Westland Financial Services

A Case to Share November 29, 2018

By

During the last few weeks we have worked on dozens of life, long term care, disability and annuity cases working alongside our Advisors.
If you are not discussing these issues with your clients then who will? 

convictionCase 1) 

We recently had a case where we looked at several Long Term Care strategies and recommended a MoneyGuard Solution as the one that was clearly in the client’s best interest.  However the Advisor almost lost the sale to a keen Nationwide salesman with a strong conviction and salesmanship for the product he was offering and he focused on the benefits of Indemnity vs. Reimbursement. We helped save the case with Care and Reasoning and being more convinced in offering what was in the client’s best interest. The opposition was a Nationwide Salesperson offering CareMatters – a product very similar to MoneyGuard and in many cases a very viable and solid solution.  We love both products.
However in this case we were trying to solve for the most long term care benefit and had to refocus the client on that goal and NOT that maybe her daughter might care for her 25 years in the future and she could pay her more easily through an indemnity based solution.
To the client…
Below are some additional thoughts to consider.
Reimbursement vs Indemnity should not be your focus.  The main point is making sure your family is coordinating care and not having to provide care.  When comparing apples to apples, MoneyGuard starts out at much more in monthly benefits and compounds to be a significant difference in monthly benefit available over time, especially at ages when a long term care event is likely to happen.
Below are some additional thoughts to consider about indemnity vs. reimbursement:
  • Not many differences that will truly matter
  • Your caretaker still needs to coordinate care and physically pay the bills each month and manage the claim and your finances
  • You will have to be reassessed as needing care services at least annually for indemnity payments to continue.
  • A reimbursement design allows for direct billing and direct payment, so a caretaker essentially supervises claim.
  • Even though indemnity plans allow for direct compensation of a family member, this can affect quality of care and the quality of life for the caregiver.  Are you are really considering and wanting a family member providing your care if you have insurance?  If so,
    • Is a family member going to be qualified to provide the type of care needed?
    • Will they physically be able to provide care needed?
    • Will they be around and available to provide the care when needed in the future?
    • Will family members all be in agreement as to what is needed for your care?
    • Will there be government requirements for caregivers to claim the income received from you or for you to provide workers compensation insurance, etc.?
    • Will there be pressure to use funds for purposes other than your healthcare?
    • What will payment and care coordination technology look like in 30 or more years.
NOTE: Women who cared for ill parents were twice as likely to suffer from depressive or anxious symptoms as non-caregivers.
Source: Press release (August 2002). “Reverberations of Family Illness: A longitudinal assessment of informal caregiving and mental health status in the nurses’ health study,” American Journal of Public Health, as quoted in Family Caregiver Alliance, “Women and Caregiving: Facts and Figures,” FCA, https://www.caregiver.org/women-and-caregiving-facts-and-figures (accessed December 16, 2016).
Other Concierge Care Bullet Points
  • When you need to go on claim, you are assigned a case manager who is a single point of contact for the entire family to assist in all phases of the process (paperwork, care coordination, etc.- no call centers).
  • Silver Brick Road – included with each MG contract, client and family can find providers based on geography, offerings, ratings, needs (what typically takes the average family 2-6 weeks takes 5-10 minutes!), articles, videos, Care Circle, Assessments, pre-planning.
  • Care Circle – keeps family and friends in the loop – anyone named in the Care Circle by the owner of MG receives an observation report by the Caregiver.  This Care post is an email blast sent to each member of the Care Circle each day care is provided, detailing what care was provided that specific day, what is going on, what they did, what to do now.
  • Assessments – puts a baseline on what to do – can also be a cognitive screen.  Insured can do on self or Care Circle member can do the assessment on insured, receive guidance and provide suggestions.
  • Next steps – we provide a list of the right questions a family should be asking potential caregivers.
  • Bill pay – a way to pay caregivers directly without the need of sending a check to the family who then has to deposit and write out more checks to caregivers.
  • Pre-planning – a service that allows you to plan for your care, develop a plan choose your care provider prior to being on claim.  Allows insured to fully develop a plan based on a future need because of a diagnosis that does not have immediate affect but eventually will (MS, Alzheimer’s, rheumatoid arthritis, etc. – debilitating conditions that can work slowly over time).   We save the plan in our system and when time comes for pulling the trigger for benefits there is no crisis management, the plan is already to go.
  • Family has White Glove Concierge Care and with the dial of a toll free number, they are put in touch with your Concierge Caregiver to guide everyone through a difficult time.
I sound like a salesman…
The only reason I would recommend Nationwide for you, is if you thought the slightly higher death benefit outweighed the loss of LTC Benefits. The Return of Premium Option is also better with Nationwide, but you are paying for this benefit and it is hardly ever invoked because you would have to give up your LTC Benefits and that almost never would make sense. And if you think you will need these funds back for some reason, then you are most likely committing too much of your portfolio today.  Plus, this type of coverage would be more expensive to reacquire the same protections at older ages. Surrendering is also not recommended when there may be loans available from cash value. If you didn’t need care until your 90’s, then in hindsight the Nationwide product would be better, but you would have to carry that extra risk for more than 30 years.
If you decide to stick with Nationwide no hard feelings.  It’s what you believe is best that matters and either Nationwide or MoneyGuard provide you and your family solid protection.  Having helped you decide to put a protection plan in place is most important to me.
Sorry to carry on, but this is an important decision for you.
She agreed on the importance of the decision and with thoughtful consideration stuck with the recommendation for MoneyGuard.
Please do not hesitate to contact your Westland team any time.  We are here to help.

