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Income Annuity Information

We have provided you with some Income Annuity Information in this post.  The term “Income Annuity” is a catch all.  We use this term for any annuity that produces guaranteed future income.  There are three types of annuities that can create guaranteed future income.  These annuities are either a SPIA (Single Premium Immediate Annuity), a deferred income annuity or an annuity (fixed indexed or Variable) with an income rider.  All three have different sweet spots which can help someone determine when to use each type.  A review of each is provided below.

• SPIA-

•   A single premium deferred annuity creates immediate income that will last for a pre defined amount of time.   You can use the annuities to provide income for one person for life, or a couple for both lives.  Although, you can also use it for a set amount of time such as 20 years.   The biggest thing to be aware of is that the insured no longer owns the lump sum.  The insurance company and/or bank takes control of the lump sum of money.  They take the money in return for paying a guaranteed income stream that will not change.   If someone puts $300,000 in a SPIA with a life with 20 years certain option, this will guarantee payment for life.  In the event that the investor dies prior to receiving payment for  the 20 years, the beneficiary will receive the income until they have received the total 20 years of payments.   The trade off is that the insured no longer has access to the lump sum of money.

• WHY WOULD SOMEONE USE THIS?-

•  A SPIA will pay out the higher ratio of guaranteed income than the income rider or the deferred income annuity.  This is most useful for someone that has other assets and can afford to dedicate a portion of assets to create a guaranteed income stream.  The lump sum is no longer available so it is important to have other liquid assets if you decide to use this option.

• Deferred Income Annuity-

• The product is very similar to a SPIA. The difference is that income does not start immediately.  It starts at a pre determined future date.  The longer the deferral the higher the future income payment is.  You can calculate payments on a guaranteed bases.  The insured will know exactly how much they will get at that future date.

• WHY WOULD SOMEONE USE THIS?-

• If the insured has a need for future income, this is a good way to create an income stream without having to worry about market performance or  anything else.  They just dedicate the amount of money they need and then they can be sure income will start when it is necessary.  The flaw is that the future  income payout is not competitive with the future income payout that some other riders create.

• INCOME RIDER-

• When an income rider is attached to a fixed indexed annuity or a variable annuity it allows the insured to create a future income at any year they choose.  They do not need to pre determine the year income will be taken and they can see exactly what the income would be in any given year.  They also maintain control over the lump sum investment and can continue to accrue interest on the money.  The income payout exceeds that paid by the Deferred Income Annuity.  It is critical however, that you pick the most competitive company, as the guaranteed payout amounts vary tremendously.  This depends on the company that you choose to  use.  Additionally, there is an annual fee on most income riders.

• WHY WOULD SOMEONE USE THIS?

• If someone is looking for the highest deferred guaranteed income payment, the right income rider is the best option.  In fact, you would also maintain control of the lump sum investment if you use this approach.

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Risk Free Investments

In this post we explain some things about Risk Free Investments.  There are a number of risk free investments (no risk to principal) available to those looking for safe/conservative ways to earn interest on investments.  While it is smart to be conservative when approaching retirement or in retirement, it can be difficult to keep up with inflation only using strategies without market risk.  Money markets, CD’s and Annuities are three popular choices of focus in this post.

Money Markets

While Money Markets are safe and a convenient place to keep cash, they are simply not going to yield any type of meaningful return.

Certificates of Deposit

While better than a Money Market return, CD’s are still averaging less than 2% on a 5 year commitment nationally.  They are certainly safe but will not be likely to keep pace with inflation.  Market Linked CD’s may be a better choice for someone that is looking for the FDIC backing provided by CD’s.  Market linked CD’s provide principal protection but have a variable return that can range from 0% up to 8% or 9% depending on the terms and bank.

There are a number of different crediting strategies used but one of the more common ones is the “Basket of Stocks” approach.  The bank picks out a group of stocks (usually between 5 and 15).  If the overall portfolio is level or positive for the year, you will pay the stated/declared interest rate.  If there is an 8% interest rate declared, that is the amount you would pay for that year.  They repeat this process for the duration of the commitment.  If an 8% declared rate product is on a 7 year surrender schedule, the client will receive 8% for every year the account is positive.  They will receive 0% for years it is negative.   As a result, Market CD’s can be a good approach for the more conservative investor.

