Blog

Who Should Buy An Annuity

This post will help you decide Who Should Buy An Annuity.  There are many types of annuities.  In many cases an annuity is a contract between a person and an insurance company.  Often, the person is giving the insurance company an amount of money for a guarantee of future income.   Now there are multiple types of annuities the make finding the right annuity more complex.  The Single Premium Indexed Annuity (SPIA), Fixed Indexed Annuity and Deferred Income Annuity all popular but have different uses.

Read more

There are multiple types of annuities that produce income.  The three main types are a Single Premium Immediate Annuity (SPIA), Fixed indexed annuity with income rider and  a deferred income annuity (sometimes called a longevity annuity).  They key is to know the strength of each product and the best time/situation to use it. Read more

Security Benefit SIA Annuity

The Security Benefit SIA annuity is one the highest income paying indexed annuities available.  This product should be one of the first choices for clients that need guaranteed future income from an indexed annuity.  The account crediting methods on this product are nothing out of the ordinary but the amount of income it can produce puts it in a unique class.

Read more

Sentinel Life has come out with the Summit Bonus Index Annuity with an optional income rider.  The product is only available in the states of UT,FL and NC.  The plan has a number of crediting methods but none of them provide anything that is not available with a number of other similar annuities.  What makes this annuity special is the income rider they offer making it a great choice for the looking for max future income.

Read more

The Security Benefit Total Value Annuity is a unique product in the fixed indexed annuity business.  The product uses innovative funds and offers unlimited growth potential without the risk of loss due to declining market conditions.  It is obvious to see why this annuity is taking in money at unprecedented rate.   Here, we will break down the product and provide the strengths and weakness instead of relying on hype and catch phrases.

Product Basics- The base of the annuity is the same as most other fixed indexed annuities.  They have a 10 year surrender schedule, 10% free withdrawls per year, 7% or 8% bonus depending on the state you purchase it in and the usual income and death benefit riders that everyone offers.   The base benefits are all standard for the industry but the crediting methods on the account value are what stand out for this product.

ATVI- The ATVI is one crediting method in this product which is unique.  The account uses a futures commodities index.  The idea behind the index is that the account performance is non correlated to the market.  This means the accounts performance will not follow the performance of the stock market.  A brochure of the ATVI is available in this post.  Total Value Annuity ALTVI explained 2013  The account runs on a 5 year point to point basis.  Interest is credited to the account value using a 5 year vesting period. At the end of the 5th year the money can be re allocated to different accounts if the client chooses.  It should be noted that any money put into the ATVI must stay in the account for 5 years.  It can not be reallocated prior to that.  The is not an annual reset on this strategy but the gains are uncapped on this product leaving the opportunity for substantial growth over 5 years.

TVBI- The account functions in the same manner as the ATVI.  (5 year point to point, 100% of gains, etc….)  Note: there is a .50% annual fee/spread on this option. Unlike the ATVI, this account uses the Transparent Value Large-Cap defensive index which consists of 100 stocks from the Down Jones large cap stock market index.   It blends this account with a 2 year US treasury futures index.   The gains are uncapped after the .50% annual spread which gives this account a unique prospect for growth over 5 years.  Security Benefit TVBI explained

Income Rider- The income rider on this product provides for a base 4% minimum growth on the income per year with any gains from the crediting methods stacked on top. Overall, this rider compares well with its competitors but it is unlikely to out perform the Security Benefit SIA annuity income rider. CLICK FOR INFO ON SECURITY BENEFIT SIA ANNUITY

The growth prospects on both account compare favorably against its competitors given the low annual caps in the market today.  It is possible to allocate any percentage of the annuity account value both accounts.  There are other more standard account crediting methods available as well but the caps on them are similar to those of many other annuities in the market.  The TVBI and ATVI are what make this product stand out compared to the rest.

Aviva has released a new annuity named Target Horizon.  The product comes with income riders but also offers a much better accumulation strategy that other annuities in the market today.  Trends in the annuity market are all moving toward offering new types of income riders (to generate future income streams) without any emphasis on the account accumulation (cash growth) of the product.  Target Horizon moves against that trend by focusing on the ability to grown the account value substantially without risk of principal.  The key components and features are as follows:

• State Approvals:  Approved in all states except for: NY, VA, TX, OK, WA and DE
• Accumulation Strategy:  100% of all gains on an annual point to point basis after a spread. (“spread” is an amount of interest the company keeps prior to crediting interest to the account every year)  Spread ranges from 2.00% to 4.85% depending on the product selected.
• Bonus: 3% to 7% depending on product and state (Look at attached comparison for specifics)
• Deposits: Single deposit only
• Free withdraw provision: 10% per year
• Surrender period: There is a 10 year product and a 15 year product
• Income rider:  Can be added for 1.25% fee.  Provides a base minimum interest rate per year plus annual gains stacked on top.
• Minimum Deposit:  $5,000

Overall:  The 100% annual point to point strategy with a spread is the best growth option available from any annuity currently.  The income rider (also comes with a 3x payout for LTC) is competitive with others in the market but is on the higher end from a price standpoint at 1.25% a year.  Call or email our office if you have questions, need additional detail or would like to get a quote.

