- 1,926
What if a 60 year old put 100,000 of qualified funds in this policy with the objective to maximize income beginning at age 70. What would be his guaranteed income?
8.15% Income Account with a 10 Year Roll Up?
- Thread starter Freddie
- Start date
- 185
IF you are going to look at income riders (meaning they are hell-bent on using the rider as designed), you can't just look at the roll-up rate (and premium bonus). You have to figure in the payout % at the age you start taking income.
For instance in your scenario - 100k, 10 years deferral, start income at age 70.
The LSW with 8.15% rollup and 10% bonus will give you about $12,600 in yearly income at age 70.
What about a product with only a 7.5% rollup and 8% bonus, like RBC?
$14,500.
2k more a year with 0.65% less roll-up and 2% less bonus? Yes, because of the percent payout at the age income is turned on.
RBC pays out 6% at age 70.
LSW pays out 5.5% at age 70.
Again, the point is if you are planning to use the rider for the purpose of maximizing an income stream you won't outlive, then you need to run the numbers. Ironically, neither of these product actually gives the highest payout available.
Even still, I think the details of the underlying annuity (not the income rider separate numbers) are important as things change and people may need to bail out on the rider. I am also not against running scenarios with future SPIA's.
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- 2,455
So then that leaves me to ask what company does?
I ran LSW and came up with the same number. Don't have the ability to run RBC but I'll take your word for it.
So what product/company has the best payout if it isn't LSW or RBC?
I think Aviva has good payout rates, typically better the LSW, I dont sell RBC so dont know either.
- 1,641
That will depend on the length of the roll up, the age of payout and if it's joint.
North American, American Equity and Aviva tend to be at the top of the list.
- 2,455
Stay on target now, we are still talking about the 60 year old that takes income at 70. The lenght of the roll up is 10 years, the age is 70 and it isn't joint. I want to know who has the best payout based on that simple example. We aren't trying to do a detailed financial long term plan here.
- 1,641
My answer is still the same.
- 1,926
If one is looking for income, investing the funds at 3.75% for 10 years, then taking a SPIA, one's income is 13,200. That being in one of the lowest "safe" return environment in history. The "8.15%" compound return is, in my opinion, misleading, the insurance company is making a substantial return on the difference unless yields drop. I am looking at this as an investment for myself and based on current info I wouldn't touch it. Great deal for the agent however, I would bet very few clients really understand the GMIB rider.
Or agents for that matter, If only there was an association that could clear all this up for us at a low monthly rate.
Seriously income riders are rarely as good of a deal as they appear. Its a way for a company to offer what looks like a HIGH rate when the rates are in fact very low.
- 2,455
RBC still has you beat at $14,500 and your SPIA isn't for life. How many years is that SPIA supposed to pay out at $13k something.......iPhone won't let me scroll up to see the exact figure.
All I'm saying as well is everyone hold on to the nickers for a moment and address lifetime income riders. Then we can approach it from other angles. How hard can it be? I had LSW but got beat out by RBC. Can anyone top RBC lifetime payout? Let's crawl here for a minute, then walk and eventually we can run some more complicated calculations.
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In all fairness you asked for 3 details and they were supplied yet you still can't give me a product with a lifetime payout amount that beats RBC.
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