Annuities-

Annuities can be a good approach but you must do a great deal of research before you purchase one. There is a big difference between a SPIA, a Fixed annuity and an Indexed Annuity.   A fixed annuity (Also called a MYGA) can offer slightly higher rates than CD’s with the same term years. As of this post, the best 5 year fixed annuity is at 3.4%.

A SPIA (single premium immediate annuity) 

This product is based on your income and is not appropriate for any type of accumulation. Fixed Indexed Annuities can be a great option for account growth.  Although, they can also be a poor choice  this depends on which company and product you choose.  Fixed Indexed Annuities use market indexes (usually the S & P 500) to determine the amount of interest to credit to accounts.

They have crediting methods that provide a portion of the index growth to the account.  This is where there can be a wild difference in companies.  As an example:  One carrier currently credits the gain in the S & P 500 per year up to  a cap which is currently at 2.75%.  This means the most a client can get in a year is 2.75% return regardless of how high the market goes.  There is another carrier that credits 75% of the gain of the S & P over a 2 year period.  This would have provided over 22% interest  to an account in the 2012 to 2013 time period.   Obviously, it is important to choose the plan with the best crediting methods.  Because if you choose the wrong one it can cost a bundle.

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Medicare Savings Program Connecticut

Medicare Savings Program Connecticut (MSP) is a drug help program available to Connecticut residents on Medicare.   The program provides help for drug copays, deductibles and premium to those who qualify based on income.

MSP is available to individuals and couples making under stated income guidelines which have been provided here:

• QMB – $2,088.90 for a single person and $2,816.85 for a couple
• SLMB – $2,286.90 for a single person and $3,083.85 for a couple
• ALMB – $2,435.40  for a single person and $3,284.10 for a couple

MSP applications and brochures

Do you have questions or need more help?  Are you looking for more information? If you are, we can help with whatever you may need with MSP, Medicare plan choices or any other questions.  Call us at 203-796-5403 or email Edward@croweandassociates.com

Is An Annuity Income Rider A Good Deal?

Is an annuity income rider a  good deal?  Annuity income riders are available on both fixed and variable annuities.  Although most people do not understand them very well, income riders are not that complicated.  Although companies have different bells and whistles on them, income riders are all very similar regardless of the company offering them.

The basic concept of an income rider is that they are a product investors use to create a future income stream.  Investors can determine their income down to the dollar at any future date.  This makes them very predictable.  An example is the best way to describe an income rider.

(Example)-

A person decides they would like to have a future income stream to supplement their retirement income they receive from Social Security and a pension.  They decide they have $250,000 that they can dedicate to future income.

The investor puts $250,000 into an income rider.  The income rider will show them exactly how much lifetime income they will be able to take in the future.  They can choose to start collecting income in any year they would like.   Although, once they start collecting income, the amount they receive every month will never increase.   The income will payout for life but their initial investment will erode over time.  When the $250,000 runs out they will still have the income payment however.

The positives of an income rider are the following…..

• Can predict future income right down to the exact dollar in any given year.
• This income has a guaranteed payment. The longer you wait to turn it on the more it will pay out for life.
• Market conditions have absolutely no effect on the deferred income increase on the rider.
• You will still have access to the lump sum investment even after you start to receive income payments.

The negatives of an income rider are…..

• Once you start to take payments your account will never increase.
• There is an annual fee for the income rider which your provider deducts from the account value (The $250,000 in the example) of the investment.
• The account value will steadily decrease  for every year the income rider pays you.

Income riders can be very useful if they are used for the right purposes (Generating future guaranteed income).  They can also be a terrible investment if used for the wrong reasons.  Many will argue that a larger future income stream can be created using other methods but they can not do it on a 100% guaranteed basis like an income rider can.

CLICK HERE FOR MORE INFORMATION OR QUOTES

Annexus BCA Annuity

The Annexus BCA annuity is a fixed indexed annuity.  This is a specialized offering from Aviva.  Unlike a traditional fixed annuity that offers a fixed interest rate for a set number of years.  The Annexus product uses an interest strategy based on performance of the S & P 500 while it still provides a 100% principal guarantee.

