The purpose of an IRA is to create future, guaranteed income in retirement. Investing your IRA assets into an income annuity creates the most guaranteed lifetime income, WITHOUT PRINCIPAL RISK.
IRA assets are being transferred from risky equities to guaranteed income annuities, in record numbers. These annuities are contracts that guarantee the principal will never be lost in down markets and they guarantee income that is payable for life.
Most of the people we speak with are more interested in being invested in the right strategy that guarantees maximum future income without risking principal. Billions of dollars every year are being moved out of brokerage firms and into annuity contracts because a diversified portfolio of equities leaves your retirement assets exposed to risk. As a result, these brokerage and wealth management firms respond with aggressive campaigns designed to discredit annuities. One brokerage firm, Ken Fisher, rails against annuities as their main marketing campaign.
Income Annuities Are Right For IRA Assets.
You are required to take annual distributions from your IRA at age 72. These income payments are pre-determined by IRS guidelines, known as Required Minimum Distributions, and the IRS does not require that your distributions must be payable for life. That responsibility falls on the IRA owner. Even though most people WANT guaranteed lifetime income from their IRA, most are not invested for that outcome. Most people have their IRA assets invested in a high percentage of equities.
A simple comparison tells the story.
Assume that two 65 year olds have identical IRAs, currently worth $500,000. The primary goal at retirement is to provide guaranteed income for life. At 72, they must begin taking income payments (RMDs). The two IRAs are identical except for how the $500,000 is invested in each.
Traditional IRA #1 is invested in diversified securities.
IRA #2 is invested in a guaranteed, income annuity that will pay income FOR LIFE. It can NEVER LOSE PRINCIPAL and the INCOME is contractually guaranteed. It will share in market gains when the markets are up.
ANNUITY + IRA = PEANUT BUTTER & CHOCOLATE
The IRA with the income annuity is better because it provides the HIGHEST GUARANTEED PAYMENTS FOR LIFE, without assuming any risk. The IRA with diversified securities can lose principal at any time. Losses are devastating in retirement considering that there is no future income to offset them.
If you agree that important goals in retirement are to preserve principal and make sure you don’t outlive your money, then Few things create guaranteed lifetime income like an annuity. Some critics say the tax deferred status of an annuity is wasted inside an IRA but this is not so. It is a classic red-herring argument designed to confuse people. The IRA’s primary objective is to create maximum retirement income for retirement and the indexed annuity does exactly that.
If you are unfamiliar with how these special annuities strengthen your IRA distributions, I offer a complimentary discussion to help give you a better understanding of these vehicles.
Economists and professors from Harvard, Wharton, Duke and Stanford all agree about the undisputed advantages and benefits of indexed annuities.
Says Michael Kitces, investment planning expert: “Given these changes, it is perhaps time to abolish the ‘annuities should never go into an IRA’ rule and recognize that it has become more a myth and remnant of old than proper advice in today’s environment.”
Millions of Americans are frustrated by record low interest rates and how they are affecting your savings and your retirement plan. Whether you have money in CDs, money market accounts or government bonds, there are better options. Instead of accepting 0%, we can helpyou can get at much higher guaranteed interest, without giving up safety or liquidity.
Get Better Returns During This Prolonged Period of Low Interest Rates.
Why not consider a 200 year old option where everything is guaranteed and currently offers fixed rate near 2.5%? It is short term, liquid and the income is not taxable until it is withdrawn, unlike other investments which tax the minimal growth each year. This option gives you a real chance of getting tax deferred, compounding interest.
With the Federal Reserve signaling that benchmark, short term interest rates would likely be held near zero until 2023, many may be reminded of the period following the last recession, which lasted for seven years. The Wall Street Journal, September, 2020
Zero percent rates are punishing savers. CNBC predicted that rates will not rise until 2025!At this point, we have to believe the Fed about rates. Some banks have announced they will soon be at NEGATIVE RATES.
We help consumers locate better solutions. For example, indexed annuities are liquid and currently paying GUARANTEED ANNUAL RATE near 2.5%. The advantages are:
100% guaranteed.
More than 2.5% is possible by allocating to the indexed funds, without taking any principal risk. The index rates are NEVER less than 0%.
All gains are kept and can never be lost.
No principal risk; no market risk.
Minimal surrender charges; small market value adjustment on early year surrender can be positive, or negative.
Tax deferred.
Protected by a contract from highly rated insurance companies.