A case to share October 16, 2018

By

During the last few weeks we have worked on dozens of life, long term care, disability and annuity cases working alongside our Advisors.
If you are not discussing these issues with your clients then who will? 
 
IULCase 1) 34 year old to Generate $140,000 in tax free retirement income
Advisor had a client who asked about life insurance that could generate tax free retirement income and called us for assistance.  This is not unusual, your clients are seeing these ads and are targets every day for life, long term care, disability and retirement planning.  You must make sure your clients know you can provide these services.  Westland is your one-stop-shop to assist.
 
This client was a younger solid earner.  He could afford an extra $1,000 monthly to save toward retirement and had a new family that needed some added life insurance protection.
We created a solution with indexed universal life that would accept the $1,000 monthly and provide $400,000 of initial life insurance protection growing over time to over $1,600,000 of protection.
In addition, he would hypothetically be able to pull out over $140,000 annually to supplement retirement income at age 70 for 20 years.
 
Please do not hesitate to contact Nancy or I at any time.  We are here to help.
Nancy Woo: (800)238-8144 nancyw@westlandinc.com  
 
 
Hopefully, you are thinking of clients right now where you can add real additional significance and value to their family with protection and legacy strategies.
Call for your personalized case designs today.  We are here at your service.
(800)238-8144 x127

A Case to Share September 6, 2018

By

Best Practice
Call Westland to discuss a case – we will gather information and then research options to recommend what  we feel is the best solution for your client.
 
Case 1) 
Recent discussion with a money manager and financial planning team who were evaluating a recommendation to address LTC Risk for a couple…
Husband (72) wife (62) second marriage $3,600,000 investment portfolio.  He had a solid LTC plan in place already and were evaluating options to address her LTC Risk.
After looking at many LTC options we created a LTC plan for presentation and it included a recommendation for re-positioning $140,000 into MoneyGuard for her with 3% inflation and that he keep his current plan.  She would receive the couples discount and have over $1,000,000 for care at age 85 (our target benefit after 23 years of inflation adjustment).
Effect on portfolio was net worth at age 100 would go from an estimated $9,200,000 to $8,700,000 using financial planner and money manager assumptions.

However, with a hypothetical LTC event factored in at age 85 and no insurance, portfolio value at his age 100 could drop portfolio value to an estimated $6,300,000 at age 100 for surviving spouse.

