Which annuities do you offer for lifetime income?

[IsaacA]

All of them!
Different solutions depending on the client and their goals.
Some clients don't care about leaving a DB, so a Life Only SPIA is the best solution.
Some clients only care about the DB in that case a FIA with a good DB would be the option.
Some clients want a high rated carrier and don't mind loosing out on a few thousand dollars in income a year.

The SPIA debate above....$569.62 with Securian is the best option.
Be careful with that quoting calculator you're using. Something was off because you had the carrier just different numbers.

I disagree with your statement on annuities being marketed wrong.
Maybe with the agents you work with.
What you're describing is immoral.
My thought is you may not understand annuities fully to make that comment.
There are more features to an FIA than just being able to cancel.
And, SPIAs and DIAs are designed to be ANNUITIZED
Annuities are not for everyone. I believe they should only be a part of client's full portfolio.
Try passing suit with an insurance company and you'll find out.

 

[JJ2713]

I fully understand annuities.

Yes, I know that SPIAs/DIAs are annuitized. And FIAs+income riders are not "annuitized" so you can get any remaining principal back that hasn't been paid out.

It's hard to beat a SPIA/DIA with a FIA+income rider.

The ability to cancel the FIA+income rider contract is somewhat overstated because if a client does that, then they also cancel their income. The client needs to have liquidity elsewhere.

 

[IsaacA]

I fully understand annuities

Your statement of annuities being marketed wrong tells me different. Tell me then, how should they be marketed?

You’re forgetting some key annuity features. That can sometimes make the sale.
Nursing home benefit
Index (helping the account value grow)
Rising Income (COLA or index)
Death Benefit

Just a few....features.

 

[JJ2713]

I'm sensing hostility in your response, but I'll answer anyway. We are just having a friendly discussion.

Yes, I know that FIAs+income riders offer a LTC benefit, where the income doubles for a number of years. However, this is not a true LTC benefit. The client is simply getting their money back quicker. It reduces the cash account. There is benefit in this, but it can't really be pitched as LTC because a true LTC benefit is different.

Yes, I know the indexing feature of the FIA. However, don't call that "growth". FIAs are not growth products. The stars would have to align in order for the contract to make anything more than 3 - 5% due to restrictions on cap rates, participation rates, or the underlying index itself. Yes, it can happen, but you can't tell a client that. You have to tell the client to expect a conservative number.

The true value in the FIA+income rider is that the client can cancel the contract. Some clients are apprehensive about annuitizing, so a FIA+income rider is the other option. Yes, the added doubling of the income is also a benefit, especially if the client can't get LTC coverage anywhere else.

Commissions on FIAs can be 6-8%. SPIAs pay 2-3%, DIAs pay 3-4%. There are FIAs with lower commissions with a lower surrender period. However, many FIAs sold have longer surrender periods, which increases the commission for the agent.

There is value in FIAs and FIAs+income riders. However, I've heard too many radio shows/commercials and seen too many advertisements where they are marketed incorrectly. I mentioned some of those in a previous post.

All types of annuities should be in your toolbox. Only focusing on one type for whatever reason is not best for the client.

 

[IsaacA]

Not hostile. Enjoying the friendly discussion. You do have annuity knowledge. Now I think you need to believe in it.

I really dislike when someone makes such a statement on annuities.

You’re right it’s not a true LTC product. It should be considered in addition to LTC. An added benefit to the original goal. And, who knows maybe the client can’t qualify for LTC for whatever reason. Happens all the time. Something is better than nothing. It’s an advance on your money yes, but going back to the lifetime guaranteed income once the account value goes to $0. In a time of need like needing LTC that sounds wonderful.

What does growth mean?
I prefer to go with straight forward indexes. Something the agent can understand which results in the client understanding. There are some indexes out there that are an uncapped participation rate on the S&P 500. Participating on part of the upside with no downside. However, always having the advisor and client understand these are conservative products. Set expectations at 2-4%. If they’re more. Great!!!

And, no. Once you purchase an income rider you shouldn’t cancel the policy. It’s a long term plan. Your other assets should be more aggressively invested.

What’s wrong with commissions?
You should work to find the best product then worry about commissions. Sometimes it’s a SPIA. Sometimes an FIA.
The “agents” who only care about commissions don’t last long. They’re reputation will follow them.

Seems like you know annuities!
That’s exciting. See them in a better light.
There are good agents out there doing good things for clients with annuities.

Remember some people feel the way you do for annuities but with health, car, life, FE, LTC, and so on.
It’s not for everyone, but there is a market for them. And a client for them.
With everything there are pros and cons.
I like seeing the silver lining in situations!

How’d you learn about annuities?

 

[JJ2713]

Not hostile. Enjoying the friendly discussion. You do have annuity knowledge. Now I think you need to believe in it.

(cut out quote top keep it shorter)

How’d you learn about annuities?

We agree on everything.

Annuities are great. My philosophy is that your guaranteed expenses need to be covered with guaranteed income.

Guaranteed income sources are:
- Social Security
- pension (most don't have)
- annuity that pays lifetime income

A reverse mortgage with the tenure option also pays lifetime income, but that's a different product altogether. And there are consequences to the home if the person sells or moves and there is no equity left. So it's like a last resort if the person is truly broke and all they have is their home with some equity and Social Security.

I have no problem with FIAs. They are a tool that has great value.

I have a problem with agents who market them incorrectly. And many do. And many agents also completely ignore SPIAs/DIAs due to the lower commissions.

I'm sure you've heard or seen FIAs being marketed incorrectly. It's a huge disservice to the client. There's a radio show here every week and FIAs are misrepresented the entire show.

I learned really on my own, just reading up on all the different types of annuities.

My retirement plan philosophy was created simply in response to all the retirement risks. How can each retirement risk be eliminated or managed? Then the appropriate product or strategy is used.