Financial Engineering: Instead of using indexed annuities with built-in commissions, we utilize fee based alternatives to boost the returns and the early year liquidity. This is state-of-the-art value creation, leading to better returns. Alternatives like these minimize the individual risks and maximize safe, upside potential.
Annuity Alternative
Money Market
Savings Account
CDs
Bonds Bond Fund
~2.5%
Less than .02%
Less than .02%
Less than .02%
Variable
Liquid
Liquid
Liquid
Less Liquid
Less Liquid
Tax Deferred
Taxable
Taxable
Taxable
Depends
Guaranteed
Guaranteed
Guaranteed
Guaranteed
Not Guaranteed
Up to 5% with no risk.
Current rate Less than .02
Current rate Less than .02
Depends on Duration
Depends on Duration
What makes this annuity alternative so much better?
Individual investors can not match the investment skill or the investing scale of insurance companies. With the brightest investment people working 24/7 to grow and protect your money, insurance companies are investing billion dollar portfolios. As individual investors with far less to invest, we cannot commit the necessary attention to safeguard our own investments in the same way. It’s win/win money management because you share in the upside when markets are up, without taking any principal risk.
How Much Interest Can I earn?Many people choose the fixed account rate that is currently paying 2.45%. Others choose one of the indexes linked to the S&P which puts you in position to earn as much as 5%. And others choose a blended approach that creates some guaranteed income plus potential for double the guaranteed rate. Higher interest rates are achieved without any principal risk. Net of fees, the returns are far superior to savings accounts, money markets and fixed income products. Furthermore, taxes are deferred and principal is creditor protected.
We are facing the real probability of negative savings rates.Imagine paying a bank to hold your money? It doesn’t seem possible but neither did zero percent interest rates seem possiblea few years ago.
If you find better rates in the future, you can liquidate without surrender penalties. However, higher rates elsewhere will likely mean that insurance companies are also increasing their fixed ratesin order to remain competitive.
Let us help you plan for this low yield crisis. Learn about these successful strategies by taking a complimentary phone call or requesting a customized quote. For more information about short term solutions, click here:
Start the ball rolling by simply filling out the contact form on this page or any page of our website. You can reach us at 561-771-4647 or 561-869-4500.
How long will interest rates remain low, click here:
More and more life insurance owners are taking advantage of life settlements by selling unwanted or un-needed life insurance policies to 3rd party investors. There are still too many owners of life insurance who shy away from or do not know about this option. The industry is regulated and very beneficial to policy owners over age 70. There are exceptions to age 70 and experienced life insurance professionals can help people navigate their way through. The bottom line is that policy owners can let policies lapse, surrender the policy for its internal cash value or sell it for its maximum market value. Each case is unique. What is the market value of 2015 BMWs, 4-door sedans? Without an appraisal, it is impossible to know the price for each one. There is no set price. The exact same rules apply to inforce life insurance policies.
What is a life insurance settlement? When an un-needed or unwanted life insurance policy is sold to a third party investor, that is known as a life settlement. In exchange for selling the policy, the owner receives a lump-sum payment. Or, some people choose different options allowing them to “partner” with the investor to keep a portion of the death benefit, without ever paying further premiums.
Who should sell the policy for you? An experienced life insurance professional, especially experience in the life settlement market. By putting buyers in a competitive situation, offers will increase. The U.S. market is robust and you want an agent with knowledge and access to all current buyers. Should you sell your policy? It pays to work with a professional working in your best interest. Before making a decision, I advise my clients to speak with their spouse, other advisors and their heirs. This information about a life settlement transaction may help.
What is the ideal age to sell a life insurance policy? Typically, buyers of life insurance policies want people who are at least 70 but there are exceptions. Some people under 70 have significant health history and they may qualify. The buyers of policies are more interested in people with shorter life expectancies and a significant health history. Of course, those people with significant health history often want to keep their policies.
Can term life insurance policies be sold for a lump-sum payment? Yes, but not all term life insurance policies are eligible. It depends on the specifics of each policy, including conversion deadlines, which can be determined in a brief phone call. Most buyers are not interested in policies with less than $1,000,000 of face value.
Can a term insurance policy eligible? Most life settlement buyers only want term policies that can be converted to permanent insurance.
When does the conversion privilege on my term policy expire? The conversion deadline varies in each policy, even policies issued by the same company will have different conversion deadlines. Some limit the conversion period to a number of years while others may impose a maximum conversion age, often around age 65.
