32yr Old $300K SPIA --Carriers?

ScottLFB

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I need options. I got a client with a chunk of change that we are trying to get $15K/yr for life w/20yr period certain on. 32yr old F TX. Since most of my SPIA carriers took a dump on their rates in July I'm looking for other carrier options please.


**Background: It's more than just 300K in premium, this is just one of the buckets of money we are looking for up to 4-5 different carriers on.

Any suggestions would be much appreciated! I already have Integrity, AmerEq, NorthAm, ANICO, and Genworth quotes in the $14,200-$14,800 range. I want to get to $15K+/yr if possible.

Thanks in Advance
 
SPIA rates as a rule suck right now. Why does a 32 year old need a SPIA?


It was a big DB from a life insurance payout from her spouse and she is trying to replace his income for the rest of her life. We are looking at 4 different buckets of $300k each to get a total of $60K worth of income.
 
It was a big DB from a life insurance payout from her spouse and she is trying to replace his income for the rest of her life. We are looking at 4 different buckets of $300k each to get a total of $60K worth of income.

Well pretty much you are looking at trying to get her 5% in something that is safe. The SPIA is about 5%.

Fixed annuity 3.65% for 5 years North American. This is the best deal I have seen. It gets you to $10,950.
 
She is too young for a SPIA. And with rates as they are right now, its certainly is not an optimal time to enter one if it even was appropriate.... and if it is, then she has plenty of time to wait to see if rates go up...

She needs lots of diversification and options for an income stream.

I would look at a VA to help save for retirement. (try Pru with the HD rider, or LFG with the I for life rider)

Consider some dividend yielding stocks to help with the current income along with some muni bond funds (tax free ones preferably), and some traditional bond funds with good track records (such as pimco or blackrock). I would look at putting a good bit into this bucket.

Then she probably needs a diversified basket of stocks to go along with it all.

With that amount of money you could possibly even look at funding a WL or UL policy to help with retirement as well.

Then probably put a smaller amount in a money market account and one or two checking accounts for her to live off of; dividends and taken gains can flow into the mm and checking accounts.

At her age, considering inflation and unknown future life events; her need for income is more complicated than just a SPIA most likely.
 
Well pretty much you are looking at trying to get her 5% in something that is safe. The SPIA is about 5%.

No, if she dies 20 years from now and payments stop, she won't be getting 5%, she'll be getting about 0.13% (principal won't be there). I'm assuming $14,800 per year on a $300,000 principal.

Now, she's getting 5% if she lives to age 80.

She is too young for a SPIA.

This is my thought, though I'm not much of a SPIA fan from the get go.

I would look at a VA to help save for retirement. (try Pru with the HD rider, or LFG with the I for life rider)

Jackson National Life. She can't put the HD rider on the Pru product as she's not old enough. Won't be able to with JNL either, but they both allow it later--JNL does, and I think Pru does.

Pac Life and Allianz will allow a rider like that added at her current age, but neither one is all that great, and their expenses are through the roof.

I like the bond idea.

An A rated Muni is paying on average just under 4% to 5.5% 10 to 30 year yields respectively. Chances are good that these yields will increase in the next couple of years, this will drive the par value on her bond down, so going all in at the moment is likely not the best strategy.

There are a lot of other things to do, but there's a lot more facts needed.
 
Based on what he said - she wants income now and probably safety. I agree a properly designed portfolio is better but loads of those blew up in 2008.

I would be very careful of any munis. Make sure they are highly rated, insured and in well run towns or cities.

A lot of munis may be blowing up soon. The u.s. dollar printing press may just be delaying the inevitable. A college dorm muni at major university in tax h*ll IL or another state defaulted not long ago.

Is she in TX or MN? I would not buy any Milwaukee munis - h*ll hole. If she is buying a muni - she better be ready to hold it - because if rates go up - bonds will get whacked.
 
Umm, if she's buying the Muni for income, why would she not be willing to hold on to it?

People sometimes do stupid things. If interest rates go up 2%, the value of the muni could drop 15% or more and she might panic.
 
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