FIA with Most Upside Index Potential that Allows 10% Free Withdrawals?

[ohbrother1]

Hi folks,
I'm looking for a Fixed Index Annuity that has the most index upside potential that allows 10% annual free withdrawals. The customers like the concept of the FIA and would like to put in around $275k and take out roughly $17k per year. Would like an upfront bonus if possible but would prefer most upside.
Thanks,
John

 

[cloisbarton]

Hi folks,
I'm looking for a Fixed Index Annuity that has the most index upside potential that allows 10% annual free withdrawals. The customers like the concept of the FIA and would like to put in around $275k and take out roughly $17k per year. Would like an upfront bonus if possible but would prefer most upside.
Thanks,
John

how old is client
what state

 

[nathan.lee]

Hi folks,
I'm looking for a Fixed Index Annuity that has the most index upside potential that allows 10% annual free withdrawals. The customers like the concept of the FIA and would like to put in around $275k and take out roughly $17k per year. Would like an upfront bonus if possible but would prefer most upside.
Thanks,
John

In addition to Clois' question about age and state, I have a couple too.

Do the clients want/need guaranteed lifetime income? Or are they comfortable drawing down the account balance of the contract? Assuming 0% growth in the product, drawing 17K a year will give them about 16 years of income until the account value is depleted. (this depends on how the 10% free withdrawals are calculated, Original Premium amount vs. Account Value) Also, odds are if the product has a premium bonus (especially one that is available for withdrawal early in the contract) then the upside potential (i.e. caps, spreads, participation rates, etc.) are most likely reduced.

I little more info on the clients and their goals would be quite helpful otherwise we are just naming products that may or may not produce the results your clients want.

Best,

 

[ohbrother1]

Thanks fellas. We have a 58F in SC that will just be taking 10% free withdrawals. The guaranteed lifetime income is not necessary. Basically looking for highest caps, uncapped, etc. Length of contract is not important (can be 15 years if necessary). Just looking for highest potential returns based on the FIA philosophy (participate in market upside/no downside, etc). They have plenty of other assets and can spend the account down if necessary.

 

[Josh Landis]

Thanks fellas. We have a 58F in SC that will just be taking 10% free withdrawals. The guaranteed lifetime income is not necessary. Basically looking for highest caps, uncapped, etc. Length of contract is not important (can be 15 years if necessary). Just looking for highest potential returns based on the FIA philosophy (participate in market upside/no downside, etc). They have plenty of other assets and can spend the account down if necessary.

Aviva has a 15 year product with a 7% bonus and an uncapped strategy with annual reset - 100% participation rate, 2.85% spread on the annual reset.

If the market returns 15% the client is making 12.15% return (15% - 2.85%).

 

[ohbrother1]

Thanks Josh. Pretty sure on that one that you are capped at 5% withdrawals. I looked at something similar with Aviva (Target Benefit maybe?) and I believe that was the only item that prevented us from moving forward.

 

[Josh Landis]

You're right, they are capped at 5% withdrawals. If 10% withdrawals is a must, I would look at two products.

Athene - 8 year product, 2% bonus, 4.7% annual cap, 10% withdrawals

Great American - 10 year product, no bonus, 4.25% annual cap, return of premium feature (if caps go up in two years they can take the money and move it somewhere else), 10% withdrawals

 

[ohbrother1]

Also heard the National Western Ultra Classic was good for upside as well. Seems decent - 13 year surrender period but no bonus.

 

[Josh Landis]

Ultra Classic is a good product, but it's not available in SC, but the impact 10 is available.

The Security Benefit 10 is what CBlomstrom is referring to. The thing to remember with that product is that it's a 5 year reset. The index only started on 3/29/12. Back tested started in 1990, but since the product has been introduced in the real world the returns are down significantly - you can check them at Bloomberg.

In this envrionment, I would recommend a product with annual reset.

 

[scagnt83]

Both Midland and NA have 14 year products that allow 10% and go up to 6%/6.5%ish.

I think Midland has a 10 year at 6% too.

But its hard to beat GAs SafeOutlook at 4.5% with just a 6 year surrender.
Or their AmericanLegend at 4.75% for 7 years.


14 years is a long time to commit to. In 6 or 7 years the IA landscape will be changed dramatically.