Annuity Information

Annuities often get a bad rap, and deservedly so, but there’s one type of annuity that deserves a place in many retirees’ portfolio:  the immediate (or income) annuity.

What Is An Immediate Annuity?

An immediate annuity is a contract between you and an insurance company where you agree to pay a lump sum to the insurance company upfront in exchange for a specified monthly income for a specific period.  The most basic type of immediate annuity amounts to a “do-it-yourself” annuity where you receive income as long as you live, with nothing going to your heirs when you die.  

There are many factors that go into determining how large a monthly income you are likely to receive from an income annuity.  The most important factor is your age:  the older you are, the shorter the insurance company will expect you to live and hence the higher the monthly income they would be willing to pay.  Other contributing factors are current interest rates (the higher the better) and future inflation expectations.  If prevailing rates are high, insurance companies will have to offer higher payouts to attract capital.  Similarly, if inflation is high, an insurance company might be more willing to give a slightly higher payout in the expectation of being able to lend out your lump sum at a higher rate in the near future.

Rider Or No?

There are literally dozens of insurance riders you can purchase to modify the terms, of which inflation protection and payment to heirs are but two of the most popular.  Of these riders, I think inflation protection is well worth paying extra for.  I’m not too keen on paying extra to provide an income stream to heirs after you die simply because an annuity is not the most appropriate vehicle for that type of thing.

Visit amateurassetallocator.com for more on choosing an immediate annuity as well as information on where to get your free annual credit report.

Tags: Annuities, Income COMMENTS

I understand annuities, but it took me a while to get there. Fortunately, I found someone to help me without “selling me.” Even so, if you are a potential buyer, don’t trust anyone until you have the tools necessary to make a well-informed decision.

You must learn to be critical of financial products because the only person you can trust is yourself. By educating yourself, you can make the best decisions for YOU- and you can learn how to screen all the other competing interests. Only then will you be a Smart Buyer and be ready to make an informed decision.

“Trust, but Verify” is great mantra for any confident person. Acquiring the tools to verify what you read and hear about annuities is essential. Products, and the advisers who recommend them, must verify against your knowledge and tools. Only then do these people and products earn your trust. Become a smart buyer- empower yourself to verify before you trust.

To use an analogy, when you buy a home, it is wise to bring a buyer’s agent to represent your interests in a purchase until you how to ask the right questions to get all the necessary information about the property. But after you’ve bought and sold many homes and acquire more specialized knowledge in the field, you can feel confident dealing directly with the seller’s agent and representing your own interests.

Financial products likewise require specialized knowledge to understand the nuances and ask the right questions. But still, most people considering an annuity deal directly with the seller by working with a company-sponsored agent, and don’t educate themselves. Commission motivated agents want a sale and can easily put a positive spin on their favorite products.

Finding the proper information needed to make an informed annuity purchase decision can be difficult. An unbiased source is critical. Some things to consider include:

Ground Rules for dealing with financial institutions
Critical decision factors that outline potentially hazardous contract provisions
Product suitability- timing is important and unique to each individual
An in-depth understanding of the above points will save headaches and pay dividends for years to come. Annuities are a powerful and sustainable financial vehicle when used properly.

Be your own informed agent and challenge your adviser, or anyone representing a product, to answer tough questions. As your own trusted adviser and expert, you will be able to verify what others are selling.

Bryan J. Anderson is the Author of The Annuity Report at AnnuityStraightTalk.com, and offers great free resources on Annuity Information Bryan helps you understand all the complexities of Tax Deferred Annuity and Annuities Pros and Cons and finds the best combination of safety, flexibility, and profitability for your money.

Tags: Annuity, Instincts, Trust COMMENTS

CD-type annuities and CDs have been confusing investors over the years because of their similar names. Although similarities exist between the two types of investments, CD-type annuities and CDs are different investment vehicles which provide different benefits to the individual customer.

CD-type annuities are fixed annuities which are issued by insurance companies. CDs are issued by banks or brokers. What makes an annuity a “CD-type” annuity is that the term of the guaranteed rate matches the penalty period of the contract. For example, if a CD-type annuity is purchased at 3.5% for five years, the holder is guaranteed to receive 3.5% if the annuity is held for five years.