When should I begin to convert the policy if a conversion is necessary? Selling a policy involves getting recent medical records, in-force illustrations, a life expectancy analysis, an offer and closing documents. Because the entire process can take 3 to 4 months, it’s best to convert no later than 4 to 6 months prior to the expiration of the conversion privilege. Each time you review your existing life insurance portfolio, it is wise to review conversion options.
What are the alternatives to selling an unwanted policy? If your life insurance policy has market value to an investor, it may also have value to your heirs. Depending on the circumstances, there are methods to help heirs retain portions of a policy, without paying further premiums. These alternatives are often overlooked, especially in rushed situations.
Can I split my policy and sell part of it? It depends on the policy and the company that issued it. Some insurance companies do not permit a policy to be split.
What happens to the cash value in my policy if I sell it? When there is cash value in a policy going to the settlement market, it is a good idea to discuss the many options to maximize its value before the sale occurs. If there is an outstanding loan, that too should be addressed.
How is this different than a viatical settlement? Viatical settlements are exclusively for people who are terminally ill.
What are the income tax ramifications ? There are income tax consideration for some people but each situation is unique. Of course, income taxes will not exceed the lump-sum you receive, if taxes are due.
To help people with the possible sale of your policy, we offer a complimentary consultation by phone. Please call us or fill out the contact form on this page and we will contact you shortly. You can call us directly at 561-771-4647.
PERHAPS WOULD YOU LIKE MORE INFORMATION ABOUT GUARANTEED, LIFETIME INCOME FOR RETIREMENT?
As an advisor to families, individuals and businesses for many years, I’ve been inspired by the following tips, all of which have stood the test of time.
1. Shakespeare said “the world’s a stage”. As such, it pays to have a plan, work from a script. But, things happen and when they do, it is okay to go off script and improvise.
It is always good to set goals and work a plan for achieving them. In your plan, try to remember that so much is not in our control. Things like prosperity, wealth and poverty are not always correlated to the choices we make. They may be influenced by our choices, but sometimes they’re not. Try not to underestimate the role of chance in life as it applies to you, and others. Realizing it may help you go off script at important times. The ability to handle the unexpected without melting down is a good skill to possess.
While the rewards of hard work often do lead to success, what about the fact that not all success is a result of hard work? What about the fact that not all poverty and failure is due to laziness or other negative labels we ascribe to ourselves, and others? Be kind.
I can tell you with great certainty that a career or a job with flexible hours and a short commute never gets old.
2. A great benefit of having money is gaining the ability to control time and make the most of it.
The ability to do what you want, when you want and with whom you want, creates a lasting sense of happiness that no amount of “stuff” will ever outweigh.
Being able to retire on your schedule is one of life’s great luxuries, for some. We tend to work towards a previous ideal that retirement is a virtue in and of itself. For some, it may be. Is a typical retirement a healthy decision for everyone? Perhaps it is not. Many people love what they do and wouldn’t consider retiring at an arbitrary, predetermined point in life.
3. It’s easy to spoil our children, easier with grandchildren.Teach them well.
Working with many families throughout my career, I’ve been blessed to see a few that seem to effortlessly produce children with fantastic values. It’s not all luck and genes, that’s for sure. They’ve taught their children well and they tend to make the tough choices when it’s necessary to make them. For example, it is difficult to fully grasp the value of a dollar without earning your own and experiencing its scarcity.
Teaching children they can’t have everything seems to be the best way for them to learn and understand the difference between “I need” and “I want“. This, in turn, teaches them about budgeting, saving, and knowing the value of what they have and what they want. Delayed gratification is painful to experience and equally as painful to teach.
Another wonderful lesson for young children is learning to appreciate frugality — within reason. It is an essential life skill that pays off during life’s inevitable ups and downs.
4. Financial success doesn’t always come from big moves.
Managing money successfully is a long game and it requires long term discipline and strategy. You don’t have to hit home runs all the time to end up ahead – not screwing up too often is just as important in reaching your long term investment goals. Like I tell my clients, “you must avoid losses in retirement because you can’t replenish”. Avoiding catastrophic investment mistakes will keep you on track.
5. Live within your means.
The ability to live within your means is powerful financial discipline. You will have less stress when other things go south, like income or investment returns. How much you make doesn’t determine how much you have, and how much you have doesn’t determine how much you need.
