If ever there was a time for Equity Linked Indexed Annuities it is now.
These products are guaranteed, their crediting rates are tied to outside markets which will replicate inflation, their value will not be diminished, they are NOT 30 year commitments and at anytime they can convert to income. In the event of illness, the funds are available. In the event of emergencies, the funds are available. In the event of death, the full value of the asset is available.
Think safety, think security, think Equity Linked Indexed Annuities.
Wednesday, June 30, 2010
H.R. 4173: Harkin Moves Ball On Annuities
This is great news for us all...
Members of the conference committee responsible for reconciling the House and Senate versions of H.R. 4173 have been looking at the indexed annuity jurisdiction issue.
Sen. Tom Harkin, D-Iowa, asked members of the conference committee to add an amendment to Title IX of the financial services bill that would classify fixed indexed annuities as insurance products -- if the FIA products are sold by insurers domiciled in states that have adopted the model regulations recently developed by the National Association of Insurance Commissioners, Kansas City, Mo., or if the insurer selling an FIA product has agreed to apply the NAIC standards to all of its FIA sales.
The amendment would have no affect on the legal status of the FIA products not subject to the NAIC model rules.
Members of the conference committee responsible for reconciling the House and Senate versions of H.R. 4173 have been looking at the indexed annuity jurisdiction issue.
Sen. Tom Harkin, D-Iowa, asked members of the conference committee to add an amendment to Title IX of the financial services bill that would classify fixed indexed annuities as insurance products -- if the FIA products are sold by insurers domiciled in states that have adopted the model regulations recently developed by the National Association of Insurance Commissioners, Kansas City, Mo., or if the insurer selling an FIA product has agreed to apply the NAIC standards to all of its FIA sales.
The amendment would have no affect on the legal status of the FIA products not subject to the NAIC model rules.
Wednesday, June 23, 2010
Why Buy a Deferred Annuity?
There are a number of good reasons to consider a deferred annuity as part of your financial retirement plan:
You postpone paying income taxes on any earnings until you withdraw money, typically during retirement, when you may be in a lower tax bracket. All earnings grow tax-deferred.
You can put in as much money as you want. Unlike Individual Retirement Accounts (IRAs), there is no IRS restriction on the amount that can be contributed annually to deferred annuities with your after-tax money. You can, however, use a deferred annuity to fund your traditional or Roth IRA, in which case you would operate within IRA limitations.
You can provide death benefits to your heirs. If you die prematurely, your annuity can offer a death benefit to your beneficiaries without the costs and delays of probate. Your beneficiaries will never receive less than what you have contributed (less any withdrawals). In addition, a spouse who inherits an annuity before distribution has begun can step in as the new owner of the annuity and the tax deferral continues until amounts are withdrawn. If distribution payments had begun, the benefits would generally have to be distributed to the beneficiary at least as rapidly as through the method in effect at the time of the annuitant's death. Taxation will continue to apply to those proceeds. Generally, a beneficiary who inherits an annuity before distribution begins can request a lump sum distribution without penalty but will be subject to full taxation on the accrued interest or gain on the contract.
Wednesday, June 16, 2010
Annuity Buyers Enjoy Peace of Mind
A new Gallup poll shows that, despite a downturn in the financial markets, a majority of annuity holders feel secure about their retirements. The poll, conducted in partnership with the Committee of Annuity Insurers, revealed that middle-class people rely heavily on annuity products in their retirement planning.
As IRI president Cathy Weatherford explained, “The findings of this poll help to underscore an emerging trend within retirement planning: As more and more Americans begin to take on a renewed responsibility for their retirement security, they are increasingly turning to annuities as the solution to help fund their golden years.”
As Weatherford points out, in generations past, the guaranteed income of Social Security gave retirees confidence that they would receive a certain income. But as the future of Social Security has become more uncertain, the guaranteed income provided by annuity products has become more attractive to those wishing to secure their futures. Buyers of these products enjoy the peace of mind provided by an insured retirement strategy.
BY Senior Market Advisor
As IRI president Cathy Weatherford explained, “The findings of this poll help to underscore an emerging trend within retirement planning: As more and more Americans begin to take on a renewed responsibility for their retirement security, they are increasingly turning to annuities as the solution to help fund their golden years.”
