Can someone recommend an annuity for my customer? I haven't sold an annuity for 6 years and need advice.
She will be 65 in December. She has 3 annuities already, 1 for $100,000, 1 for $100,000 and another for $50,000. She trusts me and wants to put another $300,000 possibly $400,000 in an annuity. She doesnt need the income right now.
Do a fact finder.
Maybe there are better options for her that the fact finder could uncover (ie single prem WL or a hybrid life ltc)
You need to know when IF ever will she need income.
Is this money Q or NQ? and How the other assets breakdown?
What terms is she comfortable with?
With out info its really hard to give an answer, it would be like me asking you if you-- If i should buy a Car or a Truck?
I thought about a single premium whole life. She doesnt expect to ever need the income. She has CD's if she does. Her goal with this and her other 3 annuities which I am not the agent is to leave with her 16 children. The money is non qualified.
She lives off of Social Security and 8% interest of a 250,000 loan. She has not elected to get any of the principle from that loan yet just interest.
She could get a nice SPWL atleast with some of that money.....Or. Does she have any LTC?
If not you could get her a nice LTC policy that has life insurance built into it. I think I did a quote the other day for a 65 year old woman. If she puts in $100k she can get ~$500k in LTC benefit for Nursing, Asst. living, HHC, etc. with coverage of 7000/month for 6 years and if she were to pass away without using LTC she could have $166k in death benefit with a %100 return of premium if she chooses to cancel the policy. This is with Lincoln Financial
If she doesn't want the return of premium you can get more death benefit I believe, I think like $200k.
Edit - if the money is solely to leave to the children, she could purchase a single premium universal life policy with a no-lapse guarantee to get the most death benefit for her dollar. A life insurance policy will obviously depend on her health, but if she was preferred risk, she could get $1,600,000 ($100k for each child/grandchild) for approximately $350,000 in a single lump sum. The life insurance proceeds are tax-free (vs. taxable for annuity interest) - to create that kind of money out of $350k in an annuity after taxes, she'd have to earn about 15% interest for 15 years. That will never happen in this market.
It could also be structured in an irrevocable trust with such a large number of beneficiaries where the proceeds are held out of her estate and not subject to the estate tax laws. This is where cases get a little bit more complicated, but is really in the best interest of your client to do it the right way.
Why not put her in a fixed annuity and then draw off some of the growth each year to pay the annual premium on a Guaranteed UL?
The lowest guaranteed UL at $1.6 million is approximately $25k per year, which is about 14 years of premiums to get to the $350k single premium. Those numbers would increase if she is in standard or worse health, but you get the idea. If she lives for another 30-35 years by chance, a fixed annuity won't generate the kind of returns she would need to keep the policy in place without putting in additional money. She'd also have to pay the taxes on the interest when withdrawn, and the interest is taxed first (LIFO method). A lump sum solves that in one payment, but is also a bit of a gamble. If she dies in the first couple years, she comes out behind because on a life-pay, it would take her that 14-15 years to pay out the full $350k in premiums. However, this is much easier to explain to a client, especially an older lady, than structuring an annuity so that she has to go in every year, make a withdrawal, and pay the premiums on the life policy, especially if it's set up in an irrevocable trust.
What is your opinion on American Amicable's Classic Solution Single Premium Whole Life?
Probably way, way, way overpriced. Is she better off with $1.6 million or ~$400k for the same price? How is her health?
Edit - I just did some quick research on the product. The maximum lump sum that can be made on that product is $250k. The maximum net amount at risk to the insurance company is $150k, which means she could get no more than $400k in death benefit on that product even with a $250k lump sum. As I said, way, way, way, way overpriced.
You really need to have someone on this case (whether it's you or another agent) who can work with 10-20 different companies, the help of a good general agent to shop the case in the event that something in her medical history complicates the underwriting, and likely a good estate planning lawyer. There will be a lot of hoops to jump through and documentation needed on a policy with that kind of money going into it. This is obviously a client that you want to keep for the long-term. If you put her into a product that isn't in her best interest and another agent comes along behind her and shows her that she could have gotten another $1 million in death benefit for the same price, it won't look very good for you. If you put your best foot forward and set her up with the right policy, you may get some big referrals in the future. People with that kind of money tend to know other people with that kind of money.
She does have type 2 diabetes. She takes pills no insulin. Other than that she is in great health.
Depending on her A1C levels, she should still be able to get a standard risk class. Assuming she's a non-smoker, she could potentially get that $1.6 million death benefit for a $401,xxx lump sum. Would also depend on where she is for product availability....what state is she in?
$1.6 million, standard non-smoker no-lapse UL, single premium payment of $401,582 guarantees coverage for life with no further payments. If she cashed out her two $100k annuities and the $50k annuity, assuming out of surrender period, she could get $2.6 million of coverage with $650k lump sum. If her sole intent is to pass the money along to heirs, the life insurance is the best way to do it. If she will possibly need the money later, that might be another story. Every life insurance company will VERY intensely scrutinize her medical history on a policy of that size, especially at her age.
Whether she can qualify is another story, but it sounds like she could from what you're describing. I can't stress enough how important it is to have a good general agent on a case like this and to be licensed with 10-20 major companies, and you'd want to have her talk to a good estate planning lawyer to set up a trust. I can almost guarantee that something will get screwed up along the way on this case for one reason or another. These things always turn out to be much more difficult in the end than you intended them to be when you started.
Dgoldenz- is right it very important that you talk you a GOOD estate planning attorney if you are gonn even consider going the life insurance route, FOr example if the life insurance is going to a trust, the trust will HAVE to be set up before the insurance is even applied for. ANd with a case like this if you screw one little thing up it could cost your clients 100's of thousands of $$'s, and with 16 beneficiaries its safe to say your gonna have a few squeeky wheels.
The Best Annuity for My Customer
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