6. Achanging and open mind is healthy; be flexible.
During your lifetime, it’s okay to acknowledge that your beliefs and goals will evolve. Thinking about your first college major is a good example of how our goals change during our lifetime. Allowing yourself to change your mind is a superpower, when you’re young and when you’re older. Ronald Reagan was a democrat when he was young.
7. Everything has a price.
The price of a career is time. The time spent to develop a career usually comes from your time with friends, family and other relationships. The price of inactivity is poor health later in life. The price of spoiling kids is setting them up to live a disappointing and sheltered life.
Everything worthwhile has a price and the payment often comes due much later. Most things we want are worth it, but we should know their price and never ignore their true costs. Once we accept the true cost of things, we begin to view relationships, autonomy and creativity with greater value.
Many of life’s lessons are things we look back and say we wish we’d learned earlier in life. Never take anyone’s advice without reflecting upon your own values, goals and life experiences. Try to consider as many sides of an issue as you can.
10. The Concept of tzedakah, or being charitable.
The Hebrew word tzedakah means charitable and “righteousness”. Being charitable creates a sense of righteousness from within. When we are acting charitably, we should gain self-esteem. I can not imagine a scenario in which the world does not benefit from acts of tzedakah. Charity is manifested in endless ways. For some, using their wealth is how they wish to be charitable. For others, money has nothing to do with money. Instead, some give their time.
Please call me at 561-869-4500 or email me, Ted Bernstein, about a complimentary consultation.
“You have asked an excellent question. Thank you for asking. The Stock Market is in a Bear Market even though the Financial Services Industry would prefer that the average American not know this reality.
Below is a chart of the S&P500 which is an index of the largest and most important corporations in the US. There are actually 505 companies issues in this index. It is formulated and averaged so it is not the total price of all of these but a value based on this quantitative formula. This is a Monthly Chart so that you can see that this is indeed a Bear Market and that is is just beginning. The monthly chart provides enough data so that you can see the prior two most recent Bear Markets also. The Bear of 2000–2003 and the Bear of 2007–2009. And at the far right hand side, the current bear of 2020 -______.
There were also the SARS epidemic of 2002, and the H1N1 Flu Pandemic of 2009. So all 3 Bears had either had a serious new novel virus develop at some point in the bear cycle. Now, please remember that technical analysis is NOT a predictive tool. It is a graphical tool that uses historical data to study prior market activity to understand the current situation. Every Bear Market is unique but every bear market has similarities to past bear markets. Studying 120 years of bear markets, the average bear loss is 50%. The duration is average 1.9 years depending on the speed of the loss. Slower bear declines last longer, fast steep bears are shorter in duration.
The Stock Market LEADS the economy. In other words, the stock market reflects the corporate and business health at growth potential BEFORE the economy goes into a recession AND before the economy begins to recover and later expand. Studying the history of the past two bears we can see that the stock market recovered well ahead of the economy. The recessions lasted longer but the stock market was already bottoming and moving upward as the recessions continued. It is common for Bear Markets to have 3 phases: Denial, Disbelief, and Capitulation. The recent rebound occurred (indexes and components moving up) occurred precisely at a strong technical support level. Technical indicators signaled early that a rebound aka fake rally was likely as the indexes hit that support level.
Banks acting as Market Makers supported the major index components which are heavily weighted to specific corporations deemed most important to the economy by the banks, financial industry and government. Then the Financial Services Industry, needing inflows of money to stay in business launched a massive promotion to new investors and inexperienced investors telling them that the recent market crash was an “opportunity to buy stocks at bargain prices!”
So many younger investors, or new investors who know nothing about how all of this works as the educational system in the US doesn’t provide education about the financial markets even for college students unless their degree is in financial services. Many new franchises also started recently from the popular neighborhood broker franchises. You see them in the strip malls. These smaller funds managers are new too and trust their corporate statements which tell them how to promote to get more money to place to stay in business. There has been a massive amount of money taken out of the stock market over the past 2 years. Money Market Funds are holding a vast quantity of funds in safety while this bear is still going on. These are the wise, experienced, educated investors who wisely sold during the speculative activity in 2019 to January 2020. The first quarter earnings season starts April 14th. The professional side of the market knows that the earnings reports are going to be the worst since 2008–2009, perhaps worse.
The recent runs up are technically very fragile. There is no longer billions of corporate cash to continue buybacks which fueled the 2018 -2020 speculative bubble. Therefore, this bear market is just on pause for the moment. The market is not in a rally. Stocks are not near their previous all time highs. This is just a bear market bounce. These happen periodically during a bear and mislead the average investor into buying stocks into a bear market…” April 24th, 2020
We all wish we could make money when the markets are up and avoid losing it when markets are down. Conservative and aggressive investors alike – nobody wants losses!