As Weatherford points out, in generations past, the guaranteed income of Social Security gave retirees confidence that they would receive a certain income. But as the future of Social Security has become more uncertain, the guaranteed income provided by annuity products has become more attractive to those wishing to secure their futures. Buyers of these products enjoy the peace of mind provided by an insured retirement strategy.
BY Senior Market Advisor
Annuities Let Consumers Be A Little Naughty
Buying a fixed annuity is a virtuous decision. The consumer is saying they do not want to gamble with their principal and so they have placed it where it will be safe and provide a nest egg or lifelong income, helping them to avoid becoming a burden on their children.
Think of an annuity purchase as a supreme exercise in self-control today to protect tomorrow’s self-interest. It is the financial world’s equivalent of the two-mile morning jog, eating the salad instead of the sundae, or watching PBS instead of E!
But virtue isn’t usually fun because it goes against our impulse for immediate gratification, so often we will reward ourselves for being virtuous by treating ourselves to a little vice. Consumers need to be told that not only is buying an annuity a virtuous decision, but that it is so virtuous it will allow them to be a little naughty.
Case study No. 1:
A couple may have $75,000 sitting in a 2 percent certificate of deposit. They would like to take a little cruise but the cost of the cruise would eat up a year’s interest. If a 4 percent yield fixed annuity could be found, the couple could maintain the level of interest earned by the former bank (virtue) and still sail the sea (vice).
Case Study No. 2:
Another couple may also have $75,000 sitting in a 2 percent CD, but there’s a conflict. The husband wants to ensure at least the current interest is earned but the wife is willing to gamble if there’s a potential for higher returns somewhere else. If an index annuity were suggested, offering a fixed account yielding at least 3 percent, the couple could place $50,000 on the fixed side (virtue) and put $25,000 in an index-linked option (vice) with higher potential income (virtue).
Virtue and vice
Retirees may be withdrawing 4 percent a year to try to make the money last, but this low payout means they now stay at home instead of eating out once a month. They should be made aware of annuities offering guaranteed joint lifetime payouts of 5 percent or 6 percent, which promise they will never run out of income (virtue) and perhaps let them dine out monthly again (vice).
Determine the additional interest the annuity could produce and then ask the consumer, “If I gave you an extra (fill in the blank) dollars, what would you do with it?” This will identify the vice, and now you can show why the annuity is the virtuous decision.
BY JACK MARRION
Think of an annuity purchase as a supreme exercise in self-control today to protect tomorrow’s self-interest. It is the financial world’s equivalent of the two-mile morning jog, eating the salad instead of the sundae, or watching PBS instead of E!
But virtue isn’t usually fun because it goes against our impulse for immediate gratification, so often we will reward ourselves for being virtuous by treating ourselves to a little vice. Consumers need to be told that not only is buying an annuity a virtuous decision, but that it is so virtuous it will allow them to be a little naughty.
Case study No. 1:
A couple may have $75,000 sitting in a 2 percent certificate of deposit. They would like to take a little cruise but the cost of the cruise would eat up a year’s interest. If a 4 percent yield fixed annuity could be found, the couple could maintain the level of interest earned by the former bank (virtue) and still sail the sea (vice).
Case Study No. 2:
Another couple may also have $75,000 sitting in a 2 percent CD, but there’s a conflict. The husband wants to ensure at least the current interest is earned but the wife is willing to gamble if there’s a potential for higher returns somewhere else. If an index annuity were suggested, offering a fixed account yielding at least 3 percent, the couple could place $50,000 on the fixed side (virtue) and put $25,000 in an index-linked option (vice) with higher potential income (virtue).
Virtue and vice
Retirees may be withdrawing 4 percent a year to try to make the money last, but this low payout means they now stay at home instead of eating out once a month. They should be made aware of annuities offering guaranteed joint lifetime payouts of 5 percent or 6 percent, which promise they will never run out of income (virtue) and perhaps let them dine out monthly again (vice).
Determine the additional interest the annuity could produce and then ask the consumer, “If I gave you an extra (fill in the blank) dollars, what would you do with it?” This will identify the vice, and now you can show why the annuity is the virtuous decision.
BY JACK MARRION
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