Index Annuity “Concerns” Long/High Surrender Charges Products Favor Agent, Not Client Limited Growth No Liquidity
INVESTMENTS SAVINGS Mutual Funds Bonds Variable Annuities Stocks CDs Money Markets Fixed Annuities T-Bills INDEXANNUITY
INVESTMENTS SAVINGS Mutual Funds Bonds Variable Annuities Stocks INDEXANNUITY
Fixed Annuity • Indexed Annuity
How Does Interest Get Credited? What to look for: Simple Crediting Method(How clients earn interest) Annual Reset Design(The reason to buy index annuities)
Understanding Index Annuity Crediting Methods Annual Reset – Point to Point with Cap Allows 100% Participation of Index Increase Up to a 6% Annual Cap.
Utilizing Index Annuities in Today’s Portfolio’s Correction Protection Fixed Income Alternative
3 Year Hypothetical Account Value Start End 6.00% Cap 1000 1100 = 10.00% Increase $106,000 6.00% Growth Account Value Start End 6.00% Cap 1100 1000 = 9.10% Loss $106,000 0% Growth Account Value Start End 6.00% Cap 1000 1040 = 4.00% Increase $110,240 4.00% Growth S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
Where Would You Be? Interest Credited(6.00% Cap) Index AccountValue Year S&P500* 6.00% 3.8% 0.00% 6.00% 6.00% 2.10% 6.00% 2006 2007 2008 2009 2010 2011 2012 +12.8 +3.8% -38.5% +27.1% +12.6% +2.1% +13.29% $106,000 $110,028 $110,028 $116,629 $123,627 $126,223 $133,579 If the market declines all 7 years, you walk away with your original deposit of $100,000 S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013
Now may be a great time to position an index annuity in your clients' portfolio. Why?
Correction Protection Consider a $500,000 client portfolio fully invested in the market in 2003 2003: $500,000 2013: $850,000 $500,000 $350,000 S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. “Fully invested in the market refers to the S&P500 index.
Correction Protection Assuming a 7.00% per year bull market 6.00% 6.00% 6.00% 2017 6.00% 2016 2015 2014 S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
Correction Protection 2013: Assuming a 7.00% per year increasing market Fully Invested 2013: $850,000 Fully Invested: $1,114,176 Correction Protection: $1,097,264 ($16,912) Correction Protection 2013: $850,000 $655,398 $441,866 $500,000 $350,000 $1,114,176 $1,097,264 S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
Correction Protection Assuming a 25% correction followed by 10.00% rebound years 6.00% 0.00% 2015 6.00% 2014 2016 6.00% 2017 S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
Correction Protection Assuming a 25% correction followed by 10.00% rebound years 2013: $850,000 2013: $850,000 $850,000 $500,000 $350,000 S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
Correction Protection Assuming we grow another 10%, correct by 30%, rebound 10% per year following 0.00% 6.00% 2015 6.00% 2014 2016 6.00% 2017 S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
Correction Protection Assuming we grow another 10%, correct by 30%, rebound 10% per year following 2013: $850,000 2013: $850,000 2013: $850,000 $500,000 $350,000 Assumed market returns are hypothetical and are not indications of future performance. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. “Fully invested in the market refers to the hypothetical assumptions.
Fixed Income Alternative
Fixed Income Alternative Chart derived from www.Morningstar.com on DWS GNMA A Load Waived, Intermediate Government, and Barclays US Agg Bond TR. Quote as of 08/14/2013
Fixed Income Alternative Solution? Utilize systematic withdrawals from an index annuity as a fixed income alternative
Where Would You Be? We are taking a 3.50% withdrawal(Coupon) each year Interest Credited(5.50% Cap) Index AccountValue Year YTM based on this time period: 4.39% S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. “Fully invested in the market refers to the S&P500 index.
Where Would You Be? Current 7 Year A Rated Bond ING FIA with Systematic Withdrawal 6.00% Cap, 2006-2012 Purchase Price $108,468 Interest Credited(5.50% Cap) Index AccountValue Purchase Price $108,468 Year 7 Years of Coupon Payments $4,875 $4,875 $4,875 $4,875 $4,875 $4,875 $4,875 $4,875 $4,875 $4,875 $4,875 $4,875 $4,875 $4,875 7 Years of Withdrawals Par Value $100,000 Account Value $109,151 S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. “Fully invested in the market refers to the S&P500 index. A Rated corporate Bond quoted as of 8/14/2013 with a 7 year maturity non-callable HSBC bond from www.scottrade.com
Producers Choice Contact Information Phone: 855.223.6500 602.544-1234 Email: AllanS@MailPCN.com
