Help your clients provide a legacy

April 24, 2013 by

Let’s face it. You’re probably pretty tired of getting bombarded with product messages packed full of features and details. Unfortunately, you can’t forget about insurance products altogether. But, there are ways they can help your clients.

If your client is looking to provide a legacy for their heirs, they may want to consider purchasing the Safe Returnsm fixed-indexed annuity with Inheritance Enhancersm guaranteed death benefit rider offered through Great American Life Insurance Company®.

Meet Joe.  Joe is 62 and retired. Joe’s wife passed away several years ago. Their daughter Lisa and her husband have two daughters and another child on the way. Before Joe’s wife passed away, they talked at length about their desire to provide a legacy for Lisa and her family.

Shortly before retirement, Joe purchased a Safe Return fixed-indexed annuity.  At the time of purchase, Joe elected to add the Inheritance Enhancer death benefit rider because it is specifically designed to provide a guaranteed death benefit. This was a key need we learned about Joe when we met him earlier.

Upon issue of Joe’s contract, a 15-year rollup period begins.  During this period, the rider death benefit base accumulates rollup credits at the end of each contract year with adjustments for any withdrawals.  Each rollup credit equals 7% of Joe’s purchase payment.

At age 77, Joe has a heart attack and passes away. After the funeral, Joe’s financial professional, Larry, reaches out to Lisa. Larry explains that she is the designated beneficiary under Joe’s annuity.  She also learns that the account value of Joe’s annuity at the time of his death was $184,796, but the death benefit base has grown to $205,000 over the past 16 years.  As a result, the death benefit under the rider will replace the death benefit under Joe’s annuity contract.

As the beneficiary, Lisa has two options. Her first option is to take the death benefit as an annuitization for life or over a fixed period of 5 years or more.  In this case, the death benefit would be $205,000.  If Lisa requests annual payments over a 5-year period, she would receive $41,819 each year.  Lisa’s second option is to accept a lump sum payment equal to the average of the death benefit base and the account value. In this case, Joe’s account value is $184,796 and his death benefit base is $205,000. So, Lisa’s lump sum payment would be $194,898.

Because she’ll receive more if she annuitizes the death benefit over the five-year period, Lisa chooses the first payout option.

For specific product details, please download the consumer brochures at www.BILTD.com/greatamerican. To receive a custom illustration, simply call me at 800.362.1097.

 

The example in this blog assumes that the indexed interest rate for Joe’s Safe Return annuity is 5% for each one-year term during the 15 years he owned his annuity before his death. Joe’s account value was calculated using the Inheritance Enhancer calculator, available at www.GAFRISingleSource.com

This example assumes that Joe is the Insured and he does not take any withdrawals from his annuity.  The Inheritance Enhancer is an optional rider for which there is an annual charge.  For producer use only.  Not for use in sales solicitation.

 

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  • Enjoyed the case study.

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