Download - Index Annuity “Concerns”
For Agent or Broker Use ONLY. Not for use with the general public.
Index Annuity “Concerns”
Long/High Surrender Charges
Products Favor Agent, Not Client
Limited Growth
No Liquidity
For Agent or Broker Use ONLY. Not for use with the general public.
INVESTMENTS SAVINGS
Mutual FundsBonds
Variable Annuities
Stocks
CDsMoney MarketsFixed Annuities
T-Bills
INDEXANNUITY
For Agent or Broker Use ONLY. Not for use with the general public.
INVESTMENTS SAVINGS
Mutual FundsBonds
Variable Annuities
Stocks
INDEXANNUITY
For Agent or Broker Use ONLY. Not for use with the general public.
Bonds
Costs
Call Options
• Fixed Annuity • Indexed Annuity
BondsCosts
For Agent or Broker Use ONLY. Not for use with the general public.
How Does Interest Get Credited?What to look for:
Simple Crediting Method(How clients earn interest)
Annual Reset Design(The reason to buy index annuities)
For Agent or Broker Use ONLY. Not for use with the general public.
Understanding Index Annuity Crediting Methods
Annual Reset – Point to Point with Cap
Allows 100% Participation of Index Increase Up to a 6% Annual Cap.
For Agent or Broker Use ONLY. Not for use with the general public.
Utilizing Index Annuities in Today’s Portfolio’s
Correction Protection
Fixed Income Alternative
For Agent or Broker Use ONLY. Not for use with the general public.
3 Year Hypothetical
Start End 6.00% CapAccount Value
Start End 6.00% CapAccount Value
Start End 6.00% CapAccount Value
1000 1100 = 10.00% Increase 6.00% Growth $106,000
1100 1000 = 9.10% Loss 0% Growth $106,000
1000 1040 = 4.00% Increase 4.00% Growth $110,240
S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
For Agent or Broker Use ONLY. Not for use with the general public.
Where Would You Be?
2006200720082009201020112012
Year S&P500* Interest Credited(6.00% Cap)
Index AccountValue
+12.8+3.8%-38.5%+27.1%+12.6%+2.1%
+13.29%
6.00%3.8%
0.00%6.00%6.00%2.10%6.00%
$106,000$110,028$110,028$116,629$123,627$126,223$133,579
If the market declines all 7 years, you walk away with your original deposit of $100,000
S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013
For Agent or Broker Use ONLY. Not for use with the general public.
Now may be a great time to position an index annuity in
your clients' portfolio.
Why?
For Agent or Broker Use ONLY. Not for use with the general public.
Correction Protection
Consider a $500,000 client portfolio fully invested in the market in 2003
2003: $500,000
2013: $850,000
$500,000 $350,000
S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. “Fully invested in the market refers to the S&P500 index.
For Agent or Broker Use ONLY. Not for use with the general public.
Correction Protection
1/3/19
95
9/3/19
95
5/3/19
96
1/3/19
97
9/3/19
97
5/3/19
98
1/3/19
99
9/3/19
99
5/3/20
00
1/3/20
01
9/3/20
01
5/3/20
02
1/3/20
03
9/3/20
03
5/3/20
04
1/3/20
05
9/3/20
05
5/3/20
06
1/3/20
07
9/3/20
07
5/3/20
08
1/3/20
09
9/3/20
09
5/3/20
10
1/3/20
11
9/3/20
11
5/3/20
12
1/3/20
130
200
400
600
800
1000
1200
1400
1600
1800
S&P 500 6.00%
2014
6.00%
2015
6.00%
2016
6.00%
2017
Assuming a 7.00% per year bull market
S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
For Agent or Broker Use ONLY. Not for use with the general public.
Correction Protection2013: Assuming a 7.00% per year increasing market
Correction Protection 2013: $850,000
$500,000 $350,000
$655,398 $441,866
$1,097,264
Fully Invested: $1,114,176Correction Protection: $1,097,264
($16,912)
Fully Invested 2013: $850,000
$1,114,176S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
For Agent or Broker Use ONLY. Not for use with the general public.
Correction Protection
1/3/19
95
9/3/19
95
5/3/19
96
1/3/19
97
9/3/19
97
5/3/19
98
1/3/19
99
9/3/19
99
5/3/20
00
1/3/20
01
9/3/20
01
5/3/20
02
1/3/20
03
9/3/20
03
5/3/20
04
1/3/20
05
9/3/20
05
5/3/20
06
1/3/20
07
9/3/20
07
5/3/20
08
1/3/20
09
9/3/20
09
5/3/20
10
1/3/20
11
9/3/20
11
5/3/20
12
1/3/20
130
200
400
600
800
1000
1200
1400
1600
1800
S&P 500
0.00%
2014
6.00%
2015
6.00%
2016
6.00%
2017
Assuming a 25% correction followed by 10.00% rebound years
S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
For Agent or Broker Use ONLY. Not for use with the general public.
