Annuity Case with Special Circumstances

Jun 17, 2008

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  1. gradyinsurance
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    gradyinsurance Super Genius

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    Hello, everyone. I've got an annuity case that has came up, that I need input on. 78 y/o Female, in good health, has from 15-45k to invest, depending on what kind of return I can come up with. The longest term she's interested in is 5 years. However, she wants to turn the money into a monthly income. Basically, she wants a check every month, made up of principal and interest, until the principal is exhausted. The money came from a property she sold, which generated a monthly income for her. She's afraid that if she puts the money in a checking or savings/money market account, she will spend it within the year. So, she want's it structured where it will pay her a guaranteed amount on a monthly basis.

    Does anyone know of a product that works like this? I don't really sell many annuities, so I'm not up to speed on the latest products. Also, what is a competitive interest rate for this kind of policy?

    Thanks, Dave.
     
  2. xrac
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    xrac Guru

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    How much income does she want per month and for how long. You can do a single premium immediate fixed annuity with a period certain of X years depending upon these two factors. The longer the period the lower the monthly payment amount. They will send her a check every month just like clock work. She would also get a potentially higher payout without the period certain option.
     
    xrac, Jun 17, 2008
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  3. bluemarlin08
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    bluemarlin08 Guru

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    xrac is right on the money. Get several different rates from different companies and obtain a clear understanding of the different options. Make sure if she chooses a lifetime benefit without a period certain she clearly understands that when she dies ballgame over. I recently came across a case where a 80 year old bought a lifetime benefit, died after 5 payments, had deposited 250,000, the children went apesh-t, threatening to suit the agent. Make sure everything is documented, trust me you can get in hot water quick with greedy heirs suspecting agents were preying on the elderly. Buy, an IA is a great way to receive income in these low rate environments.
     
  4. Mr. Bill
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    Mr. Bill Guru

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    Mr. Bill, Jun 17, 2008
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  5. Winter_123
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    I read the question to mean that she wants it all back in 5 years. So lifetime, and period certain etc do not necessarily apply. If that is not the case, perhaps the question could be clarified.

    Winter
     
  6. xrac
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    xrac Guru

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    Does these mean she only wants income for 5 years or that she only plans on living until age 83?? Does it mean she has other income after she exhaust this source?[/quote]
     
    xrac, Jun 17, 2008
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  7. gradyinsurance
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    gradyinsurance Super Genius

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    It means that she only wants income for 5 years. She's receiving 150k, in a lump sum, somewhere between 3-5 years from now. She just wants to guarantee herself around 600/mo for the meantime. It looks like SPIA is the way to go, but, at least according to the calculator posted by Mr. Bill, getting the money to be "period certain" significantly reduces the monthly payout. So, just to recap, to make sure I got it, with a SPIA, if there is no period certain payout, then if the policyholder dies, the money reverts to the insurance company?

    Dave
     
  8. Mr. Bill
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    Yes, absolutely correct. You will get sued if you don't have a guaranteed payout (because suing people has overtaken baseball as the national pasttime of Americans!)

    What does she think will happen after the five years? MIght be easier to solve for the $600 per month.
     
    Mr. Bill, Jun 18, 2008
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  9. Cwilcoxson
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    Cwilcoxson New Member

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    Dave,

    I am hearing what you are talking about and I have a much better alternative for you and for your potential client. A Spia is old news with no compensation and no flexibility for the clients. Let me know if you are interested.

    Thanks,

    Carter Wilcoxson
    800.440.1088
     
  10. Mr. Bill
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    Mr. Bill Guru

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    Why don't you just go ahead and post your product???
     
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