Many other fixed annuities have no maturity date and often only guaranteed the rate of return for the first year of the annuity contract. Usually, the interest rate drops after this initial guarantee period and is then adjusted at normal intervals.

Typical rates for CD-type annuities range from 3 to 10% depending on the contract. A CD-type annuity can have a contract duration of 1 to 10 years.

CD-type annuities were originally developed so that people could clearly understand what the rate of return of their investment was. With normal fixed annuities, some investors who did not understand that the guaranteed period was for a limited period of time were becoming frustrated that they were not receiving the payments they were expecting and eventually paid the penalty fees to get out of their annuity. CD-type annuities were created to avoid this situation.

Although they share a similar name, CD-type annuities and CDs are different investment vehicles. Typically, a CD-type annuity will offer a higher rate of return than a certificate of deposit. Currently the advantage is about 1% for CD-type annuities over bank CDs.

CDs are not tax-deferred investments, unless they are held in a tax-deferred investment wrapper. CD-type annuities are tax-deferred investments. However, any purchaser needs to consider that if the CD-type annuity is cashed in before the age of 59 1/2 then the IRS will impose a 10% penalty on the gain.

CDs are, however, insured by the FDIC for up to $100,000 if held in a non-retirement account. CD-type annuities are not insured by the FDIC. There is security, though, for CD-type annuities. They are covered by individual state reserves. These vary from state-to-state, but coverage usually ranges from $100,000 to $300,000.

Another advantage for CD-type annuities is that they can be rolled over without claiming the income for tax purposes. This is not possible with bank CDs.

Finally, partial withdrawals are allowed with CD-type annuities. Most contracts allow customers to withdrawal up to 10% of the annuity without paying a penalty. However, the IRS will charge a 10% penalty, as mentioned above, if the investor is younger than 59 1/2.

CD-type annuities could be an advantage to an investor, especially if they are older than 59 1/2. They offer a higher rate of return than CDs for the same guarantee period. Also, investors who are retired or near retirement age can avoid the 10% IRS tax penalty on CD-type annuities.

For more information from Steven on how to invest in annuities and common investment mistakes, visit his Fixed Annuities Guide. To learn more about securing your retirement via index annuities, visit the Index Annuity Guide.

Tags: Annuities, CDType, Understanding COMMENTS

Inflation is a subtle, but nasty, factor that eats away at the value of your money over time. There are certain annuities designed to counter this loss of value.

One of the givens of the economic reality is the fact that the purchasing power of money declines as time goes on. This is known as inflation which indicates that the value of the money has inflated. It does not buy as much as it used to buy. This fact concerns people interested in annuities. It is especially true in the case of a long term fixed annuity. This problem is common to all fixed incomes. You are getting the same amount of money, but it is buying less and less.

The problem is not as acute with a variable annuity. The chance to make some extra earnings on the invested money counters the effects of inflation to some degree. This is not a satisfactory result for most people. They rightfully realize that inflation is eating up their earnings in their annuity in the same manner it is cutting into their earnings elsewhere. There is a good solution to the problem of inflation. It is the inflation proof annuity.

The inflation adjusted annuity is a name given to an index based annuity that uses the Retail Price Index (RPI) as the basis for the annuity payout increases. The Retail Price Index is considered one of the most accurate indicators of the true purchasing power of money. The annuity starts with a basic payout amount. It might have a pre-set interest rate that gradually increases the payout. When the RPI moves up, this interest rate increases also. In many cases, a decrease in the RPI would lead to a decrease in the interest rate that determines the payouts. This decrease would be most unlikely given the inflationary history of the RPI, but even if your payouts decreased a little bit, it would be during a period of lower costs. The idea is that your purchasing power remains the same.

The product is ideal for long term retirement or estate planning purposes. The risks of investment are already largely assumed by the Insurance Company that sells the annuity and now the Insurance Company is going to assume the risk of changing economic conditions as well. One of the best features of the annuity is the reliability of the regular schedule of payouts. When these payouts are being automatically adjusted to the inflation rate, this feature becomes even more attractive.

