Webinar—Thursday, October 31st at 1:00 p.m. EDT
If you missed last week’s newsletter, click on the following to sign up for this week’s webinar:
https://advisorshare.net/using-forced-ira-rollovers-to-gather-aum-and-mitigate-402a-liability/
Dramatically Improve Guaranteed Income on Qualified Funds
FYI, did you know that MOST qualified plans ONLY allow VAs with SINGLE life payouts?
Would clients trade a SINGLE life payout from a VA for a higher JOINT life payout from an FIA?
Absolutely!
Don’t believe it’s possible to 1035 a SINGLE life VA with better JOINT life FIA?
Let’s look at some real-life examples that prove it’s a viable option advisors should be exploring.
Example #1—Jackson National VA (husband age 74; wife 72):
| Jackson VA account value: | $762,965 |
| Jackson VA surrender value: | $744,598 |
| New FIA account value with 3% bonus: | $766,938 |
| New FIA with no bonus: | $744,598 |
Guaranteed Lifetime Income Comparison
| -Jackson VA (single-life): | $3,195 / month ($38,344 a year) |
| -FIA with 3% bonus (joint-life): | $4,761 / month ($57,137 a year) |
| -FIA with NO bonus (joint-life): | $4,622 / month ($55,473 a year) |
What’s the difference between the bonus and non-bonus FIA? The caps on the measuring stock index (S&P 500) are 2% higher than the non-bonus product.
The increase in income is a 45% to 49% increase AND it’s a JOINT life payout!
If you are a fiduciary and have clients with single-life VA income riders, don’t you owe it to your clients to review these products for a potential 1035 exchange?
Example #2—Prudential VA (husband age 57; wife 56)
| Pre-VA account value: | $478,051 |
| Pre-VA surrender value: | $460,656 |
| FIA account value no bonus: | $460,565 |
The non-bonus product is listed because the client will defer the income and the non-bonus product when deferring has better potential for higher payouts.
Immediate Guaranteed Lifetime Income Comparison
| -Prudential VA (single-life): | $17,209 / year |
| -FIA with NO bonus (joint-life): | $26,096 / year |
5-year deferral—Hypothetical Lifetime Income Comparison
| -Prudential VA (single-life): | $24,308 / year |
| -FIA (joint-life): | $33,503 / year |
If the income was exactly the same, I’d recommend a 1035 just to get JOINT life payout!
Running the numbers
If you want help running numbers on whether it makes sense and is suitable to 1035 VAs with income riders into FIAs with income riders, please contact:
Daniel McDonald, co-founder of AdvisorShare: daniel@advisorshare.com.
What is your IMO doing for you?
For those who don’t know what AdvisorShare is, it’s the IMO (Insurance Marketing Organization) Daniel and I started 5 years ago.
We got tired of hearing advisors complain about working with IMOs who:
1) had someone on the sales desk that was new and not overly helpful
2) had someone on the sales desk who was seasoned but recommended the same 1-2 products
3) provide no real case design
4) are not transparent when it comes to commissions and what is fair for agents to be paid
5) have lousy marketing tools
Daniel and I started “AdvisorShare” (www.advisorshare.com) to remedy the above issues!
IMO Ownership
When we started the IMO, we carved out 50% of the IMO to be owned by producing advisors (at no cost to the advisor). So, when we sell the IMO someday for $20-$40+ million dollar , guess who will be get paid? The advisors who helped us build it.
When the IMO you are working with is sold to one of the big IMO aggregators (Simplicity, Integrity, etc.), what will you be paid? ZERO! If you are working directly with an IMO aggregator, when it’s sold to private equity someday, what will you be paid? ZERO
Why not work with an IMO that doesn’t have the above-listed problems and is also one you can become an owner in so when it’s sold, you can get paid off?
