Two Fully Guaranteed Financial Insurance
Products To Consider In 2017



Agents who have sold Multi Year Guarantee Annuities (MYGA's) may remember the days when it was difficult to convince a client to lock-in a seven year guaranteed interest rate of 5.00%. Many years have passed since then and deferred rate annuities are often viewed as too low yielding with too low of a commission to present as an option to clients. Many older deferred annuity contracts sit with no surrender charges, earning the minimum guarantee. The reason is, MYGA products from the past had high minimum guarantees compared to new money MYGA rates of today. Forever minimum guarantees of 3.00% and higher were very common. The minimum guarantees are the strongest guarantees in a fixed annuity contract. 

Looking forward to 2017, the expected upward momentum of interest rates makes this a perfect time to get reacquainted with fixed rate annuities. An increase of just 25% on the top fixed rates currently available could rejuvenate the MYGA marketplace big time. Imagine the ability to offer a client the guaranteed rate of 4.00% for five years! A five year yield of 21.67% would be double 2015 rates from most carriers!

As rates rise additional ways to help clients maximize yield could include: 

  • Review existing clients current fixed rates, caps and spreads. 
  • Using the free withdrawal provision to transfer to a higher guaranteed rate/cap.
  • Shorter term MYGA's such as 1 and 2 year may become available again.
  • Top quality A+ rated carriers will have rates of more than 3.00% again! 

MYGA's keep it simple and guaranteed for risk averse clients:

  • A guaranteed fixed interest rate that matches the surrender period. 
  • Clients know exactly how much their premium will grow to. 
  • No surprises or misunderstood assumptions just the guarantees as offered at issue! 
  • Waiver and free withdrawals including nursing home and terminal illness waivers.
  • Tax deferred growth and compounding!

MYGA Rates range from 3-20 year guarantee periods | Request a MYGA quote 

Single Premium Immediate Annuities (SPIA) - Get More Lifetime Income NOW! When Guaranteed Not Potential Income Matters!

Clients in need of immediate and guaranteed income can use insurance. The Immediate Annuity payment is a return of principal and interest which maximizes the payout percentage. Combined with its lower commission and loads, the SPIA cannot be beat by any other insurance product for immediate guaranteed income! 

Where else can a person use such a large percentage of their nest egg annually and know they can never run out. Recent lifetime payout percentages quoted include, 4.00% for a 27 year old female to 18.30% for an 85 year old male. Based on a $500,000 premium that is $20,000 annually for the 27 year old and $91,500 for the male age 85!

Immediate Annuities For Income Analysis!

An SPIA can also help a client determine the value of a pension income verses a lump sum distribution. We recently reviewed the value of a pension payment of $16,500 per month or a lump sum of $3,130,000. Long story short, if the pension wanted to buy a SPIA to match the income of $16,500 it would cost them $4,408,219. The $3,130,000 lump sum would produce an income of $13,136 through a SPIA, that is only 80% of the pension. The pension has a very stable outlook so makes sense for the client to strongly consider the pension payout over the lump sum.

Immediate Annuities Income For Qualified Planning

Working with an agent who has a client that has $1,000,000 in an IRA and is now beginning their RMD. The client wants to leave money to his beneficiaries and is looking at his options. Using an FIA and taking RMDs annually looks like this:

  • Selected Period 1/1/1998 - 01/01/2017 (20 Years) RMD income paid over 20 years = $947,295 / Accumulation value = $581,633
  • ZERO 0% Interest Period (20 Years) RMD income paid over 20 years = $740,342 / Accumulation value = $329,034
  • Favorable Period 1/1/1991 - 01/01/2000 (10 Years) RMD income paid over 20 years = $450,687 / Accumulation value = $920,210
  • Unfavorable Period 1/1/2000 - 01/01/2009 (10 Years) RMD income paid over 20 years = $418,217 / Accumulation value = $822,663 

Best case is $920,210 and worst case $329,034 of IRA money to the beneficiaries. Quite a spread there and does not give the most warm fuzzy feeling. NOW, look at a SPIA funding Life Insurance:

  • 100% Joint and Survivor SPIA with 10 year certain gives the client an income of $5,119.07 per month. If client is at 35% tax rate the tax is $1,791.67 leaving $3,227.40 per month of Non Qualified money to buy insurance!
  • A second to die life policy for $1,000,000 cost $1,800 per month or $21,594 annually. This leaves still leaves $17,134 annually of now Non Qualified money to reinvest, spend or whatever! 

SPIA Features

  • Highest Lifetime Income NOW - Guaranteed No Assumptions!
  • Allows Use Of Larger Annual Percentage Of Nest Egg Without Ever Running Out!
  • Nursing Home Income Enhancements
  • Inflation Protection Through COLA or CPI Increases
  • Deferred Starts For Longevity (DIA) (QLAC)
  • Up to 5.00% Commission on A+ Rated Carrier
  • Commutable Options or Lock In As Non Assignable
  • NEED A SPIA Quote? Click Here!

Clients who are completely or partially risk averse with their savings should be presented old school traditional fixed annuities known as Multi Year Guarantee Annuities (MYGA) and Simple Premium Immediate Annuities (SPIA). Clients who have not been shown these options are not getting a true fiduciary spread of financial insurance products available in the marketplace today.

Is a client asking for a portion of their funds to be guaranteed? The MYGA and SPIA are two insurance products built exactly for that purpose!

Jeff Affronti - Marketing, illustrating, studying and selling fixed annuities since 1995. 

Thinking about a using a Fixed Rate Annuity? Get MYGA contracting, illustrations, case design assistance and more. | Call 800-373-9697 or Click | | California Insurance License #0B91910 #immediateannuities #fixedrateannuities #lifeagents #bestincomeforlife


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