I'm New to Annuities

Discussion in 'Annuities Forum' started by idahoinsurers, Aug 9, 2017.

  1. jboussea
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    jboussea Guru

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    Do you know of a good company to compare Deferred income vs fixed index annuities w/ income riders... a company that does both
     
  2. DHK
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    The company... doesn't matter. The knowledge of how the product works and where it can fit is more important.

    Let's assume that you want to secure $5,000 per month of joint lifetime income for a retired couple. Which solution is best? SPIA or FIA?

    - Joint lifetime SPIA for $250,000 with life-only payout (I'm making up numbers here).
    Pro: Lowest principal required for cash flow generated.
    Con: Upon the death of the 2nd spouse, there is no residual value for beneficiaries.

    It may be the most efficient, but does it satisfy all their needs?

    - Joint lifetime FIA for $500,000 with joint lifetime income rider.
    Pro: Remaining values of the annuity can earn indexed interest credits that would primarily benefit beneficiaries.
    Con: Requires a lot more money to secure the same level of income.

    Which would the client choose? Whichever is most comfortable for them. Perhaps a mix of both to "lower" their purchase price for lifetime income.


    It's easier to study annuities based on what problem they are designed to solve, rather than on the merits of the products themselves.
     
  3. jboussea
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    jboussea Guru

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    The reason i want to know about a company is because ibwant to ckmpare THEIR dia and their fia

    This confirms ehat i noticed about fia and spia .. so i would assume the idea is the same with DIA s ..but it'll be nice to illustrate cause i m very visual..and like to see the nuances of different outcome s
     
  4. Tahoe Ray
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    The FIA and SPIA numbers are much closer than what DHK illustrated (no worries, DHK, I know that you were just using examples).

    A 65yo female could generate 5500/yr per 100k in an FIA. A life only SPIA is still going to be north of 90k for that same income. Add in a cash refund and the cost will be very close.

    You have to look at each case separately and identify the need/objective and concerns (liquidity, taxes, fees, upside, death benefit, etc.).
     
  5. DHK
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    jboussea,

    Tahoe Ray is an EXCELLENT resource regarding annuities and I would encourage you to pick his brain if/when you get a case to help you fulfill your fiduciary duty and pick the right annuity solution.

    He can help you to compare/contrast the different options for your client. Just keep in mind that income alone is not the only option/consideration because lifetime SPIAs would have no residual amounts for beneficiaries - at least not without period certain limits (that would lower income payments).

    A good fact-find and finding an optimal solution isn't just a product discussion, but an allocation discussion regarding all the client's retirement assets.
     
  6. jboussea
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    jboussea Guru

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    what if the 65 yo female wanted to take income 10 years from now with a Deferred Income Annuity ... (no liquidity) .. would the FIA with a income rider be just as closed
     
  7. scagnt83
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    jboussea,
    Great American is a good carrier to do illustrations with. I will try to find the link and send it to you.

    An illustration is actually one of the best ways to learn products since it is legally required to provide certain info, such as definitions of terms, crediting info, and various features.

    And since the "basics" are mostly the same or similar among all carriers, what you learn about one often easily transfers over to other carriers and products.

    -------

    I would not get bogged down in the academics of it too much.

    Learn how the product works, then go find people who need guaranteed solutions for retirement savings or retirement income.

    Experience is the best teacher. Which is one reason I am big on learning from illustrations. The illustration is the gospel. What some guy wrote in some book may or may not be relevant and may or may not be accurate for that product or situation. The carriers often have some good info on their web portals too when it comes to how an annuity fits into a client's broader financial picture.
     
    Last edited: Aug 27, 2017
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