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…
Annuity Rates, Is This The Best We Get?
Many times, I wonder if today’s annuity rates will be the best we are going to get. As of now, a 3.00% crediting rate (on average) can be had on declared fixed rate deferred annuity contracts with durations of seven years or longer, generally from carriers with an AM Best FSR of A- or better. In the fixed immediate annuity market and unless you are able to incorporate some kind…
Immediate Annuity Mortality & Interest Broken Down
Because insurance companies use an actuarial “averaging” method when they price mortality based immediate annuity contracts, it’s hard to distinguish the mortality gains from the interest gains being credited to the contract. This lack of transparency causes consumers and agents a like confusion regarding the deal they are really getting. This lack of transparency can be one of the biggest hurdles of explaining just how mortality based immediate annuity contracts…
What Happened to The Impaired Risk Underwriting Immediate Annuity Market!?
Short History Ten years ago, with great fanfare, LIMRA authored a Research Briefings paper article[i] regarding current SPIA impaired risk market participants and its high hopes for their expanding role in income planning. At the time, seven carriers, including my old company a longtime market participant; Presidential Life Insurance Company of Nyack, New York (Presidential Life) was active in that segment of the immediate annuity market with an additional ten…
Immediate Annuities; Rich Incomes, Rich Multi-Generational Tax Benefits
Immediate annuities, known to be rich in guaranteed income, are also rich in multi-generational income tax benefits versus other annuities. One of my all-time favorite immediate annuity income tax strategies for both contract owners and their beneficiaries for wealth transfer purposes is the interplay of IRS permitted cost basis recovery rules between the generations. More proof, the Federal government really likes these contracts and lavishes tax benefits accordingly. Let’s look…
