Annuities
of people say a reason for not owning an annuity is simply because they don’t understand them.
From 2011-2021, deferred annuity assets have increased by 58%.
of Americans agree they would be willing to sacrifice some retirement savings to buy guaranteed monthly income.
Annuities come in many shapes and sizes dependent on the needs and goals of each client. Whether your client requires a steady retirement income, is looking to expand their cash assets for future growth, or looking for a unique saving instrument, annuities integrate seamlessly into any robust financial strategy.
Ultimately, annuities play an important role in financial planning where tax considerations and outliving liquid assets are primary concerns for your client. Annuities can relieve the stress of uncertain markets and provide stability and comfort apart from other instruments. Annuities can offer guaranteed lifetime income, a refuge clients can use as a baseline for their retirement years.
OWR extensive partnerships ensure that we can provide you and your clients with competitive annuity rates, both single premium immediate and deferred annuities, fixed-rate and indexed, from the highest-rated insurance carriers to help you provide your clients with the best option to fit their needs.
CASE STUDY
The Client
James is a 55 year old retiring police officer who approached his financial professional, Cindy, about pension options he was offered. This started a planning conversation as James was also considering future career options and how much income he needed to meet his retirement goals. Cindy learned that James had purchased a fairly significant life insurance policy a few years back. James was concerned about the high ongoing premiums, and could not remember all the details about why he ended up with this particular policy. Cindy suggested a full review and partnered with OWR to get the details.
The Conversation
OWR team uncovered that James had a 7-year old, whole life policy with an over $1,000,000 death benefit and a $25,000 premium. The policy had $120,000 in cash value, but a cost basis of $175,000. Cindy asked if he could just walk away because of the loss. He could, but OWR team suggested an alternative, explaining to Cindy that you can do a 1035 exchange from a life insurance policy into an annuity (but not the other way around!) It is an underutilized transaction, but allows the policy holder to maintain their basis and, in this case, recover their basis inside a deferred annuity.
The Solution
James decided to roll his $120,000 into a fixed deferred annuity with a 3.4% interest rate. He liked the safety of the investment, the return was better than putting it in a CD, and it provided a guaranteed, tax-free income for him and his family in the future because he locked in his current basis. Cindy and Robert decided to complement this with a $1,000,000, 20-year convertible term policy for a $4,500 annual premium. This saved James $20,500 a year, maintaining a death benefit while providing flexibility for future planning while James decided his next steps.