SPIA Commutations and Income Taxation Considerations

SPIA post issue management concerns are not often considered.  To most agents and individuals these contracts tend to be “fire and forget”.  Post issue management concerns are typically associated with SPIAs issued via the new business application process and not associated with SPIAs that are created via “supplemental” annuity contracts when one annuitizes an existing deferred annuity contract or life insurance policy.  Supplemental annuity contracts are altogether different animals when…

Deferred Annuities, Breaking the Serial – SPIA Rescue

As annuity interest rates start to heat up coming out of their ice age thaw, it’s time to revisit what serial annuity contracts are and how to break serial contracts once they occur.  Should general interest rates continue to rise and new declared rate deferred annuity business begins to pick up, there will be a fair amount of new 1035 exchange activity from older declared rate contracts with low current…

DOL Fiduciary Rule and SPIA Pricing Disclosure, It’s About Time!

There is a new sheriff in town! And his name is Fiduciary.  Given the new Department of Labor (DOL) Fiduciary rules regarding individual retirement arrangements (IRAs) and qualified retirement plans along with the retention of fixed immediate annuity contracts under the PTE 84 – 24 exemption, I believe the time has finally arrived to compel a more thorough and complete fixed immediate annuity pricing disclosure.  If all you carriers out…

A Blast from The Past SPIA Protection Unintentional Consequences

Several years ago, the old Presidential Life Insurance Company, Nyack New York (Presidential), issued a SPIA with very unique variability which, I helped design.  Of course, this was prior to the Athene Life and Annuity Company (Athene) purchase in 2013.  Up until the Athene purchase, tens of millions of dollars of premium were accepted by Presidential for the “Income & Legacy”, the marketing name for the SPIA.  As fate would…

Joint & Survivor Annuity (qualified) Non-Spouse Creditor Protection

Weeks ago, I commented on Forbs post regarding establishing a “conduit trust” for a non-spousal IRA beneficiary, usually an adult child.  The attorney was recommending such a trust from a creditor protection standpoint relative to the IRA beneficiary.  In June of 2014, the Supreme Court ruled a non-spousal inheritance of an IRA isn’t protected as “retirement funds” relative to the non-spousal Beneficiary.   Therefore, inherited IRA funds may be seized in…

SPIAs a Historical Perspective

It occurred to me after writing fixed lifetime SPIAs for more than 30 years; I achieved a 100% persistency rate (except for a few deaths) and every consumer purchase along the way has been the absolute deal of a lifetime.  I mean, how many financial products have been in a bull market for more than 30 years?  Interest rates have only trended down since the mid-to late 1980s and carriers have only…

Charitable Gift Annuities vs. Commercial SPIAs

When clients express interest in charitable gift annuities (CGAs), the purchase decision usually begins with a charitable intent. In other words, they have a high interest in financially supporting a favorite charity that will issue a CGA and also by the way, reap some nice tax benefits along the way. However, in the mortality based income world, I believe there is plenty of room at the table for both CGAs…

Under Annuitized Households an Epidemic

My local paper, the South Florida Sun Sentinel, ran in depth coverage at the end of last year regarding the Hidden Hungry, in an article by Diane C. Lade about food insecurity issues and poor diets facing elderly populations in South Florida.  While many reasons were cited for this, the underlying reason was poverty. In South Florida, older age residents as a percentage of the overall population are skyrocketing.  As…

Joseph M. Belth Tontine Rebuttal

I’m disappointed that the insurance industry’s venerable Joseph M. Belth(Belth), in his recent Insurance Forum blog article: “No 127: Tontines Are Not Likely to Stage a Comeback” elected to not support a possible revival of a tontine designed income financial arrangement. Moshe Milevsky (Milevsky), a professor at the Schulich School of Business and a member of the Graduate Faculty in the Department of Mathematics and Statistics at York University in…