Money manager made the following comments to Financial Planning Team.

This may be an oversimplification, but it appears that the break-even on their expected rate of return for growth assets is around age 86 or so…if she goes to LTC. Obviously one doesn’t buy a MoneyGuard or similar policy for the death benefit, so the only remaining issue is at what point she would need LTC benefits, and how long that may last. If she lives beyond 86 and doesn’t need LTC, then the opportunity cost becomes greater than the potential of the LTC policy.

At that point, it becomes more of a non-financial decision about peace of mind and longevity risk. If I were making the decision for my own policy, I’d evaluate the possibility of needing the LTC, based upon family history, health, etc.
MY RESPONSE: It should be noted that everything in the MoneyGuard policy will be guaranteed by Lincoln vs. an expected rate of return that is hypothetical in your assumptions. Even with family history in her favor, you never know when something might happen, like a stroke, other debilitating sickness or accident.
There are many schools of thought on these issues and I appreciate your input. Some people are much more comfortable with self-insuring. However, as a holistic financial planning team, would you be okay with a recommendation not to purchase some protection and an event happened? I guess the answer could be Yes, if it never happens or happens after age 86 and the expected returns are met or exceeded, and the LTC event was as expected or less than expected.

What our analysis seems to indicate is that there is far greater downside risk for not much lost in upside potential. With the re-position for MoneyGuard protection, your values at age 100 for the older spouse show $8,700,000 Net Worth with or without our hypothetical LTC event. While NOT putting in place protection shows only about 6% more in upside potential to an expected $9,200,000 Net Worth at age 100. The RISK however, is a 32% potential loss to $6,300,000 if our hypothetical LTC event happened. So again, the question is; do you give up a potential gain of about $600,000 to eliminate a potential loss of about $3,000,000?

Here is another way of looking at this. You are betting $3,600,000 (today’s portfolio value) and are expecting a $8,700,000 pay off if we re-position the $140,000 today. Or do we bet $3,600,000 and might get $9,200,000 if we win (no ltc event) or $6,300,000 if we lose (having hypothetical ltc event). By the way… it is about a 70% chance that you lose and 30% chance that you win.

What will most clients be more appreciative of? If you help them prevent taking a big hit or squeezing out a little more yield?

I sincerely understand though that this couple should be just fine no matter the decision.

Sorry to carry on…

Tim
NOTE: The financial planning team highly recommended re-positioning the $140,000 into MoneyGuard. We are in the process of implementation.

If you do not have the time to commit for doing insurance work, then assign insurance work to an associate or allow Westland to assist.  What would you pay an associate? 50%?  Westland will be your associate for 25% or less depending on your role.  Best of all you are keeping it all in your control and not allowing any competition to creep into your practice.  We just become part of your practice just like an associate.

Please do not hesitate to contact Nancy or I at any time.  We are here to help.

 

A case to share August 9, 2018

By

During the last few weeks we have worked on dozens of life, long term care, disability and annuity cases working alongside our Advisors.
If you are not discussing these issues with your clients then who will? 

1) Best Practice
Call Westland to discuss a case – we will gather information and then research options to recommend what  we feel is the best solution for your client.
 
Westland is here to support you and work to enhance your practice.  We want to help you help more clients with putting in place protection strategies that only insurance products can provide.  Advisors who do these simple tasks will see significant increases in production and client awareness that you offer additional services.  We have heard often that clients didn’t know that their advisor also handled LTC, Life, Disability or Medicare assistance.  Now you can have experts backing you up through Westland.
 
Best practices that will greatly help:
 
For client meetings; Use an agenda for every client meeting. 
 
Have topic bullet points for: Long Term Care Risk, Legacy Goal discussion, Life Insurance Policy Review, Disability Protection Strategy. 
 
Client homework: bring in most recent statements of your life, ltc, disability policies for your files.
 
Use Agenda’s for On-boarding new clients and for all Review Meetings. 
 