As investors, we want the best of both worlds. When markets are up, we want to stay invested with minimal risk and we want to protect our gains. It is tempting to let it ride just a little longer and to stay fully invested, often against our own, best judgment. The problem is that markets take sudden turns for the worse. When they do, it can be paralyzing and difficult to minimize losses or to get out at the right time. It is difficult to consider changing course during these times and it is equally difficult to watch your assets plunging. With retirement assets, a sudden move down can be very costly. Waiting for the markets to cycle back up again is a completely different experience at age 67 than it is at 45. Time is not on your side. Depending on the severity of the drop and its duration will determine the extent of your losses.
The Good news.
The best time to consider alternatives is at the top of a market cycle. Instead of being too heavily invested in equities that offer no protection, a balance of income generating assets and equities will better protect your retirement assets. Income generating annuities are state-of-the-art, with indexes that participate in rising markets. Since they are not investments, there is no investment risk. Your principal and any growth is always guaranteed. While there is nothing inherently wrong with risky investments; they should not be the foundation of a retirement plan.
What I am asking you to consider are guaranteed income contracts or Fixed Indexed Annuities. Think of them as marketindexed annuities because returns are partially based on how markets perform, without every being exposed to market losses.
“ROI is Reliability of Income in retirement, not Return on Investment. The goal of retirement security is achieved through a shift in focus from asset accumulation to income and asset protection.
Annuities are over 200 years old. THERE IS NO LOSS OF PRINCIPAL which is the PRIMARY ATTRACTION of an indexed annuity. During the 2008 Financial Crisis and the Covid bear market drop, none of our clients lost a dollar in their fixed indexed annuities. Today, there are millions of indexed annuities inside IRAs and other retirement plans. People want gains when the markets are rising and they want guaranteed income for life with downside risk.
The world’s leading economists all agree about the value of annuities in retirement. Consider what they say because they are unbiased and impartial. It makes no difference to them whether we invest our retirement assets in hedge funds or annuities. When Olivia Mitchell from Wharton (check out her incredible resume) says that annuities are key assets to own in retirement, she is saying so because she’s spent her entire career studying these issues. Nobody explains why mortality credits are the most valuable asset in annuities, better than Tom Hegna. When Professor Wade Pfau at The American College, or Roger Ibbotson from Yale write books about the advantages of annuities, their pro-annuity positions are credible because they don’t sell products.
Professor Pfau stresses that “investors typically fall into the ‘trap’ of depending on investment portfolios as the chief way to fund their retirement. Now, many of these folks in retirement find themselves needing a life raft…acquiring an annuity would have prevented such a dire scenario“, he argues.
HOW CAN YOU DO THIS?
Theseannuities are designed to modestly beat the performance of other fixed income products and typically, they do just that. There are also times when they do much better. These are important years that can really boost the overall performance of an annuity. For example, many of our clients earned as much as 14% from January, 2019 to January, 2020. Those were extraordinary returns because the market was experiencing extraordinary growth during that same period.
More Good News: The gains credited to an annuity contract can never be lost. The upside potential of an indexed annuity is determined by a contract, offering an additional level of security.
Personally, I do not like to hype the upside of market indexed annuitiesbecause their other advantages can be just as powerful.
Let no one with a financial interest in your assets dissuade you from making a financially sound and prudent decision, especially one that may be in your best interest. When you move money away from stock brokerage firms or wealth management firms, they’re losing significant, recurring revenue that is earned from your assets. I have no problem with fees charged by professionals. But, it should come as NO SURPRISE if they make you second guess a decision to move your assets away from their firm. To keep this simple, if you pay an annual fee of 1.5% on $1,000,000 of assets, that is $15,000 per year, or $150,000 of your money over 10 years.
When markets tumble and the assets in your account go down, so too does the revenue for the investment firm and the investment manager that is managing your money. Can you trust the advice of an advisor who loses annual income if you liquidate or move your account? Is that structure in your best interest? Most investors are not aware of these potential conflicts and many are surprised when they finally understand them.
Who doesn’t want more guaranteed, lifetime income? These annuities pay you for as long as you live AND guarantee the principal – forever. If the market drops 30%, you lose nothing. If you want certainty, predictable outcomes and no anxiety over your retirement security, this is for you.