The annuity market has many different options. Your Insurance Agent will be able to help guide you through the complexities and steer you toward the options that best suit your needs and your financial goals. When you are exploring the various options, be sure to ask about the inflation adjusted annuity. Sadly, the fact that your money is going to buy less in the future than it can buy today is one of the most sure things in the entire financial world. The inflation adjusted annuity is one good way to control this fact.

Read more annuity information at UFCAmerica.com.

Tags: Annuities, Inflation, Issue COMMENTS

A life annuity is a contract with the insurance company, where a seller or the issuer i.e. the life insurance company makes a series of payments to the buyer in the future, in exchange of an immediate lump sum payment or a series of regular payments. The flow of the payment is an unknown duration primarily based on the death of the annuitant. The contract terminates on the death of the annuitant, if there are no beneficiaries following the annuitant, whose name has been mentioned in the contract. Thus life annuity can be termed as longevity insurance.

Phases

There are mainly two important phases for life annuity- the accumulation phase and the distribution phase. The accumulation phase is the phase of the customer depositing the money into the account. The distribution phase is the phase where the insurance company makes income payments until the death of the annuitant or annuitants named in the contract. The phases of the annuity can be combined as retirement savings and retirement payment plan. The payments can also be as the annuitant makes a regular contribution to the annuity until a certain period and then starts receiving regular payments from it until death.

Types of Life Annuity

Fixed and Variable annuity – Annuities whose payments are made in a fixed amount are called fixed annuities. Variable annuities on the other hand pay amount that vary according to the investment performance. There are many objectives that can be stated for the use of variable annuity. One recognizable fact is for the motive of tax deferral. Money deposited on the variable annuity grows on the basis of tax deferral. Therefore the taxes are not due until a withdrawn is made. Variable annuities also provide a variety of funds from the various money managers or the investment managements.

Guaranteed Annuities

There are chances that the annuitant may die before the recovery of the value of the original investment. This possibility of the situation is called forfeiture. This is an undesired situation. In this case the annuitant’s beneficiary continues to receive the amount at regular intervals. The tradeoff that is found between the pure life annuity and the life-with-period certain annuity is that in exchange of the reduced risk of loss, the annuity payments for the latter will be smaller.

Joint Annuities

Annuity products include joint – life and joint – survivor annuities. In this type the payments cease with the death of one or both the annuitants. In case of an annuity for a married couple payments may cease on the death of the second spouse. In joint-survivor annuity the payment is reduced to the first annuitant with the death of the second spouse.

Impaired Annuity Payments

In case the annuitant’s life expectancy has been reduced due to a severe medical problem the terms for the payment of annuity are improved. This type of annuity is known as impaired annuity. It involves a process of medical underwriting. This type of annuity has developed to a great extent with the growing time.

Visit http://www.annuitycampus.com for more annuity tips and tricks.

Robert holds over a decade of experience as a multiline agent in multiple states and currently serves on the membership council of the National Association of Insurance and Financial Advisors.

Tags: Annuity, Lifetime, Opportunity COMMENTS

When a person retires they will usually look to convert their pension fund into a regular income. This is the purpose of annuities. A lifetime annuity will transform the pension fund that you have accumulated over your working life into an income that will be paid until you die. When purchasing an annuity you have a number of options and so finding the best annuity quote for you can be a difficult process.

People reaching retirement age often mistakenly believe that they must purchase their annuity from the same company that holds their pension. However this is not the case and under the Open Market Option people are free to shop around for the best annuity quote available. In the UK there are several companies offering annuities. Annuity rates offered by these companies will tend to vary significantly and so to ensure you are receiving the highest income possible from your pension fund you should always search for the best deal.

There are many different types of annuities. Common types of annuity policies include lifetime, with profit, enhanced life and unit linked. The suitability of these different policies will depend on your own individual circumstances and preferences. Your age, sex, marital status and health will all affect the annuity rates you are offered and so which type of annuity is right for you. For example, an enhanced life annuity is a good choice for people who due to a medical condition have a reduced life expectancy.

When purchasing your annuity it is recommended that you make use of professional advice before you make a decision. Independent annuity advisors can help you choose the right annuity for your circumstances and find you the best annuity quote available. Once you have purchased your annuity you won’t be able to reverse your decision and so if you haven’t taken the time you compare the annuities on offer then you may miss out.