Super Value Add: Ask clients to bring in copies of all declaration pages for Property and Casualty (Home, Rental, Auto, Umbrella, Etc.).  List these on an insurance grid and keep it updated.  Note:We are happy to assist with creating and maintaining the insurance grid, for a negotiated fee (Sample Grid). In California, Westland does have an affiliation with a firm who will evaluate coverage limits and create a presentable recommendation report for your review. 
 
Other Value Add to consider:  Provide your clients a Home Appraisal report that you pay for.  Then you can be realistic when creating client financial statement – balance sheet.
 
Other: Review 401(k) and Health Insurance.
 
Have Westland help you create a Life Insurance Needs Report. (Sample Life Needs Report)
Have Westland help you create a LTC Needs Report. (Sample LTC Needs Report)

 

If you do not have the time to commit for doing insurance work, then assign insurance work to an associate or allow Westland to assist.  What would you pay an associate? 50%?  Westland will be your associate for 25%.  Best of all we are not competition.  We just become part of your practice just like an associate.
Please do not hesitate to contact Nancy or I at any time.  We are here to help.
Nancy Woo: (800)238-8144 nancyw@westlandinc.com  
 
 
Hopefully, you are thinking of clients right now where you can add real additional significance and value to their family with protection and legacy strategies.
Call for your personalized case designs today.  We are here at your service.

A case to Share May 17, 2018

By

Case 1
Client, Female age 68, with first grandchild having first birthday. Her Advisor mentioned the cool Legacy Gift Idea, and she said great idea! Her mother (Great Grandma) contributed $1,000 and she committed to $100 monthly for 20 years into a Indexed Life Program for grandson.
Expected results: $25,000 invested over 20 years, cash value expected of only $40,000 at year 20 and with a death benefit of over $200,000 and growing from day 1. Nothing too exciting, yet, but wait. By year 40 the cash value is expected to be over $160,000 and the death benefit over $400,000. By age 65, the cash value is expected to be near $1,000,000 and death benefit over $1,200,000. Quite a legacy from only a small initial commitment.
Using a savings calculator on Bankrate.com with a 6% assumption, the result at age 65 is about $750,000 with no insurance. There are extra bells and whistles with the Legacy Gift Idea (tax free distributions-loans for example). Start letting your clients who have children and grandchildren know about this and you will be surprised how many will move forward. Call us for a customized illustration for a case today, maybe for your own child or grandchild!

Case Study Female Age 2
Sample Illustration Female Age 2
Tax free withdrawal of $23,000 to help pay for college expenses and $44,000 tax free supplemental retirement income. That is a wonderful legacy for you to be remembered by.

Case 2
We met with an advisor and discussed ideas to help him boost revenue while helping many clients and prospects. We discovered a couple ages 59 and 58 who he had completed some retirement planning work with and they were going to be just fine according to his E-Money Capital Needs Projection. However, we modified the model to test for several scenarios.
Him dying tomorrow (had existing term insurance through age 75)
Her dying tomorrow (no current life insurance)
Him or her having a long term care event at age 83 for 4 years duration (no existing LTCi)
Results:
Him dying – plan still succeeded
Her dying – plan failed
Either having LTC event – plan failed
This planning session led to a 15 year term sale on her and traditional LTC insurance on both. They didn’t have the portfolio to justify a linked benefit strategy, but we did look at all options.

Partner with Westland and allow us to help you figure this all out and be by your side if needed when presenting solutions to your clients.

Hopefully you are thinking of clients where you can add real additional significance and value to their family with protection and legacy strategies.

Call for your personalized case designs today. We are here at your service.

A case to share April 18, 2018

By

Case 1
Couple both age 60 had been experiencing long term care needs of a parent and definitely wanted to pursue putting a plan in place now while they were healthy. They didn’t want their children to repeat what they have been going through with Mom.
 
This couple had a solid portfolio and a retirement action plan.  The Advisor identified about $120,000 that could be repositioned to address this risk.
 
