“Everything should be made as simple as possible, but no simpler.” – Albert Einstein*
Although 80 years old, Einstein’s comment related to theoretical physics can be applied to today’s income planning solutions. The annuity income sale process has evolved considerably over the last decade. It used to be simple. Just solve for how much payout you needed and how long you needed guaranteed payments.
Today, clients want it all. Lifetime income. Guarantees. Access to cash value. Death benefits. Changed consumer demands now mean you might need to do a full retirement income plan before making a simple lifetime income sale.
As a result, insurance carriers have shifted their actuarial and strategic focus to creating ever-increasingly complex indexed products, all featuring more bells and whistles. More choices are not always better.
“Although some choice is undoubtedly better than none, more is not always better than less.”** Perhaps this happens because we don’t really know what all those options are really worth, we’re not sure we’ll really use them, or we simply get driven to decision paralysis.
That’s about to change.
Simplicity Elite®: Purpose-Built for Income
Fidelity & Guaranty Life’s (FGL) Simplicity Elite® Annuity Series is a traditional single premium fixed deferred annuity with a built-in guaranteed withdrawal benefit income rider. FGL has built a fixed annuity dedicated to delivering more guaranteed lifetime income than many alternatives without annuitization. Simplicity Elite focuses its annuity pricing value on lifetime income through an automatic income rider and simple product design.
Relatively few annuity clients and producers use single premium immediate annuities (SPIA), deferred income annuities (DIA), or annuitization to deliver lifetime income. Why? Most income-seeking clients will not irrevocably convert their asset into an income stream by buying a SPIA or DIA, or annuitizing a deferred annuity. They want walkaway access to a cash value in case they need it and many also want a death benefit in case they lose the mortality game. FGL built their income benefit on a new deferred annuity because the overwhelming majority of indexed and variable annuities are sold with guaranteed lifetime withdrawal benefit riders. To enhance guaranteed income payouts and simplify their annuity construction, they have stripped away the indexed interest strategies. That simplifies the product and perhaps the sales and planning process. This purpose-built income product was designed with the specific focus of delivering more competitive lifetime income on a deferred annuity chassis. What’s more, Simplicity Elite pays a very competitive sales commission.
Click here to view the entire whitepaper on Fidelity & Guaranty Life’s (FGL) Simplicity Elite® Annuity Series.
* Attributed to Albert Einstein from statements and discussion during “On the Method of Theoretical Physics” The Herbert Spencer Lecture, delivered at Oxford (10 June 1933); also published in Philosophy of Science, Vol. 1, No. 2 (April 1934), pp. 163-169. (www.wikiquote.com).
** “The Tyranny of Choice”, Barry Schwartz, Scientific American, April 2004, adapted from the Journal of Personality and Social Psychology, 2002.
***“2012 Long-term Insurance Sourcebook”, American Assoc. of Long-Term Care Insurance.
*Impairment Income Doubler – the withdrawal benefit payment amount doubles while the contract account value is greater than zero and impairment exists.
In order to achieve lifetime income under the GMWB rider, when clients annuitize, they must select a lifetime only payment option as defined in the contract in order to receive payments for life. Annuitization amount may be different then guaranteed withdrawal amount.
See contract for further restrictions and qualifications for the Impairment Benefit.
Subject to state availability, certain restrictions apply. Optional provisions and riders may have limitations, restrictions and additional charges.
This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
“FGL” when used refers to Fidelity & Guaranty Life the marketing name for Fidelity & Guaranty Life Insurance Company issuing insurance in the United States outside of New York and, in New York only, Fidelity & Guaranty Life Insurance Company of New York. Each Fidelity & Guaranty Life company is solely responsible for its contractual commitments.