“You pay no commission from your annuity assets. Instead of paying “forever fees” in managed accounts, fees that are directly reducing your retirement fund each year, there are no annual annuity fees*. The one-time commission is paid from the assets of the insurance company, NEVER FROM YOUR ASSETS! The interest calculations, participation rates and the contract terms are regulated by the Department of Insurance in your state.”
*Some people choose riders that may have annual, disclosed fees.
Guaranteed annuities are ideal for those of us who cannot stomach market volatility or wondering when the next crash will begin. Many people cannot tolerate watching their retirement assets evaporate during these market events. Hearing an advisor tell you “not to panic” or “it always comes back, be patient”, doesn’t help. That’s never easy to hear. In, or near retirement, you must be aware of a risk called “sequence of returns risk”. If markets are down near the beginning of your retirement, down years can be far more damaging. If you are drawing money from your retirement assets, down years can be more damaging.
From 2000 to 2020, there have been three major bear markets and if you owned an indexed annuity, you avoided all three. That’s “peace of mind” – not a dollar lost over 20 years. Market indexed annuities are only available from major insurance companies because only these insurance companies are financially strong enough to provide the guarantees. They prove their financial strength to regulators and rating agencies each year.
The numbers say it all. In the chart below, the market-indexed annuity has performed nearly as well as the S&P 500 total return index (including dividends). WITH NO RISK!
Are annuities safe? If you are a conservative to moderate investor, why not let a market-indexed annuity take some of the most important guesswork out of your retirement planning? When the indexes are up, you can make money. If markets crash or if volatility takes over, you will never lose money. Keeping this simple, if you had put $500,000 in an indexed annuity in January or February of 2020, you still have $500,000 of principal today, plus possible gains. Your principal is always intact — always at the highest level it reached, which is called the high water mark.
You want the best of all possible worlds.
How Does This Work? Since the insurance company guarantees the principal, they share in some of the upside, when the markets are up.
“Don’t compare annuities to what might have been if interest rates had been higher, compare them to what is possible and available now. Now we are stuck with low rates. Trying to wait for rates to increase is going to eat away at your assets in the meantime, and there is nothing you can really gain from the effort. Low interest rates strengthen, not weaken, the case for purchasing a single premium immediate annuity.” Wade Pfau
Ken Fisher hates annuities.Why do some financial “experts” criticize annuities? Everytime a Ken Fisher client liquidates and moves money to an insurance company for the purchase of an annuity, Ken Fisher’s firm loses annual recurring revenue. Maybe this is why Ken Fisher hates annuities?
Which Is The Best Indexed Annuity?
There are thousands of annuities in the market. It is our job to know them and to know which one suits you best. To do that, we listen to what you expect in order to meet your goals and objectives. Some contracts are too expensive and some carry hidden fees and charges. You want to make sure to buy the right indexed annuity from an experienced professional who only represents insurance companies with high ratings.
Ready to start protecting your retirement assets and never lose money in the market again?
Contact us and allow us to answer all your questions? You have nothing to lose by taking a complimentary phone call. Time does matter. A low interest rate environment forces insurance companies to lower the rates for new clients. Safety is what drives their investment decisions and in order to properly respond to lower interest rates, they will change their offers accordingly.
Start the ball rolling and call us or fill out the simple contact form on this page or any page of the this site. We can be reached at 561-771-4647
For the past 200 years, life insurance companies have only offered a lump-sum payout of policy proceeds to beneficiaries. For many, this is not ideal considering these income tax proceeds are squandered in less than 5 years. Ask any life insurance buyer if they intend for the proceeds to be spent in less than 5 years. Life insurance buyers want choices. In fact, a high percentage of life insurance owners do not want a lump-sum payout. Instead, they want a policy that gives them the option to create a customized and guaranteed income stream for their beneficiaries that cannot be mismanaged. The Installment Option instructs the insurance company to make guaranteed, pre-determined income payments over time. These payments are selected when the policy is issued by the policy owner. The best life insurance policies today give policy owners flexibility and options; the more, the better.
The Installment Payout Option allows policy owners to create a customized schedule to fit their family needs and guarantee a protected income stream for their beneficiaries, up to 10, 20 or even 30 years. Premiums payments – up to 50% less for guaranteed results or the total benefit is increased as much as 50% for the same premium. The annual payments are pre-determined and guaranteed, regardless of economic conditions or other variables. Ability to customize the death benefit payments to meet individual planning objectives.