Annuities4U are UK based independent annuity advisors. Get a free annuity quote and find the best annuity for you and your family.

Tags: Annuity, Finding, Quote COMMENTS

I’m often asked, “How important is humor in a Safe Money Seminar? Can’t I just deliver the content without trying to get laughs?” Yes you can. But in the words of Dr. Charles Jarvis, one of the great humorists of all time, “You only have to use humor if you want to get paid.” As it applies to selling annuities, you only have to use humor if you want to set appointments. Besides, have you ever noticed how the people who take themselves so seriously are the only ones who do?

Humor is just as important to professional speaking as taste is to food. Laughter makes you likeable and your audience comfortable. There are plenty of meat-and-potato seminar speakers out there, but the ingredient that endears you to an audience as being authentic and personable is a generous helping of your sense of humor. Likewise, a key ingredient to adult learning is comfort. Comic relief comforts and opens the pathways to accepting new ideas, brings your audience to the present, and evokes thoughts of “I’ve been there… he’s just like me!” Humor is truth after a couple of martinis.

The best kind of humor is always the self-effacing kind. Since most humor is based on someone’s discomfort, it’s always best to make yourself the target. By exposing your vulnerabilities and foibles, people will commiserate, sympathize and identify with your situation and your message. People will root for the underdog. Instead of resisting your words, people will cheer you on. Instead of pounding away at the gray matter between their ears, you will have settled comfortably into their hearts to persuade from within. You will have positioned yourself to achieve our Safe Money Seminar goal of allowing your audience to “laugh and learn.”

But people neither laugh nor learn at the same pace or in the same way. A knee-slapper to one person might be a subtle smirk to another. I recall a speaking engagement I had in Seattle before a group of aspiring speakers in a world semi-final speech contest. Four or five of my best lines had killed in previous speeches, and most of my present audience roared with laughter time after time. But there was one stodgy lady in the second row who refused to crack a smile. I remember thinking to myself, ‘I’m going to make her laugh if it’s the last thing I do!’ I delivered the next punch line squarely at her. Nothing! And so it continued through the end of my speech. Nothing, nothing, nothing. But imagine my surprise when she came up to my table after dinner and said, “Gary, thank you so much for your valuable message. You’re also one of the funniest speakers I’ve ever heard.”

Her words resonate the fact that laughter is experienced and expressed in many different ways, all of them very personal.

“But Gary,” you say, “I’m the most un-funny person on Earth! When I tell a joke, people pound Excedrin.” Well, it’s okay if you’re not funny. You probably don’t “think funny.” But I’ve got an answer for you, too, and thank you for being honest. There is no more humbling experience than the eternal silence following a badly told joke. Save yourself the meltdown.

For now, here’s a quick fix for the un-funny. You can get just as much mileage from a well-told story as you can from humor. Stories, however, must come from your personal experience and must be told “from the heart.” You get bonus points for any funny parts whether deliberate or accidental because, unlike an obvious joke, there is no setup and nobody expects a punch line. With colorful word pictures you might be surprised to look out over the audience and find people transfixed in your every word. Stories do that. The intent of a story is to alter the frame of mind of the listener, to lift your audience out of the current moment and into a new way of experiencing both the message and the messenger.

If you can’t think of any personal stories, hire a writer to write them for you. Seriously! You’ll be surprised at how many starving writers you can Google up with just a few key words. Remember, this is show biz, and the payoff gets you about a dozen pre-sold annuity prospects from each and every Safe Money Seminar. Never lose sight of your career objective. We’re talking a potential here of seven figures annually, and nothing that worthwhile is going to be that easy. Remember, “The worst day in a man’s life is when he sits down and begins thinking about how he can get something for nothing.” –Thomas Jefferson

Finally, if your stories (or even your jokes for that matter) tend to become a little, shall we say, embellished along the way… not to worry. I remember meeting one of the great raconteurs, Zig Ziglar, at the Broward County Convention Center in Fort Lauderdale, Florida years ago. After his speech, an audience member asked, “Did all your stories happen to you exactly the way you tell them?” Zig’s reply was classic. He said, “It’s a mighty poor speaker who can’t tell a story better than it actually happened.”