LINKS TO PRODUCT INFORMATION

Aviva target 10 brochure

Aviva Target 15 brochure

Aviva Target rider brochure

Aviva 10 vs 15 comparision guide

If you are a broker, agent or advisor that wants to offer this product you may obtain a contract here.Aviva New Product Contracting May 2013   Note:  This is not a standard Aviva contract.  You must complete a contract specific to the Target product to be authorized to sell it.   Completed contracts can be emailed (Edward@croweandassociates.com ) or faxed (203)-567-6235 to our office.

The term “Life Annuity” is rather generic and can have multiple meanings but it is almost always used when describing lifetime income from an annuity product.   This post provides detail on the most common uses of the term and provide detail on how a lifetime income annuity works.

First meaning of the term “Life Annuity” = Annuity with a lifetime income rider: There are a number of companies that offer income riders that can be added to their annuity products.  The income rider is a way to guarantee a lifetime income stream off of you investment for life.  The riders usually provide for a substantial bonus on your money up front (approx. 2% to 10% depending on product)  and will increase every year at a set compound interest rate (Going rate is 4% to 8% per year).  Money in the product is guaranteed to increase at the specified rate for up to a specific number of years.  Many companies cap the growth and 10, 15 or 20 years.

The point of the income rider is that it allows the investor to calculate exactly how much income they will be able to draw in future years.  Once they decide to turn income on, it will pay out for the rest of their lives or if they have a spouse, it will pay out until both pass away.  Income riders have become hugely popular in the last 10 years due to the perceived unpredictability of the stock market.   Income riders can usually be added to fixed, fixed indexed or Variable annuities.   The purchaser should know that the income rider guarantees the income only.  It does not guarantee growth of the actual lump sum investment.

The second meaning of the term “Life Annuity” is usually associated with a Deferred Annuity or sometimes called “Longevity Insurance”.  This is also an annuity but it functions in a different manner.  The Deferred Annuity takes a lump sum payment and pays out a guaranteed future in come at a predetermined future date.   The insured will usually not have access to the money prior to the payout starting which makes the Deferred Annuity less flexible than an income rider product.

The bottom line with lifetime income products is to find the companies that will pay out the most guaranteed future income.  It is very easy to compare these products if you compare them fairly.  For example.  A 55 year old female wants to use $250,000 to create future lifetime income when she turns 65.  She needs to find the company that will pay out the most to her per month in 10 years.  Companies will try to say add “bells and whistles” to products to keep people from making this most simple of comparisons but if income is true need, there is no reason to look at anything else.
WANT TO LEARN MORE ABOUT FIA’s? REGISTER FOR OUR WEBINAR “CHOOSING THE RIGHT ANNUITY” CLICK HERE

Life Annuity Connecticut

In this post, we will explain some things about; Life Annuity Connecticut.

The term “Life Annuity” is rather generic and can have multiple meanings but it is almost always used when describing lifetime income from an annuity product.   This post provides detail on the most common uses of the term and provide detail on how a lifetime income annuity works.

First meaning of the term “Life Annuity:

Annuity with a lifetime income rider: There are a number of companies that offer income riders that can be added to their annuity products.  The income rider is a way to guarantee a lifetime income stream off of you investment for life.  The riders usually provide for a substantial bonus on your money up front (approx. 2% to 10% depending on product)  and will increase every year at a set compound interest rate (Going rate is 4% to 8% per year).  Money in the product is guaranteed to increase at the specified rate for up to a specific number of years.  Many companies cap the growth and 10, 15 or 20 years.

The point of the income rider is that it allows the investor to calculate exactly how much income they will be able to draw in future years.

Once they decide to turn income on, it will pay out for the rest of their lives or if they have a spouse, it will pay out until both pass away.  Income riders have become hugely popular in the last 10 years due to the perceived unpredictability of the stock market.   Income riders can usually be added to fixed, fixed indexed or Variable annuities.   The purchaser should know that the income rider guarantees the income only.  It does not guarantee growth of the actual lump sum investment.

The second meaning of the term “Life Annuity”:

is usually associated with a Deferred Annuity or sometimes called “Longevity Insurance”.  This is also an annuity but it functions in a different manner.  The Deferred Annuity takes a lump sum payment and pays out a guaranteed future in come at a predetermined future date.   The insured will usually not have access to the money prior to the payout starting which makes the Deferred Annuity less flexible than an income rider product.