The idea behind the Annexus product is that it provides  an opportunity for superior returns compared to either a bank CD or fixed annuity while it still provides a guarantee against loss.

It attempts to accomplish this with a unique interest strategy. The following description intends to give clients a general understanding of the product.  Returns are based on the S & P 500 using a 2 year point to point strategy.  The gain in the S & P over a 2 year period is used to determine the return provided to the client.  After 2 years, the point to point is reset and another 2 year term will begin.

Not all of the return is provided however.  40% of the funds that clients place in the account are in a fixed account that yields a declared interest rate.  This leaves 60% of the money in the S & P.  Some of that gain has a further depression because of the annual spread. “Annual Spread” is an amount of the overall return the company keeps prior to giving the reminder to the client.  The spread ranges from 1% to 2% this amount depends when  the client purchases the product.

Given the above details:

The Annexus product is certainly going to lag behind the standard S & P return.  The fact that it will allow no less than a 0% interest credit in a negative 2 year cycle helps the performance of this product.  The bottom line is that the product certainly does protect against poor market timing with the 0% floor but it will also provide lower returns than the S & P in positive years.

An example of returns from the Annexus product vs. the S & P 500 is provided here. Annexus BCA 12 Annuity

CLICK HERE FOR ANNUITY QUOTES OR ADDITIONAL REQUESTS

Please contact us if you have any questions about either investments or insurance.  You can reach us either by phone at (203)796-5403 or by email at admin@croweandassociates.com.

Bank CD Compared To Fixed Annuity

How is a bank CD different from a fixed annuity?  In this post we will talk about Bank CD Compared To Fixed Annuity.  They are more similar than you may think.  Here is a review of similarities and differences.

• Both CD’s and Fixed annuities offer a fixed interest rate for a set number of years. Terms such as 2, 3,5,7 and 10 years are common for both.   CD will provide shorter terms than an annuity as most fixed annuities will not offer a term less than 1 year.
• Interest rates have a guarantee for the full term on both products.  Once the investor reaches the term, they  may take the money out without any other obligation
• Fixed annuities tend to have larger penalties for taking the money out early.  While a CD will often just take the interest you gain as a penalty for early termination (taking money before term is over).   Fixed Annuities tend to charge penalties above just the interest you gain.   Both however are free of any penalties if the investor meets the full term.
• Most annuities will allow investors to take out 10% of the account value penalty free, per year, before the end of the investment’s term.
• Bank CD’s are FDIC insured, while Fixed Annuities are not.  Instead annuities are backed by the Guarantee Association of the state of issue.
• In general, a fixed annuity will offer a higher fixed return than a CD.  For example, the best current (As of April 3rd, 2014) 5 year fixed annuity rate is 3.2% for 5 years vs. the highest posted CD rate of 2.27% (Bankrate.com)

CLICK HERE FOR RATES OR MORE INFORMATION

Crowe and Associates is here to help you with all of your investment needs.  If you have questions, please either call us at (203)796-5403 or email us at edward@croweandassociates.com.  Also, feel free to ask us about insurance coverage.

Medicare Part D Connecticut

In this post, we want to explain some things about Medicare Part D Connecticut.  We want you to understand as much as possible about the coverage that is available to you.  This way you can make an informed decision.  In fact,  Medicare Part D plans are Medicare drug plans offered by private insurance companies.  Medicare offers these plans either on a stand alone basis or as part of a Medicare Advantage plan.   Multiple insurance companies offer various part D plans.  The plans range in monthly premiums from as little as $12 a month up to $140 a month in Connecticut.  The Benefits (copays for drugs) also range greatly.  The prices for drugs vary from pharmacy to pharmacy.  You should make a list of all your medications and check which insurance plan includes the medication that you use.

Many people incorrectly think

That there is a Part D plan offered by the Government or Medicare.  Medicare only established the guidelines of what the base part D benefit and premium should be.  They do not have an actual Medicare Part D plan that a consumer can enroll in.  This must be done with a private insurance company.

