7 Percent-Fairest Payment FIA-GIB Article

Learn How Clients Can Earn Significantly more with the a
FIA that offers a Guaranteed Income Benefit (GIB) Rider

            To sign up for a FREE WEBINAR to learn more about the GIB product that has the "fairest" payment schedule in the marketplace (which will help you avoid lawsuits), please click here.

            Would your clients like a guaranteed rate of return in their Fixed Indexed Annuity of 7%? (Based on an accumulation vs. withdrawal value).

            Would they also like to receive a “guaranteed” income for life based on the accumulated account value that is the best and most flexible in the industry?

            With much of our population moving from an “accumulation” phase of their lives to an “income” phase, clients are much more interested in having a “guaranteed” income for the rest of their lives vs. being interested in growing their wealth at a high rate of return.

            What is a (GIB) Rider in the context of a FIA?

            A GIB contract "rider" is issued by an insurance company that “guarantees” a regular monthly, quarterly, or annual payment for a client’s lifetime, even if the account balance of the FIA does not support the income stream. 

            Example: Suppose you had a client who was 61 years old who invested $100,000 in a FIA with a 5% lifetime income benefit rider. If the client activated the rider, the insurance company guarantees a withdrawal of $5,000 per year for the rest of the client’s life (no matter how long he lives), even if the account balance does not have enough money in it to support the stream of income.

            To read a newsletter more fully explaining the guaranteed income benefits (GLB) of FIAs, please click here. The newsletter was written to explain what we believe to the fairest product available in the marketplace when it comes to the income rider.

            Generally speaking, many GIB riders currently available provide a guaranteed income via the following schedule:

            -5% if the contract is issued before age 70
            -6% before age 80
            -7% over 80 years old
 
            Therefore, if a client had a $100,000 in a FIA, he/she could receive “for life” $5,000 a year if the contract is issued before age 70 and activated at age 70 or older, $6,000 if the contract is issued before age 80, and $7,000 if issued after age 80.
 
            Great, right?  It’s not bad although the schedule seems a bit inflexible doesn’t it?  Think about it.  A client who is age 79 receives the same payout as a client who is 71 years old (6%).  That doesn’t seem quite fair does it?   For a client who is age 81, the payout will never be more than 7%.
 
            A new “fairer” payment schedule

              Let me just state how the payment schedule will work for this new kind of GLB rider and then give a few examples, and I think you’ll see why your clients will like it much better than what’s currently in the marketplace.

            With the "fairest" payment scheduel FIA/GIB product the client will receive as a GIB payout rate of 1% less than their age. It sounds simple enough.

            -If a client is 60, the payout will be 5% 
            -If a client is 69, the payout will be 5.9%
            -If a client is 77, the payout will be 6.7%
            -If a client is 88 when triggered, the payout will be 7.8%
            -If a client is age 90 when triggered, the payout will be 8%

            Very interesting, isn’t it? Why?  Because this approach to GIB riders puts a client in a position to get paid significantly more than the more rigid approach that is currently prevalent in the marketplace.

              Let’s look at an example for a 79 year old with $500,000 in a FIA with a GLB rider. With most of the current products in the marketplace, the client is going to receive a GLB of 6% a year for life.           

            The income for this client using a normal FIA with a GLB rider would be $30,000 a year.

            What about with the “NEW” product just coming into the marketplace?  The client would receive a GLB of 6.9% (1% less than his/her age).

            The income for this client using a normal FIA with a GLB rider would be $34,500 a year.  With the “fairest" product, the client received $4,500 more income every year for life.  If the client lived another 10 years, that’s an additional $45,000.

            Income is based on the “accumulation” value

            The payouts outlined above (and the 7% guranteed rate of return) are based on the calculated “accumulation” value of the FIA NOT the actual “account value.”  The account value is whatever the actual value of the annuity is at any given time based on product design and annual market rates of return.  

            The account value is what the client would receive if he/she wanted to cash in the annuity.  

            The bottom line is that good options where they can earn more money in a protected environment are always what we should offer clients. After looking at the typical products with a GIB rider in the marketplace and comparing it to the more flexible and client friendly, we believe your clients will like this new product due to the 7% guaranteed accumulation value; and they can choose to earn more by delaying the time when the rider is activated.

            For more information on this product, please contact info@ecalife.com