We looked at several options (Traditional LTCi, John Hancock, State Life, Pacific Life, Nationwide…) and recommended MoneyGuard with a 3% inflation rider and 6 year benefit. This seemed to fit their specific situation best.
 
Him – deposit of $55,030 to produce a $3,000 initial monthly benefit.  Total initial death benefit was $92,831 and LTC pool of benefits of $232,863.  This would grow to $6,281 monthly benefit and a LTC pool of benefits of nearly $500,000 at age 85.
 
Her – deposit of $62,084 to produce a $3,000 initial monthly benefit.  Total initial death benefit was $117,215 and LTC pool of benefits of $232,863.  This would grow to $6,281 monthly benefit and a LTC pool of benefits of nearly $500,000 at age 85.
 
These clients will always receive a benefit.  A solid death benefit if care is never needed or can tap into a significant LTC benefit if Care is needed.

At Westland, we understand the value of committing a portion of a clients’ portfolio to insurance that creates large assets just at the time they are needed most, no matter when that may be. Your client’s heirs will think you are a hero for doing such a good job of protecting their family portfolio.
 
Partner with Westland to help you figure this all out and be by your side if needed when presenting solutions to your clients.
 
Hopefully you are thinking of clients where you can add real additional significance and value to their family with protection and legacy strategies.
Call for your personalized case designs today.  We are here at your service.

A case to share February 6, 2018

By

During the last few weeks we have worked on dozens of life, long term care, disability and annuity cases working alongside our Advisors.
If you are not discussing these issues with your clients then who will? 
 
Case 1
 
Couple ages 59 and 58 actually called with a request for long term care protection after thinking they have done pretty well, but that LTC was one hole in their plan they haven’t addressed yet.  This goes to show, that if you are not mentioning LTC you may be missing the boat.  Your clients are thinking about these risks.
 
Options presented:
 
State Life One America (A+) AssetCare I (joint life)
1) Deposit $100,000 will generate $6,375 monthly benefit each (3% option)
Second-to-die death benefit of $212,508
Lifetime benefit extension cost $1,729 annually  
2) Deposit $100,000 will generate $8,443 monthly benefit each (4% option)
Second-to-die death benefit of $211,063
Lifetime benefit extension cost $2,927 annually  
3) Deposit $150,000 will generate $6,509 monthly benefit each (2% option)
Second-to-die death benefit of $325,457
Lifetime benefit extension cost $1,091 annually
 
 
John Hancock (A+) Protection UL with LTC Rider (individual life)
1) Him $300,000 death benefit and LTC benefit of $6,000 monthly (50 months)
Cost is $5,614 annually Standard Plus Non-Smoker rate  
2) Her $300,000 death benefit and LTC benefit of $6,000 monthly (50 months)
Cost is $4,085 annually Standard Plus non-Smoker rate
John Hancock (A+) Protection UL with LTC Rider (individual life)
1) Him Single deposit $75,000 provides $257,387 death benefit
Provides LTC benefit of $10,295 monthly (25 months – 4% option)  
2) Her Single deposit $75,000 provides $313,823 death benefit
Provides LTC benefit of $12,553 monthly (25 months – 4% option)
 
 
Lincoln (A+) MoneyGuard – Single deposit $75,000 each 6 year benefit 3% inflation
1) Him – minimum death benefit of $99,344 at ages 70+
Provides LTC benefit of $8,927 and benefit pool of $692,910 at age 85  
2) Her – minimum death benefit of $90,749 at ages 78+
Provides LTC benefit of $8,399 and benefit pool of $651,950 at age 85
 
 Which of these is best?
 
Once explained:
Some clients are fearful of a long term dementia and lifetime benefits really resonate – recommend State Life.- Also has money back guarantee from day one.
Some clients like the higher death benefit offered by John Hancock should care not be needed.
Some clients are more concerned about having a higher LTC benefit in the future and an inflation option is the way to go -recommend Lincoln
 
Many other options can be considered in a case like this including traditional LTC with no death benefit or money back guarantees.  If the funding source was another annuity or IRA, then State Life would be on top of the list. There are also LTC annuities to consider should there be health issues or large deferred annuity gains that can be used for long term care on a tax free basis.
 