The bottom line with lifetime income products:

Find the companies that will pay out the most guaranteed future income.  It is very easy to compare these products if you compare them fairly.  For example.  A 55 year old female wants to use $250,000 to create future lifetime income when she turns 65.  She needs to find the company that will pay out the most to her per month in 10 years.  Companies will try to say add “bells and whistles” to products to keep people from making this most simple of comparisons but if income is true need, there is no reason to look at anything else.

How Crowe and Associates can help you pick the correct annuity:

Crowe and Associates is based in Brookfield, Connecticut. The agency is independent and able to work with any annuity company as a result. We are A rated with the BBB and help clients find the right annuity type and company to meet their needs. Once we determine the type of annuity needed, we will then shop to see which company is providing the best rates and terms. Feel free to request a quote through this site or call our office at 203-567-6235. You will be contact by someone from Crowe and Associates only. We DO NOT sell your information to other brokers or companies.

WOULD YOU LIKE TO LEARN MORE?

A variable annuity (VA’s) is an insurance contract that relies on investment accounts (Mutual Funds) to determine performance of the money in the annuity.   Depending  on the product, there can be a number of different mutual funds within the annuity for the investor to choose from.  There are usually more than enough accounts to choose from in order to have a diversified investment allocation.  The VA’s have a number of riders that can also be added.  I have provided a quick summary on VA products and some of the riders that may be added to them. Read more

A number of companies offer a variety of fixed annuities in Connecticut which often offer higher interest payouts than a standard bank CD.  The term “fixed annuity” is very generic so I will describe the different types in this post.  The type of fixed annuity that will work best for you depends entirely on your situation and what you are trying to accomplish.  Lets move on to a description of each type.

Single Premium Immediate Annuity (SPIA)- SPIA’s are the oldest type of annuity and the way they work is very simple.  You give the company a lump sum of money and they pay an income stream to you for a set amount of time. (5 years, 10 years, lifetime, etc…)  The lifetime option can not be outlived but you are also giving up the lump sum of money in order to have the income stream.  There are now Return of Premium SPIA’s which pay a bit lower income but insure that the any remaining principal will be paid out in the event of premature death.

Fixed or MYGA Annuity-  This is the traditional fixed annuity.  The MYGA stands for “Multiple Year Guaranteed Annuity”.  This product is also refereed to as a “CD Like Annuity” at times.   The plan offers a fixed interest rate at determined number of years.  The rate can not change during the fixed years listed.   So if you had a 5 year MYGA guaranteed at 3.4%, it means you will get 3.4% for 5 years.   The rate is compounded every year.   At the end of the 5 years, you are then free to take your money and go.   If you take the money out prior to the 5 year term, you will pay surrender penalties on the product.  (You are allowed to take 10% a year without penalty during the 5 year term.

Overall- MYGA’s really are a better way to a better fixed interest rate than that being offered by a bank CD.   The consumer needs to be careful of a few things however.  The first is to find out how long the surrender charges last on the product.  You should match them up with the fixed interest rate period.   If the interest rate on the fixed annuity is guaranteed for 7 years, make sure that the product has a 7 year surrender charge.  You would not want to have a surrender charge that is longer than the rate guarantee.  The second important point is to make sure that the rate you see is not just a first year bonus rate.  If you see something like “5 year annuity with 4.5% first year rate”  you need to inquire as this is probably really a 3.5% or 2.5% product with a bonus on the first year only.

Fixed or MYGA Annuity with Income rider-  This is the same product listed above but some companies will allow you to add an income rider to the policy.  The rider is a way that income can be elected on a lifetime basis in any future year. This allows the client to know exactly how much income can be taken for life.  Income riders can be very useful but you need to know all the details.  You will also want to know if the rider carries an annual fee.

Fixed Indexed Annuity- (FIA) Unlike the MYGA, the Fixed Indexed Annuity uses market based crediting methods to determine interest.   The crediting accounts follow the S & P and various other market indexes to determine how much interest will be credited.   Since it is a fixed product there can not be a negative year.  The worse the product can credit is 0% gain in a down market.  To make up for this protection, the insurance company will cap the upside gain allowed.  There are a huge number of fixed indexed products that credit interest in a number of different ways.  Income riders, accelerated nursing home riders and death benefit riders can be added to a number of the products offered.  It is not uncommon for a bonus to be credited to the initial investment.  They range from 2% to 12% depending on the product.

Overall- Fixed Indexed Annuities have many uses but it is important to pick the right FIA for its intended purpose.    There are also products that have very long surrender periods so it is important to know how long you may be locking your money up for.

How Crowe and Associates can help you pick the correct annuity:  Crowe and Associates is based in Brookfield, Connecticut.  The agency is independent and able to work with any annuity company as a result.  We are A rated with the BBB and help clients find the right annuity type and company to meet their needs.  Once we determine the type of annuity needed, we will then shop to see which company is providing the best rates and terms.  Feel free to request a quote through this site or call our office at 203-567-6235.  You will be contact by someone from Crowe and Associates only.  We DO NOT sell your information to other brokers or companies.