http://www.Free-Insurance-Leads.com Author and developer of the Safe Money Seminar, a financial planning seminar for Seniors, Gary Le Mon serves as guest speaker on behalf of agents and agencies nationwide. He is coach, mentor and motivator to over 1,000 general agents in his insurance marketing organization, InsuranStar Marketing. See also http://www.Free-Insurance-Leads.com/free-annuity-leads.html

Tags: Happen, Humor, Makes COMMENTS

An annuity retirement plan can be quite useful to ensure guaranteed income payments. I had a client some years ago that could have benefited greatly from guaranteed income. I remember him very clearly believing in the market and how he did not take my recommendations. Annuity retirement plans were fairly new and with the market so high, a lot of people thought that guaranteeing income would never be necessary. They were wrong.

The year was 2000. I had an appointment with a new prospective client that I had met in an investment class I had been teaching. The class was all about the market and how to make sure you didn’t lose all your money. It was mostly just educational so that when the students, who were mostly clients, had questions about their investments they would feel more confident and be able to have an educated conversation. At the end of the class, we talked about annuities and how an annuity retirement plan could help balance out the market ups and downs.

The appointment went very well at first. The new prospective client had about $700,000 to invest and had just retired. I recommended an annuity retirement plan first to guarantee his monthly income needs. The plan was to invest enough into a annuity retirement plan to make absolutely certain that all of his monthly income needs would be met for the rest of his life. That way there would be no worries about how he would take care of himself and his family in the event the market went down or just didn’t perform as expected. Then we take whatever money is left and invest in the market for higher returns and inflation protection.

The annuity retirement plan was too boring for him and he turned it down in favor of chasing higher returns in the market. Shortly after, the stocks that he chose to invest in took a turn for the worst along with the rest of the market. His $700,000 in retirement money dropped to about $450,000. He was pulling out 7% per year in income before which was almost $50,000 and now taking out $50,000 was over 10% of what he had left. It was a bad time for him and a lot of other investors that took the same kind of risks with their retirement nest eggs. From that point it is impossible to recover your original investment without a major decrease in income. If he would have dropped to $25,000 per year in income he may have made it.

The retirement annuity plan would have guaranteed his $50,000 per year in income for the rest of his life. There was about $190,000 left in extra cash to invest in the market after investing in the annuity retirement plan. He wished he would have followed the annuity retirement plan now. He came back a few years later to tell me his story and to ask advice as to how to proceed because at his current rate of withdrawals, even if the market came back quick which it didn’t, he would run out of money in 10 years or so.

I told him that he has lived the reason to guarantee income with an annuity retirement plan. To recover his investment now was going to be very difficult. He really had two choices to increase his income and keep his nest egg. The first is to cut his income by half. He should really only be taking out 4-5% of nest egg per year in income no matter how well the market performs and even less if the market is down. The annuity retirement plan would still work but the income he used to have was now impossible without taking principal each year. The other option was to get a part time job to replace his income which was his choice after careful consideration. Fortunately, he was able to work as a consultant in his previous profession and did quite well. Other people I have worked with to help recover have not been so fortunate.

The lesson of the story is use an annuity retirement plan to guarantee your income needs. No matter how well the market does you will be glad you did. With the annuity retirement plan your income can be indexed now to keep up with inflation and that is whole reason for investing in the market in the first place. Use the rest of your nest egg for more risky investments like the market. Always play it safe with your main income source.

To learn more about annuity retirement plans sign up for Keith’s 7 Free Annuity Retirement Tutorials or visit his Annuity Help Now blog. His tutorials contain detailed information about annuities and how they work in protecting your retirement and creating a secure and stable income regardless of market fluctuations

Tags: Annuity, Better, Plans, Retirement, Sorry COMMENTS

You may already have visited other annuity sites and used an annuity rates calculator or consulted an annuity rate table.

o Were you sure that the information about the range of annuities was in date?

o Did the annuity table or calculator take into account all of the products on the market or was it just a selection?

o Did you know that specialist independent annuity brokers may have access to a wider range of retirement annuity possibilities?

o Was it an individual annuity quote or just an illustration?

o Did the website promote particular annuity providers over others as they were paid higher commissions by some companies?

o Are the annuity providers able to pay to list their products higher up the tables, or maybe have their products shown in a different way?

o Did you know that the annuity rates may change before your application actually goes through? If you received a quote, was it guaranteed?