Partner with Westland to help you figure this all out and be by your side if needed when presenting solutions to your clients.
 
Hopefully you are thinking of clients where you can add real additional significance and value to their family with protection and legacy strategies.
Call for your personalized case designs today.  We are here at your service.

A case to share January 31, 2018

By

Since everyone dies, we know exactly what the end result of a life insurance program will be. We just don’t know however WHEN any individual will die so we don’t know how financially efficient the program will be. In other words, the younger or sooner someone may pass away the financially more efficient the payoff from life insurance. 
  • Walt purchased a $1million life insurance policy at the age of 47 and died from a brain tumor at age 53. Everyone would agree that (no matter what Walt paid for it) he made a good investment buying that policy…an Internal Rate of Return (IRR) of about 108% per year?
  • Sharon purchased the same kind of policy at the age of 63 is active and in good health most of her life and died at the age of 93. After 30 years of paying premiums….an IRR of about 5.1% per year. Should she have put her money in a mutual fund? Maybe, maybe not.
  • Tom and Gina ages 62 and 60 repositioned $100,000 into a Life with Long Term Care Linked Benefit joint strategy.  If either of them ever needed care, they would have $7,600 per month each for as long as care was needed.  If they never needed care, their family would receive $190,000. Everything is guaranteed by the life insurance company. Receiving a solid safe return, care or no care.
    • Most folks who sell life insurance or long term care for a living will concentrate on the “need” and “scare” tactics. You don’t need “scare” tactics, just focus on the benefits and that you have addressed a risk that needed addressing. Many critics of insurance criticize because they don’t truly understand the benefits, focus on costs and most likely offer an alternative. However, almost all alternatives involve some risk.
     
    On the other hand, those of us who deal with life insurance in the context of our clients overall financial and retirement planning clearly have a different perspective when we consider the investment aspect. We can see the value in our clients’ portfolio and to their family when a portion of their assets are “invested” in a life insurance policy. But just like any other investment, it is impossible to tell what the final rate-of-return or outcome will be because we do not know when the insured will die.
     
    Now consider the risks of Critical, and Chronic Illness that in all cases occur before death. Just think of the rate of return on your money and what a wise decision you would have made, if your client were to have a significant health challenge, like a stroke, heart attack or kidney failure? How about an organ transplant after only 15 years owning and paying for a policy? Be a smart advisor and make sure the insurance your clients are “investing in” contains an “acceleration rider” allowing them to access some or all of the death benefit while they are still alive. Things happen and they may need some serious money to cover the cost of that organ transplant and the rehabilitation that follows.
     
    Again, the critics of life insurance mostly just lack understanding of what it does and how it works and more importantly don’t factor in the added emotional benefits of owning it. Don’t miss a fundamental concept in financial planning; that the only time one can truly judge success or failure is when it is time to use the money or pass it on. Until then, all investing and insurance is a work in process. The big difference between “investing” in life insurance versus other options is that with life insurance you always know “what” the end result will be, it’s only a matter of “when”. With other investments you will likely not know the “what” and the “when”. That’s why having some of both increases predictability of results, reduces volatility along the way and for most people, reduces stress, allowing us to hopefully help our clients enjoy life a little longer.
     
    At Westland, we understand the value of committing a portion of a clients’ portfolio to insurance that creates large assets just at the time they are needed most, no matter when that may be. Your client’s heirs will think you are a hero for doing such a good job of protecting their family portfolio.
     
    Partner with Westland to help you figure this all out and be by your side if needed when presenting solutions to your clients.
     
    Hopefully you are thinking of clients where you can add real additional significance and value to their family with protection and legacy strategies.
    Call for your personalized case designs today.  We are here at your service.

