PREMIUM FINANCE – LIFE SETTLEMENTS AND ANNUITIES
A monthly guide for insurance agents reviewing fixed annuity product quality and performance.
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Annuity Review
(PDF Format)
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March 2006 |
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PREMIUM FINANCE – LIFE SETTLEMENTS AND ANNUITIES Over the past several months, we at FSD have assisted in funding in excess of $80,000,000 in medically underwritten annuities. This is an area we are very comfortable with and we have all the top carriers. The majority of the rated (underwritten) annuities have been purchased as part of a premium finance program. Recently we are seeing a large increase in requests from life settlement situations in which the settlement funds are used to purchase an SPIA. (See enclosed fliers for more details). If you would like to learn more about this huge opportunity call Jeff, Darren or me. Bob Affronti President Two Sales are Better than One We often have the opportunity to assist a broker in a $100,000 indexed annuity presentation. In speaking with the clients, I learned that the couple, in their early 60’s, had a $1 million IRA. In addition to the indexed annuity sale, the broker was also presenting a $200,000 face 2nd-to-die policy. I asked the clients, who had a lot of other assets, why $200,000? They answered that the premium for a $1 million policy was too much. I went on to ask about the IRA and they told me their intention was to leave it to the kids. I suggested using $200,000 of the IRA to buy a 7-year period certain immediate annuity to fund a 7-pay 2nd-to-die life insurance policy. immediate annuities. And, by the way, you make two sales instead of one. If they had died with the $200,00 still in their IRA it would only be worth about $50,000 to the children because of income tax and then estate tax. By moving it to an immediate annuity to fund a $1 million life policy we converted $50,000 after tax to $1 million. It is becoming common to use highly taxable IRA money to fund life insurance policies vis-a-vis immediate annuities. And, by the way, you make two sales instead of one! |
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