January 25, 2016 by Randy Timm
In today’s interest rate environment, many Americans are looking for ways to help grow their retirement assets and help ensure their income will last for life.
With concerns about market downturns, rising retirement costs and longer life expectancies, many individuals want a guaranteed income stream that can help them maintain their lifestyle in retirement.
But why do clients have to settle for a guaranteed income stream that only remains level? Wouldn’t it be better if it could you could also increase their income each year?
This reality is possible if you can find a retirement savings solution that can generate increasing income throughout retirement, while ensuring that their principal is protected from market downturns.
One option is the recently announced Lifetime Income Plus Multiplier SM rider offered from American General Life Insurance Company on The Power Select Plus Income® Index Annuity.
For an annual fee, this rider guarantees lifetime income for your clients and offers the potential for income to increase during the annuity’s accumulation and payout phases.
Before withdrawals begin, the rider’s Income Base can increase each contract year by an income credit equal to 250 percent of the interest earned for the year, additionally, after starting income, the Income Base can also increase by 150 percent of the interest earned, minus any withdrawals for the year.
To see this concept in action, click here to download a case study and guide to use with your clients.
If you would like to see how this product can work for a specific client situation, click here for a custom quote or give our Annuity Sales Support team a call at 800.362.1097.
December 22, 2015 by Randy Timm
A recent study found that an upper-middle-class couple who is age 65 today has a 43 percent chance of one or both of them living until at least age 95.1
The life expectancy of today’s retiree is a positive development, but it also raises concerns about how couples can generate income during a retirement period that can now last upward of 25 years, especially with inflation.
Helping clients combat inflation over time can be difficult if they are only using a fixed income strategy that doesn’t address the potentials of cost of living increases, higher taxes and medical expenses. Under this rising-cost scenario, this fixed income strategy will consistently purchase less over time as the price of goods and services increase.
While fixed indexed annuities (FIA) can be a key strategy to generate tax-deferred growth potential, a death benefit for beneficiaries and guaranteed income for life, they are only effective addressing the effects of inflation if they offer income that has the potential to increase.
Meeting these client needs may be obtained using a fixed indexed annuity with a lifetime withdrawal option that increases income when their contract earns an interest credit. Unfortunately, few fixed indexed annuities have an option to increase income when the contract earns interest.
Typical income benefits have a separate value that clients’ lifetime income withdrawals are based on. When income riders don’t include an annual reset, this value must be exceeded before an increase in income is earned. Without exceeding this threshold, clients are not able to reach a level for an income increase.
One carrier challenging this standard with many of their fixed indexed annuities is Allianz Life Insurance Company of North America (Allianz). Allianz utilizes lifetime income withdrawal benefits that are available through built-in or additional cost riders. Allianz also offers an annual reset method that increases income following every year the contract earns interest. Previous lifetime income withdrawals, fees or index losses do not impair the FIA’s ability to earn future income increases. As long as clients follow the terms of their contracts, all payment increases are locked in and guaranteed for life.
The annual reset withdrawal options available on many Allianz fixed indexed annuities have helped address the effects of inflation on their retirement income. On average, not only did their income keep up with inflation, their purchasing power actually increased over time. In fact, of Allianz FIA clients who chose the increasing income option, 93 percent received an increase.2
For more details on using an increasing income option, click here to download a no-cost, no-obligation guide. You can use this guide to discuss how to potentially increase income throughout retirement with your clients.
Brokers International is dedicated to helping you find annuity solutions that meet your clients’ retirement needs. If you need help searching for a suitable product, running illustrations or proposing multiple options that can help increase your clients’ income in retirement, please give our Annuity Sales Support team a call at 800.362.1097.
1. “Better Financial Security in Retirement? Realizing the Promise of Longevity Annuities.” Economic Studies at Brookings. Feb. 2015. Web. 2 Dec. 2015. <http://www.brookings.edu/~/media/research/files/papers/2014/11/06-retirement-longevity-annuities-abraham-harris/abraham_harris_paper_rev4.pdf>
2. “It’s not where the income starts—it’s what happens next.” Allianz Life Insurance Company of North America. Nov. 2015. Web. 9 Dec. 2015
November 24, 2015 by Randy Timm
Fixed index annuities are traditionally known for their downside protection from market losses and their potential for upside interest gains. But more recently, fixed index annuity products have become more versatile in their ability to meet a wider range of client concerns.
Here are some features that fixed indexed annuities are combining to create more holistic retirement options:
Income riders. Already a mainstay of fixed index annuities, income riders have surged in popularity thanks to their ability to provide clients with a steady stream of sometimes increasing income that is guaranteed for the life of the annuitant(s). As a result, many fixed index annuities now offer income riders either as a standard feature or optional addition.
Enhanced death benefits. Another popular feature packaged with fixed index annuities are enhanced death benefits that can secure a client’s legacy. These can provide a five-year payout of a benefit base, an enhanced interest credit accessible at death or some other variation.
Additionally, fixed index annuities offer some lesser known features like nursing home confinement benefits, terminal illness waivers, carry-over withdrawals and interest crediting strategies. These features utilize volatility control mechanisms to allow for no explicit interest caps within a client’s retirement strategy.
As consumer needs have changed, the industry has responded with products that can help offer most, if not all of these benefits in one retirement solution.
Brokers International is dedicated to helping you find annuity solutions that meet your clients’ retirement needs. If you need help searching for the right product, running illustrations or proposing multiple options, please give our Annuity Sales Support team a call at 800.362.1097.
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.