Anyone heard of life policy with annuity rider? Primerica?

[LeeInNc]

Hi all. Hoping someone out here in insurance land can point me in a direction. I have a client who brought in a Primerica policy that is a life insurance policy that has a flexible premium retirement annuity rider on it. There is almost no information on this annuity rider in the policy schedule. The policy was written back in 1983 with A.L. Williams, but Primerica took it over. This is the first time in my life I've ever seen an annuity added to a life policy - had no idea it could be done.

Called in with the client to Primerica client services and the rep had no idea as it was such an old policy, they were instructed to send callers back to the agent (and yes, I did try to speak with a supervisor, but he was adamant that the only other choice was to call the agent). We called the agent's office and.....crickets. Meanwhile the client has something she has no idea how to utilize. They are making it impossible to get information. I'm just trying to find out if this is considered a non-qualified annuity and if it is movable separate from the life policy. It seems to me it could be, but I know better than to make assumptions.

Can anyone help here? Thanks in advance!

 

[Allen Trent]

Is it even an active life policy anymore? Thought AL & Primerica were term & no one would still need a policy after 15 yrs or so

Also, does the annual statement even show any value in the optional annuity rider? If no money in the rider, likely nothing more to research

Keep in mind laws were passed in 1983 effective 1984 impacting the tax treatment of life insurance & began instituting premium tests on life insurance.

Sorry I am not more help. See if you can speak to the tax people at Primerica

 

[LeeInNc]

Thanks Allen. I can see that the life policy is still active, although I'm unsure if the face amount (10K) is still the same or decreasing. I do see an expiry date of March 2028 - I assume this is when the term will expire?

Anyway, Primerica did send the client a letter that showed the annuity statement of values. It actually reads like a letter - not an annuity statement like most companies. That's why the information is so unclear (qual or nonqual). So I know there are funds in the annuity and it is growing (even if at a snail's pace).

Very good point on the pre-1984 rules. I'll pay attention to that. I'll see if we can contact Primerica again but I really don't think they know what to do with these pre-Primerica policies.

 

[Allen Trent]

That's why the information is so unclear (qual or nonqual)

In all likelihood, they are non qualified, but the easiest way to get a best guess would be to ask the tax dept what the taxable gain would be if surrendered. If that is a lower amount than the total value, it would indicate non qualified as only the deferred gains would be reported as taxable

 

[DHK]

Hi all. Hoping someone out here in insurance land can point me in a direction. I have a client who brought in a Primerica policy that is a life insurance policy that has a flexible premium retirement annuity rider on it. There is almost no information on this annuity rider in the policy schedule. The policy was written back in 1983 with A.L. Williams, but Primerica took it over. This is the first time in my life I've ever seen an annuity added to a life policy - had no idea it could be done.

Called in with the client to Primerica client services and the rep had no idea as it was such an old policy, they were instructed to send callers back to the agent (and yes, I did try to speak with a supervisor, but he was adamant that the only other choice was to call the agent). We called the agent's office and.....crickets. Meanwhile the client has something she has no idea how to utilize. They are making it impossible to get information. I'm just trying to find out if this is considered a non-qualified annuity and if it is movable separate from the life policy. It seems to me it could be, but I know better than to make assumptions.

Can anyone help here? Thanks in advance!

Pure guess: Must be "buy term and invest the difference... in an annuity rider"? I would guess before they had their own PFS Investments firm?

Otherwise, I was thinking it was clever marketing to say that every cash value policy has an annuity rider to turn the cash values into a lifetime income stream. (That's not a rider but an option of non-forfeiture values.)

I wish I could be of more help.

I'll post this in the Primerica sub-group of the Facebook group and see if it brings anything up.

 

[LeeInNc]

Thank you Allen and DHK! Really appreciate it.

 

[Tahoe Ray]

Otherwise, I was thinking it was clever marketing to say that every cash value policy has an annuity rider to turn the cash values into a lifetime income stream. (That's not a rider but an option of non-forfeiture values.)

This was my first thought as well.

 

[scagnt83]

Both AIG and Ameritas offer Lifetime Income Riders on their IULs.

Ameritas seems to have a more competitive payout factor, but charges a higher fee for it when activated.

Both are not "cheap" to add, and especially not to activate. Ameritas charges a 30% "discount factor" when calculating the income. But the actual payout rate compared to CV seems to be around 7% for someone in their 70s with Ameritas.

Personally, I feel managed distributions are a much better option. But for someone that needs a "turnkey" solution to distributions, this could be attractive.

 

[Allen Trent]

Both AIG and Ameritas offer Lifetime Income Riders on their IULs.

Ameritas seems to have a more competitive payout factor, but charges a higher fee for it when activated.

Both are not "cheap" to add, and especially not to activate. Ameritas charges a 30% "discount factor" when calculating the income. But the actual payout rate compared to CV seems to be around 7% for someone in their 70s with Ameritas.

Personally, I feel managed distributions are a much better option. But for someone that needs a "turnkey" solution to distributions, this could be attractive.

this is something totally different. Old product from before the tax laws changed in the 80s. some carriers had some term or WL products that had an annuity rider to add savings into or endowment policies that changed from life to annuity income at age 65 or 85.

 

[rousemark]

Hi all. Hoping someone out here in insurance land can point me in a direction. I have a client who brought in a Primerica policy that is a life insurance policy that has a flexible premium retirement annuity rider on it. There is almost no information on this annuity rider in the policy schedule. The policy was written back in 1983 with A.L. Williams, but Primerica took it over. This is the first time in my life I've ever seen an annuity added to a life policy - had no idea it could be done.

Called in with the client to Primerica client services and the rep had no idea as it was such an old policy, they were instructed to send callers back to the agent (and yes, I did try to speak with a supervisor, but he was adamant that the only other choice was to call the agent). We called the agent's office and.....crickets. Meanwhile the client has something she has no idea how to utilize. They are making it impossible to get information. I'm just trying to find out if this is considered a non-qualified annuity and if it is movable separate from the life policy. It seems to me it could be, but I know better than to make assumptions.

Can anyone help here? Thanks in advance!

In the 70s and 80s a lot of companies had annuity riders that could be attached to a life policy. They were sort of the precursor to Universal Life Plans.