If you work in insurance, you’re likely already familiar with annuities, or at least aware of them. Their stated purpose is to provide tax deferred growth, followed by a stream of income in retirement that cannot be outlived; that much is common knowledge. What you may not be aware of is the number of other roles that annuities can be called on to fill in the event that a more traditional instrument is not available.
Life insurance, of course, is a staple of the insurance industry, offering financial protection against the early death of a family member. Anyone with a life license can sell either a life or annuity policy, and could reasonably be expected to be using each for its intended purpose: protecting against death for the former, and ensuring income for a long life for the latter.
In some cases, however, a life policy may not be available. A client could be disqualified for any number of reasons, such as diagnosis of a terminal illness. They may simply be too advanced in age; unfortunately, some consumers don’t realize until late in life that life insurance is an important part of one’s financial picture, and by then they are either unable to qualify or the rating they receive makes the policy prohibitively expensive. In this case, an annuity may be able to provide an alternative solution.
Some indexed annuities can be issued with an “enhanced death benefit” rider. The annuity will function as normal, while also guaranteeing a certain amount of growth per year for the purpose of death benefits only. As long as the principal remains untouched, this can substantially increase the amount available to beneficiaries. It’s important to note that this does involve placing the money into deferral upfront, as opposed to the ongoing premiums of a life policy, and also does not offer the tax-free payout to beneficiaries that a life policy does. However, if life insurance is not available, an enhanced death benefit annuity can be a good alternate way of ensuring that a client’s heirs receive as much as possible.
Coming into the business almost straight out of school gives him a unique perspective on annuities and the benefits they can offer to clients, without some of the existing biases that tend to be prevalent in the industry. He aims to bring that perspective to as many as possible in order to help more people secure the income they need later in life.
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