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…
Category: 2015
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…
SPIA First-In First-Out (FIFO), What’s Going On? Old IRS Tables Clash With Current Annuity Pricing
Due to old and unmodified IRS life expectancy tables, particularly table V and VIII, many immediate annuities (mortality polled income contracts) may produce income tax advantages in the form of a “non-taxable” income source. Of course, non-taxable income is not the same as tax free income. How is this possible? It’s possible because these old IRS tables still assume shorter life expectancies derived from 1970s and earlier data. The shorter…
“King William’s Tontine” by Moshe A. Milevsky A Life Insurance Industry – Shot Across the Bow!
Book Review – Moshe A. Milevsky, in a life insurance industry – shot across the bow, makes yet another ground breaking appeal since his landmark 2004 white paper on Advanced Life Delayed Annuities (ALDAs) that set the tone for the deferred income annuity (DIA) products we have today. The book re-evaluates how we think about lifetime income and what might make sense when it comes to “sharing” longevity risk among…
Elder Financial Fraud and Immediate Annuities
One of the problems regarding elder financial fraud is average families have not fully considered all the merits of the array of financial products and how they might work to protect them from elder financial fraud. However, in today’s day and age, this is surprisingly an extremely short list indeed. The protection really needs to start at the financial product level and not just be some new advisor practice penalty,…
It’s Splitsville: Divorce and SPIAs 2015 Update
A few readers asked me to make further comments regarding the particular deferred income annuity (DIA) marital property case involving an IRA DIA contract highlighted in the LifehealthPro article I authored last year in April 2014 when DIAs feature adjustable start dates. Most DIA (IRAs and non-qualified) contracts feature adjustable start dates that can, upon the owner’s request, be advanced or delayed up to five years from the issued contract’s…
In the Deep Dark World of Supplemental Annuity Contracts; Owners Rights May Not Be Protected!
So, what’s the big deal, anyway! I don’t believe too many agents, CPAs or attorneys have seen a supplemental annuity contract. Supplemental annuity contracts are issued by carriers when owners elect to either partially or fully annuitize their existing deferred annuity contracts or life insurance policies. What many agents and individuals don’t realize is there is no state filing requirements for supplemental annuity contracts! This leaves the door open for carriers…
