Annuity contracts offer numerous options to receive your accumulated funds as retirement income.
One option rarely used is the interest only option. At any time you can withdraw the earned inertest on a monthly basis. This allows for your account value to remain the same each month as you withdraw the monthly interest.
As an example if your account value was $100,000 and the interest paid was 5%, you could withdraw a monthly interest check of $416 without invasion of principal. The value to this option is deferring any permanent decision until a later time period. The interest income option is cancellable at any time so total control is maintained.
For mroe information regarding Annuity Payout and/or Lifetime Income Options, call us at 602.795.6270.
Contributors: Askmrannuity.com, annuity.com
Wednesday, September 29, 2010
Thursday, September 23, 2010
Listen to the Ask Mr. Annuity Radio Program
My name is Steve Lance. I am the owner of Lance Marketing and The Ask MR. Annuity Financial Network. You are invited to listen to the Ask Mr. Annuity Radio show (http://www.kcardsofcal.com/amaradio_9-22.html), and learn about ways to use it to your marketing advantage.
Advisors Are Selling More Annuities
Here's food for thought...
According to National Underwriter’s “Russell: Many Advisors Want to Pare Client Lists,” financial advisors have an average of 255 clients.
Of those surveyed, 39% said that they have been selling more annuities to their clients.
While most of the advisors already use annuities for their clients, those who don’t seem to have little interest in transitioning to this guaranteed income product. Maybe they will change their minds as clients show more interest in lifetime guaranteed income sources.
Information extracted from a post by AnnuityFYI.
According to National Underwriter’s “Russell: Many Advisors Want to Pare Client Lists,” financial advisors have an average of 255 clients.
Of those surveyed, 39% said that they have been selling more annuities to their clients.
While most of the advisors already use annuities for their clients, those who don’t seem to have little interest in transitioning to this guaranteed income product. Maybe they will change their minds as clients show more interest in lifetime guaranteed income sources.
Information extracted from a post by AnnuityFYI.
Thursday, September 16, 2010
Annuities: The official retirement vehicle of the Obama administration.
Based on a recent article by RON LIEBER.
As slogans go, "Annuities: The official retirement vehicle of the Obama administration" is hardly “Keep Hope Alive,” or even “Change We Can Believe In.” But there were annuities, in a report from the administration’s Middle Class Task Force that came out this week. They are among the tools the administration is promoting as it tries to give Americans a better shot at a more secure retirement.
At its simplest -- which is how the White House seems to want to keep it -- an annuity is something you buy with a large pile of cash in exchange for a monthly check for the rest of your life.
If the biggest risk in retirement is running out of money, an annuity can help guarantee that you won’t. In effect, it allows you to buy the pension that your employer has probably stopped offering, and it can help pick up where Social Security leaves off.
“I never thought I’d have the president as a wholesaler for us,” said Christopher O. Blunt, executive vice president of retirement income security at the New York Life Insurance Company.
After all, the announcement from the White House did make it clear that the administration was looking to promote “annuities and other forms of guaranteed lifetime income.” That suggests the administration is open to other solutions, though there are not many others that are as simple as the basic fixed immediate annuity (also known as a single premium immediate annuity) that delivers a regular check for life.
As the saying goes, "any news is (usually) good news. And, as the volatility of the market produces more insecurity as to where retirement funds should be safely parked, annuities have emerged as the obvious safe harbor.
No matter what your political views, it is reassuring that Washington has taken this step toward financial responsibility.
Wednesday, September 8, 2010
Annuities Now Offer Long Term Care Options
In financial planning, clients love to discuss building their wealth and investments, but they often cringe when we mention any insurance protection, especially long-term care coverage .Their extreme reluctance to consider long-term care is really quite normal. Who wants to think about buying coverage for nursing home care when it can be such an unpleasant experience, and we really hope it won't happen to us?
However, most long-term care services actually are provided in a person's own home according to the U.S. Department of Heath and Human Services. Clients have many more options for their senior years if they find some way to plan for these occurrences. Up until this year people basically had only two options -- self insure or buy long-term care insurance coverage.
Beginning in 2010, Congress added another planning option called the long-term care annuity. The underlying base of a "LTC annuity" is a fixed annuity. Fixed annuities are not new -- they have been available for many years. They are guaranteed by an insurance company, the funds accrue with a competitive interest rate, and the account grows tax-deferred.
What's new is that insurance companies have built in a long-term care option into a LTC Annuity. This option is not a rider and there is not a separate premium paid by the client. The option is just an election to use the long-term care benefit if you need it. If you never need the option, your interest and principal are available for you or your beneficiaries just like a regular annuity.
To make this annuity more attractive, Congress changed the tax law so that distributions from these LTC annuities are "tax free" if used for long-term care. So you can accumulate funds on a tax-deferred basis and use them tax free if needed for long-term care. If you never need this type of care, you simply receive tax distributions as ordinary retirement income or pass them to your beneficiaries. This is an excellent opportunity to legally stiff the IRS!
However, most long-term care services actually are provided in a person's own home according to the U.S. Department of Heath and Human Services. Clients have many more options for their senior years if they find some way to plan for these occurrences. Up until this year people basically had only two options -- self insure or buy long-term care insurance coverage.
Beginning in 2010, Congress added another planning option called the long-term care annuity. The underlying base of a "LTC annuity" is a fixed annuity. Fixed annuities are not new -- they have been available for many years. They are guaranteed by an insurance company, the funds accrue with a competitive interest rate, and the account grows tax-deferred.
What's new is that insurance companies have built in a long-term care option into a LTC Annuity. This option is not a rider and there is not a separate premium paid by the client. The option is just an election to use the long-term care benefit if you need it. If you never need the option, your interest and principal are available for you or your beneficiaries just like a regular annuity.
