A New Take on the Split Annuity Concept

A new take on the split annuity concept

You’ve heard it time and again from clients. You’ve read about it in dozens of articles and publications. There’s even statistical evidence to support it. All in all, you’re bombarded with the fact that clients today are concerned with income – particularly the possibility of outliving the one they’ve planned for in retirement. Meanwhile, you’re consistently evaluating product options for helping them generate the largest income stream possible that they can’t outlive while conducting a balancing act of meeting any complementary needs on their “also-must-have” lists. But if you don’t have just the right solutions available in your sales arsenal, your clients may not be incoming the way you hope.

THE FACTS

  • Male client, age 65
  • Married and retiring now
  • Looking to roll over his 401(k)
  • Desired income and a death benefit

THE GOAL

Offer the client a safe-money solution for his qualified retirement dollars that could provide income the client can’t outlive. Additionally, select an option that would allow the client to leave a legacy to heirs and provide growth potential, too.

THE COURSE OF ACTION

With retirement just around the corner, the client felt uncertain that he had covered all of his bases in planning. Upon receiving a quarterly statement in the mail for his 401(k), he realized he didn’t know if he had enough in the asset to reach all his goals. In order to lower the risk level of the asset, he decided to contact someone for help determining how best to put it to work on his behalf. The client didn’t have a relationship with an agent previously, so he made an appointment to visit with our producer. He figured he would hear what he had to say before selecting any retirement income strategy.

After an initial meeting to walk through the client’s goals and objectives, the agent worked to prepare a plan for helping the client turn the asset into the largest income checks possible for his retirement.  In addition, the agent took a different approach to ensuring some death benefit would be available for his heirs should he pass. When the agent called Creative Marketing for help putting together a compelling recommendation, we walked him through a variety of possibilities, and finally presented the idea of splitting the 401(k) asset into two annuities. With the innovative products he could access through Creative, he put together a proposal he felt would give the client the confidence in his future he deserved.

THE SOLUTION

A portion of the funds would be placed into the Annexus BalancedAllocation Annuity 12® with its BalancedAllocation Lifetime Income RiderTM. The client could then select from either the fixed interest crediting option or the Stacked Growth OptionTM for growing the Income Base.  He also could choose the Consumer Price Index (CPI-U) based payout option to hedge against the risk of inflation or the level income amount when it was time to incomitize the rider and take income guaranteed to last for life. He would be able to do this immediately or wait a few months or years. The client was attracted to these income options and his ability to make decisions about his future, and ready to hear more.

The remainder of the 401(k) asset would then be put into the Total Value Annuity from Security Benefit with the Death Benefit Rider. This would offer a Death Benefit Base that equals 4% guaranteed annually PLUS all interest credited, and could be paid out in a lump sum to beneficiaries upon his death. The beneficiary could also turn this annuity death benefit into his own income stream if he wanted. All in all, using two different annuities from two different carriers would provide the diversification benefit of a more probable result with less risk of not achieving the plan. Having heard the discussion and the agent’s proposed solution, the client knew that this combination of strategies would suit his needs better than he imagined.

THE RESULT

For the client: Although the client tended to second guess his plans and those who were helping him make decisions, he finally came upon a solution that made him feel comfortable about his future. Not only would he enjoy an income he couldn’t outlive, his family would be taken care of, too.

Annual lifetime guaranteed income (from $200,000 BAA annuity) $15,429
Death benefit in 15 years  (from $50,000 TVA Annuity) $102,777

 

For the agent:

Security Benefit Total Value Annuity and Annexus BAA12 $250,000
Total commission Call for details

 

The agent was thrilled to have been able to tap into Creative’s resources and utilize some of the most unique and competitive products on the market to work while winning over a client who wasn’t easy to persuade.

If you’re looking for ways to keep clients incoming through your doors, contact Creative Marketing for help putting our tools, resources and network to work for you. We’ve got what it takes to help you meet today’s most common retirement need and keep clients incomitizing their income as well.

FOR AGENT USE ONLY. NOT FOR USE WITH THE GENERAL PUBLIC. 12596 – 2012/12/7
The BalancedAllocation Lifetime Income Rider™ [BAAIR2 (10/11)] or state variation, an optional rider for which a charge is deducted, is issued by Aviva Life and Annuity Company, West Des Moines, IA and is not available without the purchase of the BalancedAllocation Annuity® [BAA8 (09/09) and BAA12 (09/09)] or state variation. Product features, limitations and availability vary by state. See the Disclosure Summary for details. Interest credited will be equal to the combined growth in the value of each allocation, less charges for any optional riders.

The Security Benefit Total Value Annuity (Form 5700 (3-12) and ICC12 5700 (3-12)), a fixed index flexible premium deferred annuity contract, and Guaranteed Minimum Death Benefit Rider (Form 5721 (3-12)), an optional rider available for purchase with the Security Benefit Total Value Annuity and for which a monthly premium is charged, are issued by Security Benefit Life Insurance Company (SBL), Topeka, KS. Product features, limitations and availability may vary by state. Guarantees provided under the Total Value Annuity and its optional riders are subject to SBL’s financial strength. To learn more about the features and benefits, including their limitations and restrictions, and applicable charges, please refer to the Total Value Annuity Contract, Death Benefit Rider and Statement of Understanding.

Guarantees provided by annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. Agents may not give tax, legal, accounting or investment advice. Individuals should consult with a professional specializing in these areas regarding the applicability of this information to his/her situation.

Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged.

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