Advice from Annuity Experts

[BNTRS]

But what good is gold going to do me? It won't keep me safe, it won't keep me fed, and it won't keep me warm. It is just shiny, and what good is that in a post-apocalyptic world?

And it's rather heavy...

 

[Crabcake Johnny]

Question: Why aren't insurance agents targeting people who are pre-retirement age - 50's - with annuities? Seems like the perfect audience. Why the focus on seniors? I'd have a much easier time explaining to someone who's 55 that they can start receiving payments at say, 65 then explaining to someone who's 70 that payments will begin when they're 80.

I'm assuming (correct me if I'm wrong) that the longer they want for payments to begin the better the deal. Can't a 50 year old get great deal on an annuity that begins in 15 years?

 

[Norwayguy]

Question: Why aren't insurance agents targeting people who are pre-retirement age - 50's - with annuities? Seems like the perfect audience. Why the focus on seniors? I'd have a much easier time explaining to someone who's 55 that they can start receiving payments at say, 65 then explaining to someone who's 70 that payments will begin when they're 80.

I'm assuming (correct me if I'm wrong) that the longer they want for payments to begin the better the deal. Can't a 50 year old get great deal on an annuity that begins in 15 years?

The only deal in waiting a longer period of time is that either the account value has increased (just like waiting with a CD lets forget taxes for a moment) or if there is some type of income rider with a roll up during defferal. a 65 can take out an annuity today and begin recieving interest from it within 30 days with many carriers. That client may benefit from doing a split or some type of income planning but since I think you are just asking general questions thats my answer. We can market to 50 year olds....However in most cases we are talking about retirement dollars and a lot of these dollars can be tied up in company plans (some may allow for in service withdrawal some won't).

 

[Crabcake Johnny]

Ok. It's an area I don't know much about. I would think it's a lay down sale for someone who's 50 and putting money into CDs. CD's don't supply a lifetime stream of income.

As people live longer and longer it just seems to me that they'd want continuing streams of income. How long is that $300K in their 401K going to last if they live to 95? What's the cost of living going to be in 30 years?

 

[Norwayguy]

Ok. It's an area I don't know much about. I would think it's a lay down sale for someone who's 50 and putting money into CDs. CD's don't supply a lifetime stream of income.

As people live longer and longer it just seems to me that they'd want continuing streams of income. How long is that $300K in their 401K going to last if they live to 95? What's the cost of living going to be in 30 years?

Well it depends...People like the idea of lifetime income streams but depending on what that amount is some people would prefer to keep access to the larger amount. If someone took out an annuity with an income rider and needed the money to begin right now they might be able to get 5% or 15K per year...The chances of that increasing as time goes on diminishes. But can they take the same 5% from equities and see it increase, maybe possibly who knows...Depending on timing the account could grow while in liquidation could remain the same or could take a drastic drop in value requiring a change in approach and income.

The real issue is every person is different be it with risk tolerance, required income and also life expetancy. Try telling someone whos parents and siblings all passed away by 69 that they need to plan for living till 95 or longer they might listen to you or throw you out of the house. On that 300K the client might want/need 30K or 10% per year and might not listen to any form of reason but continuing with an aggressive investment approach because it has always worked for them in the past (walk away fast because when they crash and burn it will be you who they blame for not stopping them).

To equate it to health insurance you know some people will demand a co-pay plan which will cost them $3000 more per year than a HDHP with say a $2500 deductible even when you point out they are in excellent health and rarely go to the doctor. Some people will want to analyze things to death never making a decision and once they do a factor might have changed like interest rates or what they require and go back into analyzing everything all over again.

Selling Annuities or investments isn't that different then other forms of insurance, your still dealing with people. The products are different and how things are treated for taxation might be more important but is that any different then knowing your products, laws and underwriting in Health Insurance?

 

[Crabcake Johnny]

Try $300K at a 3% rate of return since after they retire they won't be able to risk the principle. That's 9K a year in theory, for life. So the only question is with that same 300K could they do better in an annuity.

 

[Norwayguy]

Try $300K at a 3% rate of return since after they retire they won't be able to risk the principle. That's 9K a year in theory, for life. So the only question is with that same 300K could they do better in an annuity.

With an Income rider they could depending on age...An income rider guarantees the client is able to take a stream of income from the annuity and the payments will continue even after the actual account value terminated. This is an example.

Single Life %

Ages 40-49 N/A
Ages 50-54 4.0%
Ages 55-59 4.5%
Ages 60-64 5.0%
Ages 65-69 5.5%
Ages 70-74 6.0%
Ages 75-79 6.5%
Ages 80-84 7.0%
Ages 85-89 7.5%
Ages 90+ 8.0%

Joint Life
Ages 40-49 N/A
Ages 50-54 3.5%
Ages 55-59 4.0%
Ages 60-64 4.5%
Ages 65-69 5.0%
Ages 70-74 5.5%
Ages 75-79 6.0%
Ages 80-84 6.5%
Ages 85-89 7.0%
Ages 90+ 7.5%


So what this means for a single 60 year old is they could take 5% or $15K per year. The 15K reduces the account value but the most income riders would still allow the client to access the entire remaining account value....say 300 after 2 years of 15K withdrawals the value was now 270K they could withdraw they entire amount obviously payments would stop and I haven't accounted for interest or withdrawal charges.

And an important note. Income riders are backed by the faith of the company issuing them.

 

[padthaiforlunch]

So buy bullet-proof edible blankets, or just get yourself some sheep since they have the added benefit of combating lonliness.

But what good is gold going to do me? It won't keep me safe, it won't keep me fed, and it won't keep me warm. It is just shiny, and what good is that in a post-apocalyptic world?

 

[Norwayguy]

So buy bullet-proof edible blankets, or just get yourself some sheep since they have the added benefit of combating lonliness.

Why buy edible bullet proof blankets...Sure get bullet proof blankets buy edible panties.

 

[JFBAgent]

Question: Why aren't insurance agents targeting people who are pre-retirement age - 50's - with annuities? Seems like the perfect audience. Why the focus on seniors?

As someone who focuses on this age, I can tell you that there is a growing segment of agents who are selling less to seniors and more to pre-retirement people.

Seniors have that $50,000 IRA, but folks in their 50's seem to have that $100,000 IRA. In my experience.

In years past, the 50's crowd was not considered a candidate for what we do, because their money was tied up in employer based plans. Increasingly, agents are talking about inserting non-harship in-service withdrawals provisions into group retirement plans that change that whole dimension.