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Annuity Spotlight for February 2012
 
What's New 

 

Additional State to Adopt NAIC Suitability Model  
    

Connecticut is scheduled to adopt requirements on February 18, 2012.

 

The rule requires all insurance producers selling or soliciting annuity products to obtain a four-hour continuing education course from an approved vendor.  This is a one-time requirement.  Product specific training - by each Carrier - will also be required. 

 

PRIOR to taking an application, please make sure
you have fulfilled both requirements.

 

 

Notice on Product Specific Annuity Training 


As each state adopts the NAIC Suitability model, product specific

training will be required - for each carrier you are contracted with - before an application may be taken.  

If you write business in any of the following states, you must complete product specific training for each Carrier before an application may be taken:  AL, CA, CO, CT, DC, HI, IA, IL, IN, KY, MD, MN, ND, OH, OK, OR, RI, SC, TX, WI, WV.  

 

If a submitted application is dated before the required product training has been completed, the application can not be processed and will be returned by the home office.  In this environment of falling interest rates, failure to complete product specific training in a timely manner may affect your clients ability to lock in a stated rate before rates fall again.  

All states will be adopting the NAIC suitability model at some point in the future and will require product specific training.  Please check frequently to see if your state has been added to the list.   Please do not delay!  Complete your required, carrier specific product training today.

 

Avoid Returned Applications 

 

Have you... 


... Completed all required, product specific annuity training?


... Correctly completed all suitability questions?


... Pulled all of the required forms?

 

When in doubt,  call the Annuity Center!

 

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What's Hot

 

Best of Fixed Annuities Snapshot 

 

 

Click here to enlarge.  Updated as of 2/13/2012.


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 You can earn up to a 20% BONUS on your earned commissions!

 Exclusively through DAI.  Contact us for Details

  

 

 

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In the Market

 

Don't Get Mad...Get Educated!

 

You did your job. You talked to your client about fixed annuities and their benefits and how they can help with retirement planning goals. You took their application, and made sure it was fully completed. You checked that you had all the required forms. Your client gave you a check and you submitted the application to the insurance carrier. You did everything you were supposed to do. 

Done, right? Not so fast. You may not be done. You may be in for a real surprise when the application is not accepted and returned to you. Why?  Read on...

 

Since the National Association of Insurance Commissioners finalized its Suitability in Annuities Regulation in March of 2010, multiple states have adopted the regulation and all states are required to do so before the end of 2013. The regulation requires all annuity producers to receive mandatory suitability and product training.

   

At first glance, it doesn't sound so difficult really. Take a course and you're done, right?  Unfortunately, that is not the case.

 

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Visit our Blog to read the entire article.  

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Sales Ideas

 

A Guaranteed Paycheck - for LIFE! 

 

 Can you predict how long you'll live?  For a 65 year old couple, there is a 67% chance that at least one of them will live to Age 90 and a 38% chance that at least one of them will live to 95!   Your client can be comfortable with a retirement of 20 years or longer with a Genworth SecureLiving Indexed annuity and the optional Income Protection Rider.   By adding the Income Protection rider your clients are guaranteeing a stream of income withdrawals that will last as long as they do.  It's like creating a guaranteed "paycheck" for life.   

 

What does your client get from the Income Protection Rider?

 

Protection:

Once your client begins income withdrawals, they lock in their annual withdrawal limit.  Lifetime withdrawals are guaranteed to never decrease unless an excess withdrawal is made.   

Security: 

Your client receives an income withdrawal each year for as long as they live, guaranteed.

Flexibility:    

Your client can stop and start their income stream as their retirement needs change, and withdrawals can begin anytime after the first contract year. 

