Annuity with Long Term Care Rider

[DWPCL]

I am with AE as well so I have access to the SIA. Every day that sucker becomes more and more attractive because of the joint payout and LTC benefits.

Its a fantastic product. But I havent been able to pull the trigger yet because I can't get over the ratings.

 

[Josh Landis]

I am with AE as well so I have access to the SIA. Every day that sucker becomes more and more attractive because of the joint payout and LTC benefits.

Its a fantastic product. But I havent been able to pull the trigger yet because I can't get over the ratings.

Have you looked at the F&G SIP? Same product, with a higher commission, although the rating is still a B. If you want an income play, take a look at a QLAC. It will give you the best income.

 

[scagnt83]

Although I am an FMO and don't have SBL and believe there are better options out there, I have to say that this seems a bit biased.

To be fair, SBL has 4 distribution partners and could easily open this up (1 for the SIA, but 4 for TVA). They are B rated, but let's face it, F&G, Athene, Equitrust are all B rated also and I know a ton of those policies being sold and they're good products. SBL is backed by Guggenheim, which helps with any sort of liquidity issue.

Biased how? I have access to the TVA, so its not like Im against it because I cant sell it.


I dont know the breakdown, but I would bet that the SIA accounts for at least half of their business and the TVA the other half. Even if it is a smaller amount, that is still very limited distribution that is highly dependent on just a few sources. That is not a stable business model imo.

Also, F&G is the only one out of those I have ever considered selling. Mainly because I liked their real estate index option. I would not sell an Income Rider that was meant to provide a substantial portion of a persons income, from a true B rated company. Too much unneeded risk imo.

Also, I'd say that the SIA inparticular, similar to the F&G SIP is an income play only. So if someone is selling that to a client, it needs to be very clear that you're not going to have growth in your account, but you're going to get a life time income stream that is higher than you could with other products (based on guarantees).

Then that is just a DIA with an LTC enhancement.

I would look at a true DIA and use the extra income to purchase true LTCI.

No account growth kills the main advantage of the income rider.

I would also say that the advantage of the income rider is not for liquidity, but for guaranteed income you can't outlive. From my perspective, liquidity is how easily can the client access their money...obviously any FIA, except a few out there with ROP, have surrender charges, so in nature FIA's are not liquid investments - point being this isn't exclusive to SBL.

I have to disagree. If liquidity is not a benefit then you should just sell a DIA since it will provide a higher income stream.

To me, the main advantage of a GLWB over a DIA is that the Rider gives you access to your funds for about 15 years. It provides flexibility in how you are able to access your money, vs a SPIA/DIA that provides no flexibility at all.

If the client does not care about access to the funds for emergencies or flexibility in how they access funds, then a DIA is the more suitable product to sell.
The only advantage the Rider gives in that situation is possibly the doubling feature... but for the difference in income it is often possible to fund a LTCI policy with the extra DIA funds (depending on age and insurability)


Lets also be brutally honest about the LTC enhancements on these Riders. Most of them require permanent impairment, or exclude home care. So many LTC claims will not meet the requirements of these Riders.

That is why if you are not worried about access to funds, but like the LTC features, a cost analysis needs to be done on using a SPIA/DIA and funding LTCI with the extra income.

I think these LTC based Rider sales are a ticking time bomb for this industry. (along with a lot of rider sales in general)
Not many agents seem to realize the requirement for permanent impairment. That means even less clients know about it or remember it if told.

Im not against the LTC enhancements. But I just feel that agents need to set very realistic expectations when educating clients about them. And the benefit of most of them I do not feel is worth placing a large % of retirement assets with a low rated company.

 

[Josh Landis]

Biased how? I have access to the TVA, so its not like Im against it because I cant sell it.


I dont know the breakdown, but I would bet that the SIA accounts for at least half of their business and the TVA the other half. Even if it is a smaller amount, that is still very limited distribution that is highly dependent on just a few sources. That is not a stable business model imo.

Also, F&G is the only one out of those I have ever considered selling. Mainly because I liked their real estate index option. I would not sell an Income Rider that was meant to provide a substantial portion of a persons income, from a true B rated company. Too much unneeded risk imo.






Then that is just a DIA with an LTC enhancement.

I would look at a true DIA and use the extra income to purchase true LTCI.

No account growth kills the main advantage of the income rider.





I have to disagree. If liquidity is not a benefit then you should just sell a DIA since it will provide a higher income stream.

To me, the main advantage of a GLWB over a DIA is that the Rider gives you access to your funds for about 15 years. It provides flexibility in how you are able to access your money, vs a SPIA/DIA that provides no flexibility at all.

If the client does not care about access to the funds for emergencies or flexibility in how they access funds, then a DIA is the more suitable product to sell.
The only advantage the Rider gives in that situation is possibly the doubling feature... but for the difference in income it is often possible to fund a LTCI policy with the extra DIA funds (depending on age and insurability)


Lets also be brutally honest about the LTC enhancements on these Riders. Most of them require permanent impairment, or exclude home care. So many LTC claims will not meet the requirements of these Riders.

