Which annuities do you offer for lifetime income?

[JJ2713]

Which annuities do you offer for lifetime income?

SPIA/DIA?
FIA+Income rider?
Or even a VA with the withdrawal rider?

And why do you offer these annuities?

Or do offer them all and recommend the annuity that best fits the client?

I ask because I know some people only offer FIAs+Income Riders for lifetime income. That doesn't make sense. SPIAs/DIAs have their place too.

 

[Devin01]

Fias for longer term horizon like 7 to 10 years then turn on income.

SPIAS are typically right away I use them when we convert a pension for guaranteed income over a certain period.

Spias can last a lifetime or for a certain period we just run the numbers to see what's best for the client.

Had a sale last week where we converted a pension for a 10 year certain period, money ran out and and in 10 years FIA income kicked in.

Seniors like guarantees and annuities provide them.

 

[jasperjohns]

Most all large FMOs will have software that can run SPIA vs FIA w/ rider comparisons. The FIA w/rider offers higher income just about every time. VAs w/income is a whole other monster as many are now tied to the market going up and locking in a withdrawal based on the high point. I feel that when they have a fixed roll up the fees all in can be really really high. All have a place but FIA w/ income rider is tough to beat.

 

[JJ2713]

Clients don't really understand a FIA+income rider. Agents/advisors don't explain them correctly and/or honestly.

A FIA+income rider where you're going to use the roll-up for several years until starting the income rider needs to be compared to a DIA for the same period of time.

So a FIA+income rider where you won't turn on income for 5 years must be compared to a DIA where you also won't turn on income for 5 years. See which pays more income in year 6.

I see many agents pitching FIAs with a long-term surrender period simply to increase the commission substantially. That's just wrong and immoral. If all annuities paid the same commission rate, I'm not so sure FIAs+income riders would be sold as much.

FIAs+income riders are also marketed incorrectly as well:

- "Market upside without downside" is simply not true and deceiving. The client doesn't get ALL the upside, just a portion. And this doesn't really matter if the FIA is being used for lifetime income (the income rider). The cash account is almost never going to be higher than the income account due to the guaranteed roll-up rate of the income account, which is often much higher than the rate the cash account could earn.
- Not explaining the phantom income account and the cash account is also deceiving to the client. The client can't walk away with their income account that's been rolled up for several years; they can only walk away with their cash account if they cancel their contract.
- Misrepresenting the roll-up rate as an actual interest rate is also deceiving. Many clients actually think they are getting 6% per year or 8%, or whatever the roll-up rate is.​

The main selling point of the FIA+income rider is that you can cancel the contract, not necessarily the roll-up rate. I don't know why there isn't a liquid SPIA/DIA that you can cancel.

SPIAs/DIAs and FIAs+income riders have their place. They just have to be explained correctly and honestly to the client

 

[Tahoe Ray]

Most all large FMOs will have software that can run SPIA vs FIA w/ rider comparisons. The FIA w/rider offers higher income just about every time. VAs w/income is a whole other monster as many are now tied to the market going up and locking in a withdrawal based on the high point. I feel that when they have a fixed roll up the fees all in can be really really high. All have a place but FIA w/ income rider is tough to beat.

Can you give me an example where an FIA w/ a income rider will generate more immediate income than a SPIA? What carrier?

 

[jasperjohns]

Can you give me an example where an FIA w/ a income rider will generate more immediate income than a SPIA? What carrier?

Sure. This is literally the first quote I ran. To create a apples to apples as much as possible I used a cash refund SPIA, which is how the FIA w/rider would work ….Accum. Value goes to bene if anything left at death.

Age 70 Male in FL 100k SPIA with cash refund 515.63 a month with minn. life
Age 70 Male in FL 100k FIA w/income rider 526.50 a month with Phx

 

[Tahoe Ray]

Sure. This is literally the first quote I ran. To create a apples to apples as much as possible I used a cash refund SPIA, which is how the FIA w/rider would work ….Accum. Value goes to bene if anything left at death.

Age 70 Male in FL 100k SPIA with cash refund 515.63 a month with minn. life
Age 70 Male in FL 100k FIA w/income rider 526.50 a month with Phx

Male 70 w/ 100k SPIA w CR in FL? There are 17 carriers (SPIAs) that generate more than 526.50 for life.

 

[jasperjohns]

Please reply with 1 or 2 of the carriers. This is not a challenge this is so that I can use them in the future when generating income planning proposals. I ran the quote through FIG and they have a large number of carriers and Minn Life was the highest SPIA with Cash refund that come up on the quote report.

 

[Tahoe Ray]

Please reply with 1 or 2 of the carriers. This is not a challenge this is so that I can use them in the future when generating income planning proposals. I ran the quote through FIG and they have a large number of carriers and Minn Life was the highest SPIA with Cash refund that come up on the quote report.

If you ran it through a multi-quoter at FIG I think that there is something wrong with it...

Both Cannex and Minn Life's actual site are generating 569.62/mo for FL male 70 100k life w/ CR.

Lincoln, Integrity, ANICO, Principal, and Guardian are all over $550 (there are more but not everyone will have access to them like CUNA and NY Life).

I didn't view it as a challenge and often use FIAs w/ income riders. I like to show a SPIA as "pure income" and then position the FIA as for slightly less income, you can retain control of your asset and have the possibility of better results than the cash refund.

That's why I was genuinely curious. I run these comparisons a lot.

 

[jasperjohns]

If you ran it through a multi-quoter at FIG I think that there is something wrong with it...

Both Cannex and Minn Life's actual site are generating 569.62/mo for FL male 70 100k life w/ CR.

Lincoln, Integrity, ANICO, Principal, and Guardian are all over $550 (there are more but not everyone will have access to them like CUNA and NY Life).

I didn't view it as a challenge and often use FIAs w/ income riders. I like to show a SPIA as "pure income" and then position the FIA as for slightly less income, you can retain control of your asset and have the possibility of better results than the cash refund.

That's why I was genuinely curious. I run these comparisons a lot.

Thanks again man!! I will have to do a bit more leg work next time researching this for a client.