Percentage of SPIAs sold with cash refund option?

[Garya505]

Does anyone know the percentage of SPIAs sold as "Life with cash refund" as opposed to "Life only"?

I'm just curious.

 

[DHK]

This Chapter in the ACLI "Facts of Life" book may be helpful:
https://www.acli.com/-/media/acli/public/files/factbook/08fb22chapter08annuities.pdf

 

[Allen Trent]

Less than 1%.

More common is life with period certain, life with installment refund, then life only, joint life or fixed period

 

[Tahoe Ray]

Less than 1%.

More common is life with period certain, life with installment refund, then life only, joint life or fixed period

That's interesting because I quote cash refund more frequently than any other design. It's super easy for the client to understand (and is only slightly less income than installment refund)

 

[Allen Trent]

That's interesting because I quote cash refund more frequently than any other design. It's super easy for the client to understand (and is only slightly less income than installment refund)

Agree. For some reason most agents don't & stick to period certain quotes.

With lifetime income riders on FIA, payout SPIAs are still a very small portion of total Annuity sales, only between 2-3% of total sales. That likely means the majority are medicaid planning fixed period annuities, and death claim settlements for people to spread taxes over 5 years on NQ annuity & 10 year on Qualified. Just doesn't seem like SPIA sales or adoption by consumers is being utilized much as a product solution for steady lifetime income........yet. maybe Secure Act 2.0 will help with annuities getting inside employer plans

 

[walthamny]

If the client is in good health, Life only combined with permanent life insurance is usually better for the client. The problem is most annuity salesmen dont have the patience of health underwriting

 

[Allen Trent]

If the client is in good health, Life only combined with permanent life insurance is usually better for the client. The problem is most annuity salesmen dont have the patience of health underwriting

Agree in theory..............but seen a couple of devastating cases in my career when this is done. The Joint Life or Life with Period Certain are 100% guaranteed to be paid to the beneficiary contractually. Selling Life Only & a corresponding permanent life policy requires the consumer to stick with the plan by way of willpower/follow through & remembering the plan & not needing medicaid.

Saw a guy buy $250k worth of SPIA & use the checks to buy a larger no lapse UL. 3 years later, he got sick of paying the life premiums & let it lapse. Died 1 year later. Spouse still living

Saw another client very similiar to above. during decline due to Alzheimers, quit paying the permanent policy premiums. Lapsed

So, while I love the idea, I beg agents to get others involved so the plan is followed & a 3rd party is notified when premiums are not being paid.

Lastly, if the person had an old, outdated annuity from decades ago, you are very unlikely to be able to currently get a life only SPIA (with current lower rates & longer mortality) to produce as high of a check as the older Payout tables in the annuity contract for Life with period certain with outdated interest rates & shorter mortality tables.

 

[NicolasBair]

Agree in theory..............but seen a couple of devastating cases in my career when this is done. The Joint Life or Life with Period Certain are 100% guaranteed to be paid to the beneficiary contractually. Selling Life Only & a corresponding permanent life policy requires the consumer to stick with the plan by way of willpower/follow through & remembering the plan & not needing medicaid.

Saw a guy buy $250k worth of SPIA & use the checks to buy a larger no lapse UL. 3 years later, he got sick of paying the life premiums & let it lapse. Died 1 year later. Spouse still living

Saw another client very similiar to above. during decline due to Alzheimers, quit paying the permanent policy premiums. Lapsed

So, while I love the idea, I beg agents to get others involved so the plan is followed & a 3rd party is notified when premiums are not being paid.

Lastly, if the person had an old, outdated annuity from decades ago, you are very unlikely to be able to currently get a life only SPIA (with current lower rates & longer mortality) to produce as high of a check as the older Payout tables in the annuity contract for Life with period certain with outdated interest rates & shorter mortality tables.
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I agreed with you.