That is why if you are not worried about access to funds, but like the LTC features, a cost analysis needs to be done on using a SPIA/DIA and funding LTCI with the extra income.

I think these LTC based Rider sales are a ticking time bomb for this industry. (along with a lot of rider sales in general)
Not many agents seem to realize the requirement for permanent impairment. That means even less clients know about it or remember it if told.

Im not against the LTC enhancements. But I just feel that agents need to set very realistic expectations when educating clients about them. And the benefit of most of them I do not feel is worth placing a large % of retirement assets with a low rated company.

We'll have to disagree here on income riders making it more liquid (meaning an FIA with an income rider is certainly more liquid than a DIA or SPIA, but it's not a liquid investment by any means - it's all relative on what you're looking at). I do think a DIA is a better option if you're looking for income only, which I my point being that's what the SIA and some of these other FIA's are trying to do essentially.

 

[scagnt83]

We'll have to disagree here on income riders making it more liquid (meaning an FIA with an income rider is certainly more liquid than a DIA or SPIA, but it's not a liquid investment by any means - it's all relative on what you're looking at). I do think a DIA is a better option if you're looking for income only, which I my point being that's what the SIA and some of these other FIA's are trying to do essentially.

Riders and DIAs are essentially the same thing. They both provide a specific amount of income at a future date.

The main difference is that Riders allow access to the funds for around 15 years. For that benefit you give up some yearly income when compared to a DIA.

Liquidity might not be the perfect term for it. But it allows "access to your funds" if needed. And that by definition to some extent is a form of liquidity.

Semantics aside. The only difference between the two methods is the Rider allows access to funds. Plus the LTC enhancement of some Riders.

So my point is that in my opinion, if you go with a Rider, the Account Value is an important consideration. If you can get close to the same benefit with a better rated company and with higher caps, then to me it makes more sense to do so.

 

[Josh Landis]

Riders and DIAs are essentially the same thing. They both provide a specific amount of income at a future date.

The main difference is that Riders allow access to the funds for around 15 years. For that benefit you give up some yearly income when compared to a DIA.


I assume you are referring to you have access to the account value until it goes down to 0...which I agree.


Liquidity might not be the perfect term for it. But it allows "access to your funds" if needed. And that is by definition to some extent is a form of liquidity.

Semantics aside. The only difference between the two methods is the Rider allows access to funds. Plus the LTC enhancement of some Riders.

So my point is that in my opinion, if you go with a Rider, the Account Value is an important consideration. If you can get close to the same benefit with a better rated company and with higher caps, then to me it makes more sense to do so.

I also agree, if that's possible. Problem I see is a lot of times B rated carriers offer better rates bc they are B rated and have to have some benefit to get business. Anyways, I think we're on the same page.

 

[Charpress]

I am with AE as well so I have access to the SIA. Every day that sucker becomes more and more attractive because of the joint payout and LTC benefits.

Its a fantastic product. But I havent been able to pull the trigger yet because I can't get over the ratings.

What ratings are we talking about here? Is it the A- S&P rating or the B++ Best rating? Are you talking about ratings for the particular products or for SB in general? If so, are you taking into account SB's 105.3% solvency ratio?

Personally I had somewhat of a problem when the company started off and before Guggenheim got involved and the ratings subsequently went up as we all thought they would. When I tell clients how much of my own money I have with SB, they usually don't ask about company ratings. If they do, there is absolutely nothing to be ashamed of.

 

[DWPCL]

What ratings are we talking about here? Is it the A- S&P rating or the B++ Best rating? Are you talking about ratings for the particular products or for SB in general? If so, are you taking into account SB's 105.3% solvency ratio?

Personally I had somewhat of a problem when the company started off and before Guggenheim got involved and the ratings subsequently went up as we all thought they would. When I tell clients how much of my own money I have with SB, they usually don't ask about company ratings. If they do, there is absolutely nothing to be ashamed of.

I was talking about the b++ rating for SB not the rating for the individual product.

I love the fact that you show them how much money you have with them, I do the same thing with my life insurance. Since I'm 31I think the minimum age for the SIA is 55 anyway.

No, I have not taken into account the solvency ratio.

 

[Charpress]

I'm still trying to avoid sounding like I'm promoting Security Benefit. I'm not.

Their products are fine for particular needs. But if I were asked "What is the company's rating?" I would go with the A- S&P rating.

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By the way, I had a client come in yesterday who was totally confused by getting two annual statements from Security Benefit for 2013.

One had a return of over $8,000, the other showed his return being $4,000.

SB made a mistake in calculating the annual S&P return and had to correct itself in a subsequent statement. Naturally, the correction was to the lower figure.

A bit embarrassing to have to explain to a client how a huge mistake like that can be made. They still made close to 9% at the lower figure, but still....