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:
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 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.
We work with annuity clients every day and we see the same mistakes made over and over. Here is a quick list of the more common mistakes made that you should avoid.
Buying an annuity based on the company’s name- This is the biggest mistake I see made the most often. Buying an annuity simply because you know the company name is a sure fire way to ensure that you are buying a product that is not competitive. Look at the payouts when buying an annuity instead of just trusting that a big name company is going to be offering you a good deal. Most often, it is the big name companies that are relying on that big name and are not looking to be best in class. They know they name will bring in customers so there is no need to be making a great offer. Read more
Annuities are often used to generate lifetime income streams for retirees. SPIA’s and Income Riders are the two main ways to accomplish a lifetime income stream for a single person or for a couple. Here I will explain how both work and the positives and negatives of each.
SPIA- (Single Premium Immediate Annuity) A SPIA is one of the oldest types of annuities and are used exclusively as a tool to generate a lifetime income stream. The concept is simple: The annuitant gives an amount of money to the insurance company and in return, the insurance company provides the annuitant with a lifetime income stream that they can not outlive. Read more
With licensed sales professionals in both the investment and insurance fields, the experienced and knowledgeable team at Crowe & Associates can tend to your various needs.
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