Asset allocation? Of course. But what about cash flow diversification?

Posted by Bob Burton on Tue, Oct 27, 2009 @ 04:03 PM

Are your clients in need of steady income during retirement?
You could choose to finance a portion of this need through certificates of deposit (CDs), but you may run into problems…

Problem:
There is no guarantee a CD will last the clients lifetime - and your clients are looking for Guarantees.
Solution:
A single premium immediate annuity is the only financial product that can guarantee an income for life - "A Guaranteed Paycheck for life."

Problem:
CDs are subject to penalties if cash is withdrawn for unforeseen emergencies before the CD matures. 
Solution:
Many Immediate annuities now allow 100% return of principal on surrender, waiver of surrender charges for terminal illness, and 10% free withdrawals every year.  
Payouts can be tailored so that for certain medical conditions, payments increased up to 20%; or up to 50% for nursing home confinement. Options also include 3% inflation protection and survivor continuation. 

Annuity Bonus Round…
Immediate annuities avoid Probate upon an annuity owner’s death.  The cash value of the annuity will pass to the beneficiary outside of probate. Unless a CD owner has completed a “transfer upon death” form, the CD will pass through probate.

Higher Monthly Payouts, Immediate Annuities many times outperform CDs on payout rates because interest rates are only one component of annuity payouts. Distributions of principal contribute to the stream, as do mortality credits—the dividends that accrue to surviving contract owners. Mortality credits account for a growing share of the payment as you delay the start date

Also remember, insurers base their payout rates on corporate rates.  From 1919 to 2008, the average rate for long-term AAA corporate bonds was 6 percent.  Today, the rate is close to 6 percent and well above the lows of 2.5 percent in the late 1040's.

Can your clients CD's compete with this??

Click Here, to view a Case Study

For more information please contact Nickelle Leist at Nickelle@provada.com.