Buy a SPIA now (64 years old and retiring) Or MYGA and buy in 5 years?

[LostDollar]

Best way to learn about annuities?

The second best way is to get with an upline focused on annuities who is willing to train you.

Caveat, I am not an agent.

I am a current annuity prospect. Based on my recent annuity buying effort experiences, for an agent who knows nothing to little about annuities, but wants to sell them, I would second Tahoe Ray's suggestion above, with a slight modification:

"... get with an upline focused on annuities who is willing to train [and support] you."

Based on a limited buying experience over a few months, I can see at least three things a beginning agent would need help with from experienced people.

--Technical nuances of the different types of annuity products.

--Differences in the ways different insurance carriers choose to administer a specific type of annuity product.

(Reading annuity brochures from 5 different carriers for a specific type of annuity product is, in some ways, rather like reading dental insurance brochures from 5 different insurance carriers. Neither product is "standardized" like Medicare Supplements.)

--"Best Carriers" in the current (ever changing) marketplace, you might not be aware of, to meet the specific need of a current client.

 

[bill3173]

I just did a case on Thursday for a client. DIA on a 10 year deferral vs. and FIA on 10 year deferral. The FIA generated 24% more lifetime income.

What product(unless it's a secret), and what is the cost of the income rider?

 

[LostDollar]

Guessing locking in a DIA with income to start in 5 years would be better than MYGA now & rolling dice on SPIA rates in 5 years. DIA can have a bit of boost too as you are irrevocably making the selection now & if you were to die before payments begin, beneficiary might only get refund of premium, etc.

Rates have dropped a bit in recent weeks & many predict they could further drop over the next 11 months as government prepares for improved pre election mortgage rates, etc.

If I understand correctly,

I have just had a guy tell me the direct opposite of your first sentence above.

Rather than me purchasing an FIA with income rider now, with plans to take joint life based payments,

He wants me to use CD's and/or MYGA's now, with wife as beneficiary, let her inherit those and then she buys an annuity sometime in the future. That sounded reasonable when he presented the idea, but after thought I have two concerns.

---One is that I have to manage the CD's in the interim, and that is a PIA. I can get over 5% from local credit unions on CD's, but they do squirrley terms. Like one I just did yesterday. I get 5.25% for 13 months, but it renews to a 12 month CD at some pretty low rate. So I will have to be right on top of that and get right in there in the 10 day grace period 13 months from now, to either pull the money back into passbook savings or switch it to another odd term promotional rate current at that time. That gets rather wearing when you have a number of CD's (attempts to ladder) to monitor and manage.

---The other is, if I put a specific date in the sand, say Dec 1, 2034; and that is THE date whether I am living or dead; and then have a choice of scenarios:

a) Buy an FIA with income rider to accumulate for 10 years and then do joint life based payouts, or

b) Save money, then say I die in 6 years, wife takes money (today's cash plus 6 yrs of earnings) and buys annuity, has a 4 year accumulation period, and then takes single life payouts--I am not sure there is any significant gain for wife.

That puts me back to thinking your first sentence comment is probably much more realistic.

 

[Allen Trent]

I have just had a guy tell me the direct opposite of your first sentence above.

Rather than me purchasing an FIA with income rider now, with plans to take joint life based payments,

He wants me to use CD's and/or MYGA's now, with wife as beneficiary, let her inherit those and then she buys an annuity sometime in the future. That sounded reasonable when he presented the idea, but after thought I have two concerns.

the only problem I see with that idea is there is no way for your wife to know what interest rates will be when she buys an annuity in the future. Look how low interest rates were from 2012 to 2022 on CDs & MYGA. If she were to receive your account during a time like that & go out in the market to buy, it may pay 0-1% interest.