Members are eligible to enroll in a Part D Rx plan when they turn 65 or first become eligible for Medicare.  They may also add, drop or make a change to an Rx plan every January during the Medicare Annual Election Period.

CLICK HERE FOR MORE MEDICARE INFORMATION AND RATES

Crowe and Associates is a full service brokerage.  In addition to Medicare, we offer clients a full range of medical, dental, life, home and auto insurance products.  We also offer advice on investment products including annuity and bridge loan products.

Please feel free to contact us with any insurance or investment questions.  We are here to help you.  You can contact us either by phone at (203)796-5403 or by email at admin@croweandassociates.com.

Should You Buy Medicare Part B

Medicare Part B becomes available to people when they turn 65.  Unless, they are eligible prior to 65 due to permanent disability. If you are turning 65 in the near future, you may ask yourself; Should You Buy Medicare Part B.   Part B of Original Medicare covers outpatient services.  These services include doctors visits, lab work, testing, outpatient surgery and most medical procedures done on an outpatient basis.  In general Medicare Part B covers 80% of the cost of services after you meet the annual deductible.

There is a cost for Medicare Part B

There is a standard Part B cost for most people, although it can be higher for those earning higher income. There is also a penalty for those that do not purchase Medicare Part B when they are first eligible for it.  Most people will pay the penalty if they enroll late.  There will not be a penalty for someone 65 or older if they receive coverage from their employer and are actively working.  The penalty also would not apply to the spouse on the plan.  If someone is 65 or older and getting coverage from an employer but is NOT actively working, they will pay a penalty for not signing up for part B when first eligible.

As a result, it is advisable to purchase Part B when first eligible.  Unless you fall under the actively working and getting coverage category.  You cannot purchase a Medicare Supplement or Advantage plan without Part B of Medicare.  This is another good reason to purchase it when you are eligible.

If you would like more information about health insurance plans. Please contact us either by phone at (203)796-5403 of by email at admin@croweandassociates.com.  We are here to help you feel comfortable with your insurance coverage.   We will find  you a plan that fits both your medical needs and your budget.

To learn more about Crowe and Associates, click here

Move To A Plan N Supplement

Move To A Plan N Supplement In this post, we are going to give you some reasons why you should Move To A Plan N Supplement.  The majority of seniors enrolled in an AARP Medicare Supplement plan (Also called Medigap) are in Plan F when the best choice would be AARP Plan N supplement.  Why are so many people enrolled in Plan F? What reason should they enroll in plan N instead?  In fact, there are a number of good reasons to consider this option.

First, we will look at why most people with an AARP supplement in Connecticut have Plan F.  Because Plan F has been around the longest most people are familiar with it.  It also has one of the highest premiums which makes consumers think it is the best choice.   On the other hand, Plan N has only been around for 3 years and is not as easy to understand compared to Plan F.

Plan F

Covers 100% of Medicare approved services not covered by Medicare A and B.  Plan N has some limited out of pocket costs ($50.00 for ER visit, $147.00 annual part B deductible, up to $20 for physician services).  All other benefits are the same as plan F.  The premium of plan N in CT is $145.50 a month vs. the Plan F premium of $218.50 a month representing a $876.00 a year premium difference.   The limited out of pocket costs of Plan N make it highly unlikely that anyone will have $876.00 in medical copays.  Only the highest of utilizers of care would be able to approach the number.

Those that want to make a change in Connecticut do not need to wait for the Annual Election Period.  You can switch from Plan F to Plan N any time of the year in Connecticut.   Because it is a guaranteed issue state for Medicare Supplement plans.

CLICK HERE FOR MEDICARE SUPPLEMENT RATES AND MORE INFORMATION

If you would like more information about this healthcare plan or any other plan please contact us.  You can reach us either by phone at (203)796-5403 or by email at admin@croweandassociates.com.

