June 25, 2013 by Randy Timm
More than likely, your clients have relied on cost-of-living adjustments to their salaries to help offset the effects of inflation. But, have they accounted for cost-of-living adjustments in their retirement plans?
An inflation rate, as little as 3%, can have a significant impact on your client’s retirement savings. Assuming this 3% inflation rate, a $10,000 level income today would only equate to the purchase power of $7,441 in 10 years.
This example is not far from realistic. According to InflationData.com, the average inflation rate between 1913 and 2013 was 3.22%.1
To help your clients address inflation in their retirement plans, Aviva USA released the TargetBenefitSM with optional TargetPaySM and TargetPaySM Plus income riders. Both riders offer inflation-adjusted income.
Here’s how it works.
Claire, 50, has been working with her financial professional, Jane, to create a retirement strategy. Throughout her career, she has placed money in a savings account to help with retirement.
During an appointment, Claire tells Jane about her savings account. She also expresses concern that future inflation may affect the purchasing power of her savings account. After discussing possible options, Claire decides to purchase the TargetBenefit 15SM fixed indexed annuity. She also elects to add the TargetPaySM Income Benefit Rider to the annuity for an additional cost.
At age 65, Claire turns on income under the terms of the rider and elects the inflation-adjusted income benefit option. Her first annual income payment is $11,144. By choosing inflation-adjusted income, Claire’s future income payments have the potential to increase for up to 30 years based on Consumer Price Index movements.
In the unlikely event that inflation is negative or 0% for the next 30 years, Claire’s would receive guaranteed lifetime income payments of $11,144 each year.
To learn how you can offer TargetBenefitSM fixed indexed annuities to your clients, call Sales Support at 800.362.1097.
1McMahon, T. (2012, November 05). Average annual inflation rates by decade. Retrieved from http://inflationdata.com/Inflation/Inflation/DecadeInflation.asp
The above example is for hypothetical purposes only. The use of alternative assumptions could produce significantly different results.
Annuities are not FDIC insured; guarantees provided by annuities are subject to the financial strength of the issuing insurance company.TargetBenefit 10 Annuity [TBS10 (09/12)], TargetBenefit 10 Select [TBS10 (09/12) NB], TargetPay Income Benefit Rider [TBSIRF (09/12)], TargetPay Plus Income Benefit Rider [TBSIRI (09/12)] or state variations are issued by Aviva Life and Annuity Company, West Des Moines, IA. Product features, limitations and availability vary by state; see the Certificate of Disclosure for details. See the Certificate of Disclosure for a more detailed explanation, including definitions for the terms that are capitalized in this brochure. If you take a withdrawal of any type prior to starting Lifetime Income Benefit payments, your benefits will be reduced, and an updated statement will be sent to you. 19581 172263.
May 9, 2013 by Randy Timm
It’s a fact that Americans are living longer. As a result, more Americans are facing health concerns as they age. In fact, 70% of individuals will require long-term care services at some point in their life.1
Despite the increased number of people in need of long-term care services, only 10% of aging Americans own private long-term care insurance.2 TWhy his small percentage could be because people don’t want to pay a premium for coverage they may never use.
To help address this concern, Aviva USA recently released the new TargetBenefitSM Annuity with optional TargetPaySM and TargetPaySM Plus income riders. Both riders offer a Confinement Income Benefit3 that will triple the income benefit for up to 60 months in the event your client is confined to a qualifying care facility.
Here’s how it works.
John and Mary, both 70, have been retired for several years. Recently, they attended a dinner with their long-time friends, the Johnsons. During dinner, John and Mary discovered that the Johnsons had purchased a fixed indexed annuity to help supplement their retirement income. Their fixed indexed annuity helped provide them with several benefits, including income payments for life.
The next morning John and Mary discussed what they learned from the Johnsons. They found that each was interested in learning more. That day, John made an appointment to visit with their financial professional, Frank.
During their office visit, Frank asks John and Mary several questions about their current situation. Frank learns that they have $500,000 to purchase an annuity. He also learns that one of their key objectives is to create an immediate stream of income.
Together, they discuss potential options. John and Mary decide to purchase the TargetBenefit10SM fixed indexed annuity. They also elect to add the TargetPaySM Income Benefit Rider to the annuity for an additional cost. At the time they turn on joint income under the terms of the rider, John and Mary receive annual income payments in the amount of $25,640.4
John and Mary continue to receive their annual payments for the next three years. Unfortunately, in the fourth contract year, John becomes ill and must enter a nursing home to receive skilled care. After John has been admitted to the nursing home, Mary calls Frank to discuss their finances. Frank reminds Mary that they have access to a Confinement Income Benefit through the TargetPaySM Income Benefit Rider they elected to add to their TargetBenefitSM fixed indexed annuity. After 180 days of confinement within a 250 consecutive day period, Mary can submit proof of confinement to receive an increased benefit.
John’s condition does not get better and he remains under skilled care in the nursing home for the necessary 180-day period. Mary submits proof of John’s confinement. Shortly after, John and Mary’s annual joint payout increases by three times to $76,920. Mary uses this money to offset the nursing home expenses she incurs over the next three years (36 months), until John passes away.
After John’s death, Mary’s annual lifetime income payment returns to $25,640 and is guaranteed for the remainder of her life.
You can download a sample Statement of Benefits here. To learn how you can offer TargetBenefitSM fixed indexed annuity and TargetPaySM Income Benefit Rider to your clients, call Sales Support at 800.362.1097.