Updated by machines or humans?

Did those sites use ‘screen-scraping’ technology that retrieves and transfers information from other programmes?

According to Wikipedia, “Screen scraping is generally considered an ad-hoc, inelegant technique, often used only as a “last resort” when no other mechanism is available. Aside from the higher programming and processing overhead, output displays intended for human consumption often change structure frequently. Humans can cope with this easily, but computer programs will often crash or produce incorrect results.”

But what if the site reassures you it is up to date?

Even if the annuity comparison table or calculator was 100% up to date and correct, were you aware that the stated rates may have no resemblance whatsoever to the income that you will actually achieve? This is because your annuity may increase due to circumstances as yet unknown to the site, i.e. your state of health, medication that you may be taking and whether you’re a smoker or not. Some annuity providers even base your future income on your previous occupation or where you live.

Again, let us say that you do eventually find a site where everything is up to date and works correctly; do you know at this stage whether you want a level annuity, fixed-rate escalating annuity or an rpi-linked escalating annuity? Also, have you considered your spouse’s, partner’s or dependant’s percentage on your demise? Have you considered an unsecured pension, variable annuity or purchased life annuity? There are a bewildering array of choices.

What does the FSA say about comparison sites?

Comparison sites have been heavily criticised in the media and by the Financial Services Authority (FSA) for their lack of independence and incomplete information. Consumers often do not realise that they are not getting the whole picture.

The FSA say “Some may only include products that the website can make money from in some way, for example if you click through to the provider.” They also state that you should never buy a product just on the basis of what you see on their own tables. They recommend getting advice before using their tables.

(Please note that the information about annuities on this page does not represent financial advice. You must consult an annuity broker for complete information. “The argument against annuity rate tables and calculators” is an opinion only and you should not rely on this information to make (or refrain from making) any decisions about buying an annuity.)

One-to-one non automated annuity comparison sites can be found at Annuities Central UK.

Annuities Central http://www.annuitiescentral.co.uk/

Tags: Against, Annuity, Argument, Calculators, Tables COMMENTS

When we plan our marketing efforts for direct mailers to reach the senior market who may have a need for our LTC products almost always the filter is to only mail; homeowners. This is a big mistake because demographics show that 21% of people in this target market are renters. The decision to be renters may be financial but more than not it is based on convenience and the desire to make living simpler.

I am not suggesting that this is the only market to consider marketing to but because of the high percentage of people considered to be in this group, they should not be ignored. The percentage of people in this segment is just too high. Don’t ignore it because your competition will ignore it. This gives you a competitive edge and the referrals are much easier. The reason they are easier is the living quarters are designed to use common spaces. This allows for more social interaction with neighbors and a more sense of community. Referrals in the renter segment of the senior market are easy to get and generally re much better than the norm.

I know this next tip will be received with little degradation but if you want to reach these people in a way no one would ever consider do this. (I know of no other agent who has ever done this and it is a shame because it is so easy and natural.) In senior apartment homes where our target market would congregate they usually have a nurse or other medical service come in to give them the flu vaccine. Be there during the time period, dress nice, be very friendly and prepare in advance information about senior medical issues or service. Attach a small resume about yourself and staple your card to it. After the vaccine is given, hand out your paperwork. I try and not be in the same area the shots are given but 20 feet or so away and catch them as they leave. They will all be in a good mood because others will have been watching them get their shots and it is really a festive time (truly, and lots of kidding between them)

Be friendly and hand out your information, almost all will stop to visit and it is a great time to build a little relationship. It is ok to ask for their name and the list of residents is normally on the wall. Follow up with a short phone call a day or so later and remind them where you met and ask them if their arm is still sore (it builds conversation). Then say you are going to be in the apartment complex that day dropping some additional information off and could you stop by for a few minutes. In a day’s work you can easily see 15 residents and at least 3-4 will be people you can extend the relationship with. A couple of sales are a complete guarantee.

Bill Broich is thirty year annuity salesman who helps agents generate insurance annuity leads and sales. To discover more visit his website: < Qualified Annuity Leads

Tags: Market, Renters, Target COMMENTS