 

Want to see the Income Protection Rider in action?  Check out this case study, below:

 

Sample Case Study

 

Optional Income Protection Rider Guide

 

 

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Let's Explore

 

6 Common Mistakes Retirees Make

 

1.  Being too conservative with money.

Inflation's impact is real and measurable. Do you have clients that are not totally convinced?  In 1981 a postage stamp cost 18 cents.  Thirty years later it stands at 45 cents - an increase of 250%.   T-Bonds, CDs and other savings instruments can give your clients a false sense of security.   While these options do provide a small amount of guaranteed income, they don't stand a chance to keep up with inflation long term.   As of September 2011 the latest rate of inflation was 3.9% annually.  Below are the current Annual Average rates for a few popular vehicles: 

  • Savings Accounts - 0.13% annually
  • CD's - 0.34% annually
  • Checking Accounts - 0.49% annually
  • Series EE Bonds - currently earning 0.60% (bankrate.com, 2/1/2012)  

 

2.  Not guaranteeing basic income needs  

Watching their retirement portfolio fall to pieces when the market collapses is not a part of retirement that people expect and plan for. When it comes to basic retirement income, that income should be guaranteed.  It shouldn't matter what the markets do or don't do, that base level of income should be steady and come to them - guaranteed.   Whether in the form of a SPIA, annuitization of a Deferred annuity, or perhaps a Guaranteed Income Benefit Rider, clients should put enough money into guaranteed products to ensure their basic income needs are met.

 

3.  Bailing out the kids

Although it seems like an obvious pitfall, bailing out the kids can have a devastating effect on your client's financial security.   Encourage clients to put their financial retirement needs first, and then figure out how much they can safely spend.  Their grandchildren can take out loans for college, but they can't take out a loan for retirement.

 

4.  Thinking your Traditional IRA is always the best vehicle 

IRAs for years have been the most popular savings vehicle for people who want a tax shelter for their retirement savings.   Your client can take an income tax deduction on the money contributed to the plan and compound yearly earnings free of current income tax.  IRA's are great for accumulating money, but there are four features to be aware of in retirement:

  •  Every dollar taken out of the IRA is taxed
  •  Withdraws can force your client to pay more taxes on Social Security income
  •  It is the only type of account which MANDATES withdrawals at a specific age, and   
  •  All growth in the account increases future tax liability.

Before your client leaves a ticking tax time-bomb to their spouse, consider converting the IRA over to a Roth IRA, or use those IRA funds to purchase a single premium life insurance policy which pays a tax-free death benefit.

 

5.  Underestimating the cost of health care

Unless your client's health or age make it unfavorable, consider buying LTC insurance which pays for in-home care and nursing home care. Nearly two-thirds of people over age 65 will need long term care at home or through adult day health care, or care in an assisted living facility or nursing home.  According to the Genworth Cost of Care Survey (2011), the Median Annual Expense, nationwide, for some of these services is:

  • Home Health Aide - $43,472 annually
  • Adult Day Care - $15,600 annually
  • Assisted Living Facility - $39,135 annually for Single Occupancy
  • Nursing Home - $70,445 for Semi-Private room

A long term care policy can go a long way to ensuring significant medical expenses later in life don't wipe out your clients' retirement assets.  

 

6.  Underestimating life expectancy

With advances in medical technology and health care, your client's retirement could last as long as 20-30 years or more.   According to the Society of Actuaries, there is a 67% chance that at least one member of a 65-year old couple will live to age 90 or older.   Many retirees only plan for 10 or 15 years of retirement, leaving the potential for income shortfall a very real concern.   Make sure your client has realistic expectations about how long retirement might last, and plan accordingly.

Special Announcement

 

The Annuity Center's Website has a Brand New Design 

 

Website BarcodeVisit the new home page regularly for updated news, events, important information and highlights!  In the new Carrier Section you will find all product guides, rates, state approvals and forms, etc. that you need for each carrier.   Visit the new Marketing & Sales and Education & Compliance sections for sales ideas, educational materials and more. 

 

Visit our Annuity Center to register. Or locate the link in the Resources section of our website (www.dworkin.com). 

Contact our Annuity Center for additional information!

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Dworkin Associates Inc. 22 South Main Street Rochester, NH 03867