1 U.S. Department of Health and Human Services. (n.d.). Longtermcare.gov. Retrieved from http://longtermcare.gov/the-basics/who-needs-care/
2the National Bureau of Economic Research: The Market for Long-Term Care Insurance. Retrieved from http://www.nber.org/bah/winter05/w10989.html
3 Once released from the qualified care facility, the rider income will adjust back to the original level. The Confinement Income Benefit will cease upon reaching the Extended Income Guarantee Phase or after a period of 60 months, whichever occurs first. The Confinement Income Benefit is not available in all states.
4Assuming no excess withdrawals are taken.
TargetBenefit 10 Annuity [TBS10 (09/12)], TargetBenefit 10 Select [TBS10 (09/12) NB], TargetPay Income Benefit Rider [TBSIRF (09/12)], TargetPay Plus Income Benefit Rider [TBSIRI (09/12)] or state variations are issued by Aviva Life and Annuity Company, West Des Moines, IA. Product features, limitations and availability vary by state; see the Certificate of Disclosure for details.
Annuities are not FDIC insured; guarantees provided by annuities are subject to the financial strength of the issuing insurance company.
April 2, 2013 by Randy Timm
Unfortunately, record low interest rates have reduced the interest potential for many retirement savings vehicles, including fixed index annuities. In fact, five years ago annual interest rate caps on index annuities averaged approximately 7.0%. But, now most caps have fallen to 3% or lower.
If low interest rates are affecting you, Genworth Life and Annuity Insurance Company has developed a possible solution – CapMaxSM.
CapMaxSM is a patent-pending index crediting methodology available exclusively on SecureLiving® Index Annuities. It gives you the opportunity to roll forward current year interest in exchange for the opportunity to multiply next year’s growth potential. It also provides you with the opportunity to potentially outperform other crediting strategies.
Simply put, CapMaxSM allows you one of two options:
Option 1: You can roll positive interest credits earned for the year, up to the current annual cap, in exchange for the full CapMax Multiplier of 3.0.
Option 2: You can lock in positive interest credits earned for the year, as is common in interest crediting strategies.
Here is an example of option #1:
In year one, your interest growth is at 3.5%. You decide to exchange that interest for the opportunity to multiply next year’s interest potential by a factor of 3. In year two, your interest growth is 3.5%. With the multiplier, you would have an available interest credit of 10.5%.
This interest strategy is suited for those who believe the market has potential for consecutive years of positive growth.
Download a consumer brochure with a hypothetical example.
To request an illustration, call Sales Support at 800.362.1097. We can review the illustration with you and answer any questions you may have.
Annuities are designed to meet long-term needs for retirement income. They provide guarantees of principal and credited interest, subject to surrender charges, and a death benefit for beneficiaries.
Issued by: Genworth Life and Annuity Insurance Company, Richmond, VA
SecureLiving® Index Annuities, Individual Single Premium Deferred Annuities with market value adjustment and optional indexed interest crediting, subject to policy form series GA3003-0711, GA302R-06912, ICC11GA3001, and ICC12GA302R et. al. Features and benefits may vary by product, state and market and may not be available in all states. Genworth Life and Annuity Insurance Company is licensed in all states except New York.
All guarantees are based on the claims-paying ability of the Genworth Life & Annuity.
This is a brief product description. Consult the annuity contract for a detailed description of benefits, limitations, and restrictions.
Although the contract value may be affected by the performance of an index, the contract does not directly or indirectly participate in any stock or equity investment including but not limited to, any dividend payment attributable to any such stock or equity investment.
The CapMax strategy is designed to create greater growth potential by taking advantage of consecutive periods of positive momentum in the index. That means that during periods of alternating annual index performance it may not perform as well as other available options.
March 26, 2013 by Randy Timm
According to a recent study conducted by the Employee Benefit Research Institute, 28 percent of workers are not at all confident and 21 percent are not too confident they’ll have enough savings to live comfortably in retirement.1
It’s more than likely this trend will continue into the future as participation in Defined Benefit plans declines and fewer Americans rely solely on Social Security for retirement income. In fact, participation in Defined Benefit plans fell from 38% to 18% between 1980 and 2010.2
To alleviate some of that uncertainty, Aviva created TargetBenefitSM Annuity with an optional TargetPaySM or TargetPaySM Plus Income Rider. Either rider provides a simple Statement of Benefits each year that will show what your future targeted income will be, similar to a statement from a defined benefit plan.*
Unlike some annuities with income riders, this new product does not have confusing roll-up rates, income account values, restarts, or payout percentages.
Financial professionals can receive a sample illustration and Statement of Benefits by calling 800.362.1097.
1 Helman, Ruth, Mathew Greenwald & Associates; and Nevin Adams, J.D., Craig Copeland, Ph.D., and Jack VanDerhei, Ph.D. (2013). Employee Benefit Research Institute. Issue Brief. March 2013 (No. 384) Pg 1. The 2013 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many. http://www.ebri.org/pdf/surveys/rcs/2013/EBRI_IB_03-13.No384.RCS.pdf.
2Schemo,Diana J. (2010). Coming Boomer pension cuts: what impact on economy? Remapping Debate, ed. Jan. 16, 2012. http://www.remappingdebate.org/article/coming-boomer-pension-cuts-what-impact-economy.
* Assuming no withdrawals are taken prior to accessing the Lifetime Income Benefit. Any withdrawals will reduce the Lifetime Income Benefit amounts.
Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values.
TargetBenefit 10 Annuity [TBS10 (09/12)], TargetBenefit 15 Annuity [TBS15 (09/12)], TargetPay Income Benefit Rider [TBSIRF (09/12)], TargetPay Plus Income Benefit Rider [TBSIRI (09/12)] or state variations are issued by Aviva Life and Annuity Company, West Des Moines, IA.
Product features, limitations and availability vary by state; see the Certificate of Disclosure for details.
Annuities are not FDIC insured. Guarantees provided by annuities are subject to the financial strength of the issuing insurance company.