This post has been updated.  Click here for information

Medicare Supplement Rates Connecticut 2014

Medicare Supplement  Rates Connecticut 2014.  The Medicare supplement plans (also called Medigap) are standardized in the state of Connecticut. This means that plan benefits can not vary from company to company.  If a company is offering a Plan F supplement, the benefits must be the same regardless of the company offering it.  The only difference is the monthly premium.  Traditionally, the most popular plan in CT has been plan F.  AARP currently holds the best plan F price at $218.50 a month but Combined has released a plan for $214.57 a month starting in April of 2014.  Plan N and L have started to gain popularity in the last 24 months with many consumers enrolling in them as a lower cost alternative to plan F.

The state of Connecticut is a guaranteed issue Medigap state. This allows the insured to change from one supplement to another anytime during the year.   The state of CT does not allow underwriting on Medigap plans.  There is a 3 month waiting period for those that did not have any type of plan (Medicare Advantage or Medigap) prior to signing up for a Medigap plan.  The 3 month wait would not be applicable to those with a qualifying event.

CLICK HERE FOR ACCESS TO MEDICARE SUPPLEMENT RATES 2014 CONNECTICUT

Crowe and Associates is always happy to help you with either healthcare or investment needs.  We want you to feel comfortable with the plan you choose. Your plan has to fit both your healthcare needs as well as your budget.

If you would like more information about Medicare, please contact us.  You can reach us either by phone at (203)796-5403 or by email at admin@croweandassociates.com.

Changing Medigap Plans

Changing Medigap Plans is not impossible.  Medigap plans (Also called Medicare Supplements) can be changed the first of any month in Connecticut.  This change can be made internally from one Medigap to anther in the same company.  You can also change from one company to a different company.  This is allowed because Connecticut is considered a guaranteed issue state for the Medigap plans.

As a quick example, if someone is in an AARP plan F and wants to move to an AARP plan N supplement, they may do so the first of any month.  Likewise, if they want to move from an AARP supplement over to an Anthem BCBS supplement, they may do this as well.  Again, the change will take place the first day of the following month.

People often confuse the rules regarding Medicare Advantage and Stand Alone Part D plans with Medigap plans.  The rules for making changes (Nov 15th to Dec 7th for a Jan 1 change) only apply to Advantage and Part D plans.  These rules do not include the Medicare supplement plans.

Looking for more information on Medicare supplement plans?  Click Here

Crowe and Associates is a full service brokerage.  In addition to Medicare, we offer our clients council on medical, dental, life, as well as home insurance products.  We also offer advice regarding investment products including both annuity and bridge loan products.

Click here to learn about all of our services.

Do not let health insurance scare you.  Crowe and Associates is here to help you  to choose a plan that suits both your medical needs and your budget.

If you have any health care coverage needs or questions, please contact us.  You can reach us either by phone at (203)796-5403 or by email at admin@croweandassociates.com.  We are also available to help you with investment opportunities or questions.

Cigna Plan G Medigap CT Alternative Plans

We want to give you some information about Cigna Plan G Medigap CT Alternative Plans.   Cigna is an insurance company with A+ rating in their industry.   They have come out with a plan G supplement in Connecticut at the rate of $203.28.  This is the first competition to the AARP plan F supplement to come out in a long time.   AARP plan F through United Healthcare is currently priced at $220.75 a month.

Plan G covers all of the benefits covered by plan F with the exception of the Medicare Part B deductible of $147.00.  If you do the math and add up the Cigna plan G premium plus the part B deductible it comes out about $62.00 less than the annual premium for the AARP plan F.  Keep in mind that once the part B deductible is paid, the Plan G supplement has the exact same benefits as plan F.

Plan G through Cigna provides a solid alternative Medicare supplement plan to those that may not want to be in an AARP sponsored Medigap plan.

Want to Learn More About Medigap (Medicare Supplements) CLICK HERE

Crowe and Associates is a full service brokerage.   We are able to offer clients council on medical, dental, life, long as well as short term care insurance.  Annuity and bridge loans are great investment opportunities we can also facilitate for you.  We also offer clients in New York and Connecticut home and auto products.

For additional information, you can either call us at 203-796-5403 or email us at admin@croweandassociates.com.  We are here to help you feel comfortable with your insurance choice.  In fact, if you need answers to any insurance or investment questions, we can help you.