A Creative Annuity and Life Insurance Solution

I recently worked with a couple (Mr. & Mrs. Jones) who were interested in annuities. They were looking for a retirement vehicle that would offer a steady flow of income for life. They had just under $390,000 to put in to their account.


The Joneses had spoken with some other agents, and one was able to offer them $19,800 per year by going with an "indexed annuity with income rider". I looked at several other carriers, but just couldn't find one to beat that payout. Frustrated, I asked around the office for ideas, and John Hockaday said "Have you looked at KSKJ Immediate Annuity?"

We ran the numbers, and much to my surprise, we were able to design a plan that was much simpler than the indexed annuity they had been offered. The indexed annuity product is very good, but can be hard for clients to truly understand.

They placed their $390,000 into a "single premium immediate annuity" with "10 year or life certain" on Mr. Jones. This means that the plan would pay the Joneses $26,000 per year for at least 10 years, even if Mr. Jones were to die. If he doesn't die, the plan keeps paying $26,000 every year.

The risk though is that he could die. If that were to happen, Mrs. Jones would stop receiving income after 10 years. To protect aganst that possibility, they bought a life insurance policy on Mr. Jones to ensure that Mrs. Jones never runs out of money. If he dies, she'll get $360,000, income-tax free. Furthermore, if Mrs. Jones dies, the proceeds can go to their daughter.

The net income left them over $21,000 per year. I was able to provide the Joneses with a solution that cost the same, and gave them more income and a sizable life insurance policy.

Please consider this combo sale and give your client the option when you feel they will qualify for the life side of the deal. Sometimes you have to get creative to find good solutions!

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