Annuities

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.
Long Term Care and Disability Insurance

Protection for the stay-at-home spouse?

Presented by Donna Ries   Few carriers allow disability income insurance protection for the homemaker due to lack of income.  Another alternative to consider is a critical illness plan. In the case of a major event such as cancer, heart attack or stroke, a lump sum payment may help the family cope with such a situation.  To qualify for critical illness, there is typically limited income restrictions, limited occupational analysis and an easy solution to a huge potential financial burden on the family. The hidden cost of major health crisis is something we don’t give much thought to.  Transportation, housing and time off of work all become big issues if care is being received away from where a person lives.  Health insurance policies don’t pay for the non-medical cost of care. “Cancer, heart attacks and strokes happen at all ages and most people are not prepared for either the emotional or financial cost,” explains Jesse Slome, Executive Director of the Industry Trade Organization.  “Nearly two-thirds of U.S. bankruptcies are the result of medical expenses and 78 percent of those filing for bankruptcy had health insurance when they were first diagnosed.” A lump sum payment may be the answer to help the affected spouse to concentrate on recovery.  Your Financial Brokerage marketer is here to help you place more of this business.  Give us a call today at 800-397-9999 to discuss the plans available.