- Hey everybody, it's Randy Pierson,
Vice President of Life and Annuities at Gordon Marketing,
and welcome to another
episode of Selling Life and Annuities.
Today we're gonna be talking about guaranteed income
in retirement for your clients.
(upbeat electronic music)
So, today I've got with me Tim Luby, our new annuity RVP,
and Clayton Duvall, our annuity marketer extraordinaire,
and we're gonna be talking about guaranteed income
within the annuity space.
So guys, why is guaranteed income important
and kind of how does it work
within the insurance annuity space?
- That's a good question.
You know, annuities offer one of the only opportunities
for a guaranteed income that you can find from a retirement
income planning standpoint.
You know, the fact that they can provide an income that's
guaranteed, often tied to how long someone's gonna live,
is very unique,
and it's often a tax advantaged income as well.
- In addition to that, look,
it'll provide an income stream that nobody can out live.
- All right, fantastic.
So, you know,
the income stream that might last for life I mean,
how does that work, and you know,
how can a insurance carrier guarantee that?
- There's a couple different ways.
The traditional methods that's been around for a long time
is annuitization, or an immediate annuity,
which really involves exchanging a lp some of money
for a stream of income to last a lifetime.
But what we're seeing a lot more of now is some of the index
products that are out there,
fixed index annuities with income riders on them,
and these can provide an income that can guarantee,
that can be guaranteed for as long as someone lives,
but without having to give up the asset,
still having assess to the value of that for as long
as it lasts, and that's important.
- You know a lot of these insurance carriers are providing
a guaranteed interest rate.
Whether you're looking at 6% compounding interest,
or 7.25 simple interest, or 10% simple interest.
Also, from these income streams,
a lot of these products have enhancements in the form
of a bonus on the front end.
So, it's a great way to turbo charge your retirement income
streams that you would need for the later parts of life
by investing today.
- What you're telling me is a consumer,
who has perhaps reached retirement,
they've got a bunch of money in, for example,
their qualified retirement plan at work,
they could take those funds,
put them in this annuity product,
get a big bonus on the front end, and receive something like
as much as eight, nine,
or 10% simple interest on that money on a guaranteed basis?
- Absolutely. - Absolutely.
- Wow.
Now I was riding a plane recently and I was reading
an article from one of the investment journals out there
and they were talking about insurance products in general,
and income riders in specific,
and they were ranting about the high fees and expenses
that are associated with these guarantees.
Is that accurate?
- To me in my opinion, that's a bogus claim.
I think the fees that you would pay for an income rider,
one it's a fee charged by the insurance carrier,
not the broker itself, so the one thing I must reiterate is,
I'm not taking your money, client,
the insurance carrier is gonna charge you a nominal fee.
But look at it like it's a cheap term insurance rider,
where you're literally paying for a benefit that you know is
gonna lock in a guaranteed retirement amount down
the road by paying a small fee today.
- There's a fee,
that at the average is probably right around a point or just
under a point, but what you get for that fee is phenomenal.
In terms of the step up rates that clients can get,
the bonus up front,
the guaranteed step-ups, and the withdrawal factors that are
used to calculate someones income.
We don't see people concerned about the fee at all.
- You know, what you're really describing is,
back in the day when most of our parents,
our fathers perhaps,
worked at an employer that provided a defined benefit plan,
you know, a guaranteed income from work, or for life,
from your employer at work, that you could never outlive.
The only difference is you're funding it yourself
and your employer's not funding it.
- You're also in the process of moving it into a fixed index
generator with the rider.
You're removing market risk.
You know, no more downside market risk, and no chance that,
you know, a year before you retire the market goes down 20,
30% and so does your retirement income.
So you remove that risk from it and still have guaranteed
step-ups, you know,
guaranteed continued growth in your income.
Not necessarily the account value,
but the income can continue to grow,
in a way without market risks, so that's a win-win.
You know, the closer someone gets to retirement, the more
important they reduce that risk.
- So Clayton, are there any stipulations as to when a client
could actually exercise a rider, or initiate the income?
- Good question.
So, a client can elect income as early as within 30 days
of a policy being issued and placed in force,
or a customer can wait one year, five years, 10 years.
Heck, I was working on a case a couple days ago for a client
who, she's 45 and does not want to turn on income
until she's 70.
And so, of course,
I went and found a product that's performance based income
growth, and at the end of the day will still provide good,
guarantees for this woman when she hits the retirement age,
while at the same time she has peace of mind knowing she
can't lose any of her money now.
- Excellent.
Very good.
So Tim mentioned upside potential with zero downside risk.
What other features or benefits would an agent want to know
about these products if they wanted to start selling?
- Look, the first and foremost thing is,
you don't need a securities license to sell these products.
If you're selling a fixed annuity and indexed annuity
and you want to include an income rider for your customers
you don't need a securities license.
I get asked that question all the time.
- That's an excellent point.
You know also,
the income that you're talking about securing also can
have tax advantages.
It can be a taxed advantaged income.
Easy for me to say.
But also, there can be living benefits as well.
So, that income can be improved or secured,
or can help to address things like being confined
in a nursing home or being diagnosed
with a terminal illness.
So, there's some other living benefits that can affect
that income too that can make a big difference.
- Wow, interesting.
You know, I would imagine for folks over 65, I mean all
of those features and advantages of that product wrapped up
into one nice bundle would be imminently sellable, right?
So, to assist agents out there and helping them sell more
indexed annuities with income riders and other benefits
and features that can guarantee that income for the rest
of their life,
I know you guys wrote a white paper on those riders
and how they work, and if you're an agent out there watching
this video and you'd like a copy of that white paper,
make comments in the comments section
below this video and we'll
make sure we get it out to you.
In addition, I'd ask you to like our video, share our video.
Make sure you tune in every Tuesday, because every
Tuesday we're rolling out a new video on insurance life
and annuity subject matters that will help you sell and grow
your career in the insurance business.
I want to thank Clayton and Tim for joining me
on this episode of Selling Life and Annuities.
Stay tuned for the next one coming out next Tuesday.
- We'll see ya!
- Thank you. - Take care.
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