A case to share January 25, 2018

By

Annuity Income – Take the time to understand this product and strategy for guaranteed income.
 
Client is age 65 with $350,000 and wanting this portion of his money out of the market – No risk!  However he needed about $1,000 per month of income from these funds, plus growth to supplement his retirement income needs.  We proposed that he take $36,000 and keep this in cash and draw from it for the next 3 years.  The other $314,000 could be placed in the Core 7 Indexed Annuity with an increasing payout beginning in year 4.  The guaranteed payout would be about  $18,000 beginning in year 4 and likely to be $20,000 or more.  With the increasing income option, each year in the future, when the index is positive, the client will receive a raise. We were able to achieve what this client needed with nearly no worries about his retirement income needs for the rest of his life.  Click on this link for the illustration sample – Core Income 7, 65 year old $314,000 Rising Option
Hopefully you are thinking of clients where you can add real additional significance and value to their family with protection and legacy strategies.
Call for your personalized case designs today.  We are here at your service.

A case to share January 16, 2018

By

Annuity Tax Bomb Saving Idea for Legacy 
 
 
An Advisor called to discuss options for an annuity owned by the mother of one of his best clients.  Mother was age 84 diagnosed with dementia and the family was considering moving her to an Alzheimer’s care facility.  Mom was described as very healthy otherwise. Her Daughter and son-in-law were her only close family and both Mother and Daughter (beneficiary) didn’t need income from the annuity now or later – this was a true legacy asset.
 
The Annuity was a Variable Annuity purchased by mom 12 years earlier and original deposit was $200,000. (Note: VA may not have been suitable at the time of purchase, but that is water under the bridge now) The base fees on the VA were almost 2.0% and she had an income rider and guaranteed death benefit rider for another 90 basis point cost.  In short, the total fees including the sub accounts were close to 4% and with this fee drag, she had averaged only about 2.4% over the 12 years.
 
Current Annuity Value was $259,000 & Death Benefit was $259,000
Income Value account was only $190,000 and had a special 10% income option (LIFO)
Mom was in a net 15% tax bracket and Daughter (beneficiary) was in a 35% tax bracket.
 
After analysis, we set on a plan to annuitize the annuity for Mom with a 10 year period certain. This would spread the tax due over those 10 years and would be paid at Mom’s rate until death.  Hopefully Mom will be around for most or all of those 10 years. Since Mom didn’t need the income, an investment account would be set up to dollar cost average the income payments at an assumed net yield of 5%.
 
Expected Results after 10 years.
 
Current tract: In 10 years, Variable Annuity would have been worth about $330,000 and $130,000 would be taxable to the daughter at her higher tax rate and paid out subject to IRS rules.
 
Recommendation: Annuitize and create Investment account to accept funds over time. In 10 years, Investment Account should be worth about $340,000 with no tax due.
The SPIA created $2,150 of monthly payments for 10 years – net after mom’s tax rate applied to taxable portion of payments.
 
Clients loved the analysis performed by their Advisor.  In speaking with the daughter (his client), she would much rather receive an investment account from mom worth about $340,000 after tax rather than $330,000 tax deferred account with tax due on $130,0000. 
 
Note: Ancillary Benefit – The Advisor received a 3% commission on the Immediate Annuity ($7,700) and control of the Mothers account.    
 
Hopefully you are thinking of clients where you can add real additional significance and value to their family with protection and legacy strategies.
Call for your personalized case designs today.  We are here at your service.
 
 
Corporate headquarters | 13520 Evening Creek Drive North, Suite 360, San Diego, CA 92128 | (800) 238-8144 - Contact Us

For Professional Use Only-Securities offered through The Leaders Group, Inc. Member FINRA/SIPC 26 W. Dry Creek Circle, Suite 575, Littleton, CO 80120, 303-797-9080.
Westland Financial Services, Inc. is not affiliated with The Leaders Group, Inc. Westland CA Insurance Lic #: 0785972