Correction Protection
2013: $850,000
$500,000 $350,000
Assuming a 25% correction followed by 10.00% rebound years
Year Fully Invested Correction Protection
Difference
2014 $637,500 $725,000 $87,5002015 $701,250 $783,500 $82,2502016 $771,375 $847,010 $75,6352017 $848,512 $915,980 $67,468
2013: $850,000
$850,000
S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
For Agent or Broker Use ONLY. Not for use with the general public.
Correction Protection
1/3/19
95
9/3/19
95
5/3/19
96
1/3/19
97
9/3/19
97
5/3/19
98
1/3/19
99
9/3/19
99
5/3/20
00
1/3/20
01
9/3/20
01
5/3/20
02
1/3/20
03
9/3/20
03
5/3/20
04
1/3/20
05
9/3/20
05
5/3/20
06
1/3/20
07
9/3/20
07
5/3/20
08
1/3/20
09
9/3/20
09
5/3/20
10
1/3/20
11
9/3/20
11
5/3/20
12
1/3/20
130
200
400
600
800
1000
1200
1400
1600
1800
S&P 5006.00%
2014
0.00%
2015
6.00%
2016
6.00%
2017
Assuming we grow another 10%, correct by 30%, rebound 10% per year following
S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. Assumed market returns are hypothetical and are not indications of future performance
For Agent or Broker Use ONLY. Not for use with the general public.
Correction Protection
2013: $850,000
$500,000 $350,000
Assuming we grow another 10%, correct by 30%, rebound 10% per year following
Year Fully Invested Correction Protection
Difference
2014 $935,000 $921,000 ($14,000)
2015 $654,500 $756,000 $101,500
2016 $719,950 $816,760 $96,810
2017 $791,945 $882,705 $90,760
2013: $850,000
2013: $850,000
Assumed market returns are hypothetical and are not indications of future performance. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. “Fully invested in the market refers to the hypothetical assumptions.
For Agent or Broker Use ONLY. Not for use with the general public.
Fixed Income Alternative
For Agent or Broker Use ONLY. Not for use with the general public.
Fixed Income Alternative
Chart derived from www.Morningstar.com on DWS GNMA A Load Waived, Intermediate Government, and Barclays US Agg Bond TR. Quote as of 08/14/2013
For Agent or Broker Use ONLY. Not for use with the general public.
Fixed Income Alternative
Solution?
Utilize systematic withdrawals from an index annuity as a fixed
income alternative
For Agent or Broker Use ONLY. Not for use with the general public.
Where Would You Be?
Year Interest Credited(5.50% Cap)
Index AccountValue
Year Beginning Value S&P500 Interest
CreditedValue Before Withdrawal
Withdrawal Ending Value
2006 $100,000 12.8% 6.00% $106,000 $3,500 $102,500
2007 $102,250 3.8% 3.8% $105,370 $3,500 $101,870
2008 $104,629 -38.5% 0.00% $101,870 $3,500 $98,370
2009 $101,129 27.1% 6.00% $104,272 $3,500 $100,772
2010 $103,443 12.6% 6.00% $106,818 $3,500 $103,318
2011 $105,891 2.10% 2.10% $105,488 $3,500 $101,988
2012 $104,615 13.29% 6.00% $108,107 $3,500 $104,607
We are taking a 3.50% withdrawal(Coupon) each year
YTM based on this time period: 4.39%S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. “Fully invested in the market refers to the S&P500 index.
For Agent or Broker Use ONLY. Not for use with the general public.
Where Would You Be?
Year Interest Credited(5.50% Cap)
Index AccountValue
Current 7 Year A
Rated Bond7 Years of Coupon
Paym
ents
Purchase Price$108,468
$4,875
$4,875
$4,875
$4,875
$4,875
$4,875
$4,875
Par Value $100,000
ING FIA with Systematic
Withdrawal 6.00% Cap, 2006-2012
Purchase Price$108,468
$4,875
$4,875
$4,875
$4,875
$4,875
$4,875
$4,875
Account Value $109,151
7 Years of Withdraw
als
S&P500 returns were taken from www.yahoo.com. Cap rates are subject to change. Values are subject to the claims paying ability of the issuing insurance carrier. All information current as of 8/15/2013. “Fully invested in the market refers to the S&P500 index. A Rated corporate Bond quoted as of 8/14/2013 with a 7 year maturity non-callable HSBC bond from www.scottrade.com
For Agent or Broker Use ONLY. Not for use with the general public.
Producers Choice Contact Information
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