Proceeds are paid according to a pre-determined schedule, selected by the policy owner at the time of purchase. In the past, a lump-sum payment was the only option available. The Installment Option eases concerns about lump-sum payments being mismanaged.
Protect Proceeds For Beneficiaries
What is the Installment Life Payout Option? Rather than your beneficiary receiving a lump-sum payment at the time of death, the Installment Payout Option gives you the power and control to choose guaranteed, pre-determined installment payments when the policy is purchased. Is the Installment Option Less Expensive ?Can I Buy More Life Insurance With the Same Premium Payments? Yes, this option is less expensive. The longer the deferral period, the lower the premium payments will be. Premiums can be as much as 40% less on an annual basis.
Is the Installment Option Better Than a Lump-Sum Option? Neither option is “better” than the other. An increasing number of life insurance buyers are concerned about the risks of leaving a lump-sum death benefit to their beneficiaries. For them, the Installment Option may be best. Life insurance owned for estate tax planning is a good example of when a lump-sum option may be a more appropriate alternative. How is the Deferral Schedule Determined? We encourage every life insurance buyer to meet with a life insurance professional to consider these options, and others. Your income, debt levels, other assets, fixed and variable expenses, education, retirement assets and inflation are some of the elements in the calculation. Can I Change the Payout Option from Installment to Lump-Sum? Some insurance companies allow for this. Unlike the lump-sum option that is very limited from a planning perspective, the Installment Payout Option allows for customization by each policyholder. Can I choose a Blend of Lump-Sum and the Installment Option? Yes. Most people appreciate the ability to customize their life insurance policy by combining a lump-sum payment with installment payments over time. Can I Upgrade My Existing Insurance to the Installment Option? Yes. By doing so, you may be able to lower the premium payments or increase the death benefit for the same premium you pay now. Can a Beneficiary Make Changes to the Installment Schedule? No. However, the installment payments are an asset that can be sold at a discount. We recommend a trust be considered as the policy owner, with an informed trustee to ensure the insured’s intent is honored. What if My Health Has Changed Since Last Purchasing Life Insurance? If you have had a material change in health, be cautious about giving up any existing coverage without a careful analysis. Consult with us to help evaluate your options. By choosing the Installment Payout Option, you may be able to neutralize the impact of a higher premiums. What Insurance Companies Underwrite the Installment Payout Option? The Installment Option is available from several of the most highly rated life insurance companies in the United States.
Please call me at 561-869-4500 or email me, Ted Bernstein, about a complimentary review of your existing policies.
Are you over 65 with a life insurance policy you no longer need or want? Like any other asset, it can be sold for cash in the secondary market.
Life insurance policies have value in the secondary market. Institutional investors will buy policies from people who have determined they do not need or want the policy. The market is best for people over 70 who are not in perfect health. If you fit this profile, you have an opportunity to sell your unwanted policy for a lump-sum, before lapsing or surrendering it.
Even term policies have value. We help policyholders determine the secondary market value of their inforce policies. The value of a life insurance policy is expressed as a percentage of the face amount. For example, if you sell a $1,000,000 policy for 5 percent, you would get paid a lump-sum of $50,000. A $3,000,000 policy could fetch $150,000, or more, depending on the percentage. The important considerations are health and the type of policy. There may be some income taxes to consider on these sales (each sale is different) and that is easy information to obtain. After the policy is sold to the new owner, future premium payments are theirs.
Term policies also have secondary market value but most policyholders are unaware of what this means.
Life insurance is an important asset to your beneficiaries and I urge potential sellers to consider keeping the coverage whenever possible. There are many creative ways to retain an inforce life insurance policy and you may want to consider them before selling the policy or letting it lapse. There are hybrid arrangements in which you give up a piece of the face value in exchange for having the future premiums paid.
Life Settlements convert your policy to cash through a sale to an interested buyer. This is no different than selling any asset when it is no longer needed or wanted. The policy is appraised along with your medical records and an offer is then made to the owner, if they determine there is value. Sometimes, no offer is made, depending on the outcome of these appraisals. Some people are too young and healthy or they have a policy that is not attractive to buyers. Other times, the market favors sellers, not buyers.
Getting an appraisal by working with a broker creates great value to sellers. You may have heard ads from some buyers who are attempting to go direct to sellers and that is certainly one approach but it is not optimal? Why deal only with one buyer when there are dozens, if not more?
