Different Marketing Idea-Annuity’s for Newborns!

[Ned]

$1500.00 at birth. Assume 10.19% compounded untill age 65 = $820,450.15.

Also variable annuities pay ongoing commission and take additions. I never said it had to be single premium. Just wanted to share the power of compounding. In addition its about providing solutions to your client or having something different to talk about. That may lead to you getting access to other assets. Marketing can take many forms.

 

[padthaiforlunch]

Assume 10.19% compounded untill age 65

Does historical FIA data support such a high interest rate assumption? I know the data only goes back 18 years.

 

[Norwayguy]

Does historical FIA data support such a high interest rate assumption? I know the data only goes back 18 years.

Forget historical...how about current participation rates...How can you say 80 percent participation rate would accomplish this and they ask what the current participation rate is and you say 40 percent ...

 

[MrPhill]

I like the idea to get in front of parents - seems like a good way to takeover the family investments. No one else talking about this - I am going to give it a trial ballon. I had a client with over $100K in UGMA's for his kids - there may be gold there.

Yuppie moms will love this.

How do I find out more?

I did some quick math and $1,500 invested in 1945 invested in the S&P would have you with over $1.5 million today.

If you used an EIA and did not have losing years your result would be over $2.5 million with a 80% cap.

Sounds like a GREAT idea to me I wish someone had done this for me.

 

[Ned]

What numbers did you use to turn $1,500 into $4,300 a month at age 65?

$4300.00 is what the projected payment of SSI would be in 65 years assuming 2 1/2% indexed increase.

$1,500.00 is what the initial investment would be and could turn into $820,450.15. They would then annuitize $820,450.15 at age 65.
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$1,500 single premium annuity ... why in the world would I want to sell that?

I sell alot of these and get other business because of it. Also, I almost never use single premium with this marketing approach. Annuitys that take additions used in this method can get a lot of contributions from other family members. Its like a 401k for a baby. But most importantly its about marketing.

With that said, often while promoting this it has reulted in rolling over a significant UGMA or UTMA account at a bank into an annuity. You would be surprised at how much are in some of these accounts. Frequently they are 60-70K.

 

[Newby]

Why not just start with a higher amount and more conservative numbers.

$10,000 at birth. 6.0% average rate over 65 years = $493,937

$10,000 at birth 7.0% average rate over 65 years = $946,515

$946,515 X 6% income for life = $56,790 annually for life. Which when you factor in inflation is not much money but might get some attention.

 

[Ned]

Why not just start with a higher amount and more conservative numbers.

$10,000 at birth. 6.0% average rate over 65 years = $493,937

$10,000 at birth 7.0% average rate over 65 years = $946,515

$946,515 X 6% income for life = $56,790 annually for life. Which when you factor in inflation is not much money but might get some attention.

Whatever number you assume is great for the child, great to talk about, and great for the agent. That is the point here.
However historical returns are "HISTORICAL". But you can use your own calculation custom to the type of product you are comfortable selling.
Just wanted to share with others how I have been successful.

 

[Josh]

Why not just start with a higher amount and more conservative numbers.

$10,000 at birth. 6.0% average rate over 65 years = $493,937

$10,000 at birth 7.0% average rate over 65 years = $946,515

$946,515 X 6% income for life = $56,790 annually for life. Which when you factor in inflation is not much money but might get some attention.

I completely agree with where you're going on this.

I would use more conservative interest rate, but no reason to not go out until at least 70+ on the time period. Hell, if you want to make the numbers really work have them add $500-$1,000/year instead of birthday money (or whatever the other numbers are) and things start getting really interesting, even if it cuts off at age 18.

That all said, I think that's a really neat concept.

 

[padthaiforlunch]

Yes. Doing $5k to start with $1k per year until age 18, all growing at 4.5% until age 68 will pay a bit over $20k per year in retirement. Not tons, but enough that many seniors can appreciate the benefit of. All for $23k total investment. And if they have the cash available, might as well use a spia for advance funding.

 

[slushpuppyking]

But how much do you make as an agent by selling a $1500 annuity? I guess any business is better than no business, but if it doesn't open the door to other possiblities and you just sold the $1500 annuity what would you make on that?