Life, SPIA & Deferred Annuities - Guaranteed* Income Options for ClientsSubmitted by Ameritas on July 18th, 2018
As life expectancies continue to climb, your clients will need steady, dependable retirement income that will last their entire lives. Bolstering their retirement plans with sources of guaranteed* income can help clients meet their needs for housing, healthcare and food for as long as they live.
Life insurance, single premium immediate annuities (SPIA’s) and deferred annuities can add value to your clients’ retirement plans by providing guaranteed* income during their golden years. When you educate clients about their options, you’ll help them fulfill life in new ways while you grow your business.
Pensions Bolstered by Life Insurance
If your client is married and has a defined benefit pension plan, he or she will need to choose either a “Single Life” payout option or a “Joint and Survivorship” payout option upon retirement. The choice is between a larger lifetime benefit with no survivor benefit versus a reduced lifetime benefit but continued income for the surviving spouse.
Pension Maximization is a strategy that uses life insurance to potentially increase the retirement income available to a client and his or her spouse. The retiree elects to take the larger Single Life benefit and purchases life insurance to replace the survivor benefits that they have forgone.
Social Security Bolstered by Annuities
If your clients need guaranteed income between the time they retire and the time they start receiving Social Security benefits, consider a period certain SPIA to fill the income gap.
Single Premium Immediate Annuity (SPIA)
A SPIA provides a guaranteed* income for whatever time period your client specifies. For added long-term flexibility, suggest SPIA laddering. SPIA ladders allow retirees to maintain a portion of their investments in equities and bonds while periodically using a portion to buy annuities to cover their income needs. This strategy offers your clients the benefit of reevaluating and adjusting their income strategies every five years, for example, as their income needs and expenses change.
A SPIA with a period certain payout can also:
- Fill the gap between early retirement and the beginning of Social Security or pension benefits
- Provide extra income during the early, more active years of retirement
- Cover care in a nursing home facility if your client does not already have Long Term Care Insurance
In addition to SPIA’s, a deferred annuity can turn client assets into a steady, guaranteed* income stream.
Deferred annuities can be useful options for retirement savings because interest earnings are tax-deferred until withdrawn. These annuities can also be converted (annuitized) into a guaranteed stream of income payments that can last for the rest of your client’s life. However, annuitization generally requires your client to exchange their annuity accumulation value for income payments, causing them to lose access to their investment. For an additional charge, your client can add riders to their annuity contract to better suit their needs. Some annuities offer riders that provide guaranteed income without having to annuitize.
Get the Conversation Started
Social media can be a great way to start the conversation. Share a post to your Facebook and LinkedIn followers with a link to our “Get Comfortable Thinking about Social Security” video.
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