I dont love DIAs, but my point was if you buy one now, you are irrevocably purchasing with a future start date of X & locking in the interest rate assumed & the guaranteed lifetime check guaranteed at issue to start later. A DIA is merely a SPIA bought now, but checks start later like 5, 10 or 15 years --whatever you bought at purchase. Similar can be done with a Fixed Index Annuity with income rider to start an income at a later date.

not saying the other person is wrong as they have talked/met with you, but based on what you had explained, it sounded like you wanted to lock into forever guarantees, not roll the dice on what the future products or future interest rates might be in 10, 15 or more years at a death claim time

 

[Tahoe Ray]

What product(unless it's a secret), and what is the cost of the income rider?

North American. 1.15%

 

[scagnt83]

KISS

 

[LostDollar]

Caveat, not an agent.

What product(unless it's a secret), and what is the cost of the income rider?

North American. 1.15%

bill, 2 additional comments for your consideration:

--One, Please be aware of this comment from TR in another post:

So the products are fluid (can change depending on market conditions, carrier appetite, etc.) but the profiles remain the same (because the 65 yo looking for immediate income from their 401k rollover is the same this year or 5 years from now).

The rollup rate on the product TR is mentioning was 8% in Dec. It is now 7%. (I am not an agent, I am painfully and unhappily aware of that because I have been looking at income rider products from a buyer perspective.)

--Please don't allow yourself to get focused solely on GLWB rider cost as you are doing evaluations. An example - and let's use that $25K number we were mentioning in another post.

--- I could go to North American and put $25 in that 10 year surrender period FIA with 7% rollup rate (on the income base) and GLWB rider at 1.15%. (and I am not sure I can fully understand and explain that one.)

---I could also go to Oxford and put $25K in a 10 yr Multi Select MYGA with an interest rate of 5.35% (on my real money) and add a GLWB rider for 0.5%. (And I think I can understand and explain that one.)

The cheaper GLWB rider cost may, or may not, be the best option.

 

[MedicareMutt]

Caveat, I am not an agent.

I am a current annuity prospect. Based on my recent annuity buying effort experiences, for an agent who knows nothing to little about annuities, but wants to sell them, I would second Tahoe Ray's suggestion above, with a slight modification:



Based on a limited buying experience over a few months, I can see at least three things a beginning agent would need help with from experienced people.

--Technical nuances of the different types of annuity products.

--Differences in the ways different insurance carriers choose to administer a specific type of annuity product.

(Reading annuity brochures from 5 different carriers for a specific type of annuity product is, in some ways, rather like reading dental insurance brochures from 5 different insurance carriers. Neither product is "standardized" like Medicare Supplements.)

--"Best Carriers" in the current (ever changing) marketplace, you might not be aware of, to meet the specific need of a current client.

TY for the response. Let me say, I was offered a gig with an agency that provides leads and I'm thinking they split ... they told me average FIA was 150 to 180 K ... roll overs, etc. they train ... comp. was 4500 bucks ... I'm thinking sounds like 1/2 ...?

 

[LostDollar]

TY for the response. Let me say, I was offered a gig with an agency that provides leads and I'm thinking they split ... they told me average FIA was 150 to 180 K ... roll overs, etc. they train ... comp. was 4500 bucks ... I'm thinking sounds like 1/2 ...?

Note, I am not an agent.

I have no idea what annual FIA sales volumes for an agency might be, or what an average sale might be, or what commissions on sales might be.

 

[The Ringo Kid]

I just put $500,000 for a Kansas couple into a name-brand FIA with an income rider that they want to turn on in 10 years. If '08/'09 repeat year after year for 10 years, this couple gets $68,000 guaranteed annually the rest of their life.

If the FIA does just half the illustrated performance, the guaranteed income is much higher. The product is built to deliver accumulation while delivering income so they could conceivably do a lump-sum withdrawal after they turn on the income and not impact the guaranteed income payout.

I like FIA income riders. Properly built by an annuity agent who is carrier-agnostic, they can deliver more income and return some of the corpus to the beneficiaries at death.