Wealth Transfer: Annuities and Qualified Accounts.

Wealth Transfer: Annuities and Qualified Accounts

The Problem

What your clients think they will leave to their

beneficiaries is not what they will leave to their

beneficiaries

Example: IRACurrent Retirement Plan

Year Age Beg YearAccount Value RMD End Year

Account Value

1 70 $100,000.00 $3,649.64 $100,204.382 71 $100,204.38 $3,781.30 $100,280.013 72 $100,280.01 $3,917.19 $100,217.334 73 $100,217.33 $4,057.38 $100,006.355 74 $100,006.35 $4,201.95 $99,636.586 75 $99,636.58 $4,350.94 $99,097.067 76 $99,097.06 $4,504.41 $98,376.358 77 $98,376.35 $4,640.39 $97,485.409 78 $97,485.40 $4,802.24 $96,390.49

10 79 $96,390.49 $4,943.10 $95,105.2811 80 $95,105.28 $5,085.84 $93,620.2112 81 $93,620.21 $5,230.18 $91,925.6413 82 $91,925.64 $5,375.77 $90,011.8614 83 $90,011.86 $5,522.20 $87,869.2515 84 $87,869.25 $5,668.98 $85,488.2816 85 $85,488.28 $5,776.23 $82,900.5217 86 $82,900.52 $5,879.47 $80,101.8918 87 $80,101.89 $5,977.75 $77,089.1119 88 $77,089.11 $6,070.01 $73,859.8620 89 $73,859.86 $6,154.99 $70,413.07

• 70 Year Old Client• 4% Annual Earnings, Net of fees• Assuming RMDs are not reinvested• Assuming 20% tax rate for heirs

After-Tax Death Benefit$76,084.22

Example: NQ Annuity

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 $-

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00 Yr Current Value After-Tax Value1 $ 100,000.00 $ 90,000.00 2 $ 104,000.00 $ 93,200.00 3 $ 108,160.00 $ 96,528.00 4 $ 112,486.40 $ 99,989.12 5 $ 116,985.86 $ 103,588.68 6 $ 121,665.29 $ 107,332.23 7 $ 126,531.90 $ 111,225.52 8 $ 131,593.18 $ 115,274.54 9 $ 136,856.91 $ 119,485.52

10 $ 142,331.18 $ 123,864.94 11 $ 148,024.43 $ 128,419.54 12 $ 153,945.41 $ 133,156.32 13 $ 160,103.22 $ 138,082.58 14 $ 166,507.35 $ 143,205.88 15 $ 173,167.64 $ 148,534.12 16 $ 180,094.35 $ 154,075.48 17 $ 187,298.12 $ 159,838.50 18 $ 194,790.05 $ 165,832.04 19 $ 202,581.65 $ 172,065.32 20 $ 210,684.92 $ 178,547.93

$100,000 Value // $50,000 Cost Basis // 4% Net Annual Earnings//20% tax rate

Your Client

“I have $200,000 in Annuities, $400,000 in my 401(k), and $200,000 in life insurance.

If I die tomorrow my kids will get $800,000.”

Qualified: Common Beneficiary Options

• Inherited IRAs• Stretch/Multi-Generational IRAs• Lump-Sum

Which of these passes funds to beneficiaries the way both the

owner and beneficiary would like?

Non-Qualified:Common Beneficiary Options

• Lump-Sum• Annuitized benefit• Stretch

Which of these passes funds to beneficiaries the way both the

owner and beneficiary would like?

Lump Sum

$100,000

IRA: $80,000NQ Annuity: $90,000

Inherited IRA/Stretch

$100,000

What if…

We could increase the value of the asset 20-80% and pass on a lump-sum tax-free to

beneficiaries?

At the same time the client has access to tax-free funds in case of emergency?

Generation Legacy®

• One product – two policy numbers• Life insurance and SPIA together– 10 year period certain ages 60-74– 7 year period certain ages 75-80– True SPIA so payments are inheritable

• Accelerated benefits for terminal illness, chronic illness, or nursing home care

Gen-Leg Illustration

$78,4502/6 ADLs

$196,126Taxable Equivalent

Taxes owed on this

Cash Value

Ideal Client

• 70-80• Annuity Owner• No longer taking withdrawals or only RMDs• Do not need this money to sustain lifestyle• Want to leave maximum value to beneficiaries

Underwriting

1

2

3

Underwriting: Who Fits

Who to write• Hypertension• Diabetic, controlled• High cholesterol• Post-remission cancer, after 3

years• COPD, 3 years after diagnosis• Heart attack, full recovery

after 2 years• Stroke, after 3 years

Who not to write• Cirrhosis of the Liver • Alzheimer’s/Dementia• Been declined past 2 years• Multiple Sclerosis• ALS• Congestive Heart Failure

Prospecting

• Your existing annuity clients• Prospects with IRAs or existing annuities• CPA’s

Tools We Offer

• Simple annuity client call script• Existing client pre-approach letter• Marketing fliers• Point-of-sale tools• Complimentary coaching

QUESTIONS?Luke BrittNational Marketing Director – AnnuitiesThe Insurance Group800.460.5567 [email protected]