with the flexibility to defer payments until you need the income.
  • The annuity death benefit passes directly to your beneficiary without probate.
  • In most states, an annuity is free from the claims of a creditor.
Disadvantages:
  • The growth of a fixed annuity may not keep pace with inflation.
  • Premiums for a non-qualified annuity are not tax deductible, meaning that they are made with after-tax dollars.
  • While you can surrender or make withdrawals from a deferred annuity before you begin receiving income payments, the surrender or withdrawal may be subject to a charge if made within a stated number of years after the annuity is initially purchased.
  • If made prior to age 59-1/2, a surrender or withdrawal will be subject to a 10% federal penalty tax on the gains of the withdrawal unless one of the exceptions to this tax is met.
  • When received, gains are subject to ordinary income tax rates and not the lower capital gains tax rate.
  • Once annuity income payments begin, annuity contracts vary in regard to whether the payment amount can be changed and/or whether amounts can be withdrawn from the contract.
Annuities

Income Rider Advantages

Authored by Jim Guynan Recently I heard that almost 60% of index annuities sold today have an income rider attached to them. Also, that the average time before the income is activated from the rider is only 1.8 years. What does this tell us about fixed index purchases and income riders? Simply, that more than half of the owners of fixed annuities are thinking about the future use of these assets as possible income sources and they are utilizing it in a new way. Before income riders became available there were really only two ways to access an annuity; a 10% penalty free withdrawal per contract year or to annuitize the annuity contract. Now there is a third option which is activating an income rider payout that will provide an income for the rest of the owner’s life. The advantage of this is that the owner does not give up control of the underlying fixed annuity in order to do so. What is interesting to me is that the average time to activate is so short. Many of the illustrations I run for agents show longer deferral times before income is needed. One explanation could be that only those people who need income now are buying the annuities. As time moves on, I believe that more younger people will become educated on the advantages of the riders and take advantage of the longer deferral.