To make this annuity more attractive, Congress changed the tax law so that distributions from these LTC annuities are "tax free" if used for long-term care. So you can accumulate funds on a tax-deferred basis and use them tax free if needed for long-term care. If you never need this type of care, you simply receive tax distributions as ordinary retirement income or pass them to your beneficiaries. This is an excellent opportunity to legally stiff the IRS!
Pros
- Age limitations are very liberal. People up to age 85 can purchase.
- Simple medical underwriting. There are no physicals required and most people can qualify, even if they have been denied traditional long-term care insurance.
- Tax-deferred accumulation of earnings.
- Potential tax-free use of distributions.
- You or your heirs receive any funds not used for long-term care.
Cons
- You need to have a lump sum to invest, usually at least $40,000.
- There are penalties if you surrender the annuity in early years.
- As with all financial options, "One size does not fit all."
- We encourage everyone to discuss their particular needs with a Certified Financial Planner to determine what long-term care options are needed and suitable in your individual circumstances. At least now Congress has given all of us an additional tax-favored option to consider.
Column by Van Sievers CFP • September 7, 2010
Fixed Index Annuities
A Fixed Index Annuity (also equity-indexed annuity) is a special type of fixed annuity contract that fuses the safety of fixed annuities with higher participation in the financial market. Strictly speaking, it is not an investment- as it is primarily an annuity contract between an annuity investor and insurer or annuity provider. Although Fixed Index Annuities represent an improvement on fixed rate annuities, they inevitably have their merits and demerits.
Guarantees
Fixed Index Annuities- like other insurance contracts- offer investors guarantees on their premiums and returns. Apart from safety assurances for contributions, Fixed Index Annuities offer investors minimum (base) guaranteed rates of return. This suggests that even though their performance is linked to an external index, the annuities are insulated from severe downturns in the market.
Market-Type Returns
A major benefit of equity-indexed annuities is that they offer returns that link to market performance through an external index (such as the S&P 500). Annuity investors on this plan can benefit from favourable fluctuations in the market while being insulated from sharp downturns. Fixed Index Annuities also offer higher returns than fixed rate annuities, CDs and Money Market Funds.
While this is an obvious benefit, the annuity contract determines how much this benefit trickles down to the Fixed Index Annuity investor. Interest rate caps, margins and participation rates are features of this contract that determine how much the annuity contributor benefits. The method of indexing can also minimize or increase this benefit. How the FIA is indexed can play a huge role in determining whether market-type returns is a token benefit or not.
Taxation
Qualified equity-indexed annuities benefit from tax-deferred growth in the accumulation phase. Tax-deferred growth with eventual income taxation is far superior to accumulation with lower taxation. The downside to this tax benefit is that tax authorities treat annuity payments and distributions as income and not capital gains. As a result, the income tax bracket is applied instead of the less-burdensome capital gains tax. However, the benefit of tax-deferred growth makes the eventual tax implications a lot more palatable.
Guaranteed Lifetime Income
One of the primary merits of an annuity is the provision of guaranteed lifetime income. The Fixed Index Annuity provides this important feature as well. As a long-term contract with an insurer or annuity provider, FIAs also bear hefty charges and penalties from insurers and/or tax authorities in the event of premature withdrawal or surrender. Some insurers even apply non-indexed rates if the annuity is not carried to maturity, which effectively cancels any benefit of having an equity-indexed annuity.
Conclusion
This is a terrific overview by D. Victor (Ezine article). If you have further questions about how Indexed Annuities can help your portfolio, please feel free to call me at 888.939.0135 .
Guarantees
Fixed Index Annuities- like other insurance contracts- offer investors guarantees on their premiums and returns. Apart from safety assurances for contributions, Fixed Index Annuities offer investors minimum (base) guaranteed rates of return. This suggests that even though their performance is linked to an external index, the annuities are insulated from severe downturns in the market.
Market-Type Returns
A major benefit of equity-indexed annuities is that they offer returns that link to market performance through an external index (such as the S&P 500). Annuity investors on this plan can benefit from favourable fluctuations in the market while being insulated from sharp downturns. Fixed Index Annuities also offer higher returns than fixed rate annuities, CDs and Money Market Funds.
While this is an obvious benefit, the annuity contract determines how much this benefit trickles down to the Fixed Index Annuity investor. Interest rate caps, margins and participation rates are features of this contract that determine how much the annuity contributor benefits. The method of indexing can also minimize or increase this benefit. How the FIA is indexed can play a huge role in determining whether market-type returns is a token benefit or not.
Taxation
Qualified equity-indexed annuities benefit from tax-deferred growth in the accumulation phase. Tax-deferred growth with eventual income taxation is far superior to accumulation with lower taxation. The downside to this tax benefit is that tax authorities treat annuity payments and distributions as income and not capital gains. As a result, the income tax bracket is applied instead of the less-burdensome capital gains tax. However, the benefit of tax-deferred growth makes the eventual tax implications a lot more palatable.
Guaranteed Lifetime Income
One of the primary merits of an annuity is the provision of guaranteed lifetime income. The Fixed Index Annuity provides this important feature as well. As a long-term contract with an insurer or annuity provider, FIAs also bear hefty charges and penalties from insurers and/or tax authorities in the event of premature withdrawal or surrender. Some insurers even apply non-indexed rates if the annuity is not carried to maturity, which effectively cancels any benefit of having an equity-indexed annuity.
Conclusion
This is a terrific overview by D. Victor (Ezine article). If you have further questions about how Indexed Annuities can help your portfolio, please feel free to call me at 888.939.0135 .
Subscribe to:
Posts (Atom)