As a life insurance professional with secondary market experience, I represent sellers by bringing the policy to all of the market. By putting buyers in a competitive situation, your offers will increase. The U.S. market is robust and you want an agent with access to the maximum number of capital sources buying policies.
Should you sell your policy? It pays in many ways to work with a professional working solely in your best interest. A life insurance professional is qualified to help you think through the pros and cons of selling a policy. Before making a decision, I advise my clients to speak with their spouse, other advisors and often, their heirs. This information about a life settlement transaction may help.
Interested but unsure? The best way forward is to determine if your policy has value. There is no downside and no obligation to obtain this value or to get bids. You will learn a great deal about the policy you own.
To determine its value, potential buyers need the following information:
Policy projections including the premiums to keep the policy in-force to various ages.
The type of policy and its terms. Some policies have no value in the secondary market because of their terms.
The life expectancy of the policy owner which is determined by an independent, 3rd party analyst. No medical is necessary.
A detailed history and understanding of the policy owner’s current and past health.
Typically, there is minimal value for policies owned by healthy people under the age of 70. If there are health considerations leading to a shorter life expectancy, that may change the numbers in your favor. I recently helped a 73 year old man sell a $3,000,000 policy. Because of previous medical history, he received several offers. He sold the policy for 16% of face value, or a little bit more than $450,000.
Are term policies eligible for sale in a life settlement? Yes. You should be age 65 or older with some decline in health since the policy was issued. Term policies are typically bought for a temporary insurance need, unlike permanent policies where the policy owner typically has a long duration or lifetime insurance need.
Are there special requirements for selling a term insurance policy? Most life settlement buyers want term policies that are convertible to some form of permanent insurance. Therefore, being able to control future premium obligations through a conversion is usually ideal.
When does the conversion privilege on a term policy expire? The answer varies among different policies even issued by the same company. Some limit the conversion period to a number of years; other companies may also impose a maximum age.
When should I begin the process if a conversion is involved? A life settlement transaction requires getting medical records, in-force illustrations, life expectancy analyses, investor pricing and the closing. In addition, a term settlement usually includes issuance of the conversion policy. Because the entire process usually takes 3 to 4 months, you should get it started at least 4 to 6 months prior to the expiration of the conversion privilege.
Can I sell part of a term policy and keep part? Insurance companies typically do not permit a permanent policy to be split for a life settlement. It is worth exploring if they will allow partial conversions. Then, it would be possible to sell only a portion of a term policy by doing a partial conversion as part of a life settlement transaction. The remaining policy can be kept as term insurance or be converted separately.
I offer an initial, complementary consultation in person or by phone. Please email me or fill out the contact form on this page and I will contact you shortly. You can call me direct at 561-869-4500.
Using Fixed Indexed Annuities, insurance companies guarantee lifetime income for a critical part of your retirement plan. Annuities are not investments. Instead, they are contracts you enter with multi-billion dollar financial institutions that are regulated by 50 states. To maintain Triple A ratings, they are transparent to regulators and are considered to be extremely conservative.
Insurance companies have higher reserve requirements than banks.
Insurance companies must comply with strict investment guidelines.
The 30-year bull market in bonds may be over. The Fed has said it will continue to raise interest rates, which is not good for bond owners, especially open-ended mutual fund bond owners. Now is a great time to protect gains and protect retirement assets with a principal protected, lifetime income solution.
The right annuities, fixed indexed ones, can participate in the some upside of the markets, without any downside risk. This allows you to participate in potential stock market growth without the anxiety from the roller coaster of stock market losses.
There are contracts with 100% liquidity from day one – a full return of premium if you want out for any reason. These are special contracts not offered by everyone.
When stock market returns are negative, your annuity is credited at zero percent. When the markets are positive again, you will participate in a portion of the upside. This is a tremendous benefit during down years and bear markets.
Annuities provide higher income payouts as you get older. The longer you wait, the higher your guaranteed payout will be.
Annuities can provide guaranteed income for both spouses. The guaranteed income may continue for as long as the surviving spouse is alive. The life expectancy for two lives is much longer.
Some contracts DOUBLE the income payment for long term health care costs in the event you cannot perform two out of six Activities of Daily Living.
Upon the owner’s death, any unused principal will be transferred to the beneficiaries. The amount of money you contribute, plus all gains credited to your contract, will pass to your heirs.
Please contact me at 561-869-4500 or email me, Ted Bernstein, about a complementary consultation about indexed annuities and your specific needs. You can visit us at www.facebook.com/lifecycleplanners
