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Fixed Income Annuities American Pathway Deferred Income Annuity (DIA) Qualified Longevity Annuity Contracts (QLAC)

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Annuities issued by American General Life Insurance Company (AGL)

All guarantees are backed by the claims-paying ability of the issuing insurance

company.

Fixed Income Annuities

American Pathway

®

Deferred Income Annuity (DIA)

Qualified Longevity Annuity Contracts (QLAC)

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Introduction

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AIG companies offer a range of annuities

DIA

SPIA

Index with

GLWB

VA with GLWB

INCOME LEVEL HIGHER

LOWER

Income protection

Guaranteed lifetime

income

Immediate income

Min. 13 month wait

Income with

growth potential*

Increase option

available

Increase option

available

Access to principal

Limited liquidity

available

Limited liquidity

available

charges may apply)

(Withdrawal

charges may apply)

(Withdrawal

Market participation

QLAC eligible

“Income insurance” comparison

• Subject to market conditions. Guarantees are backed by the claims-paying ability of the issuing insurance company.

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Qualified Longevity Annuity Contracts (QLAC) topics

Background, overview & conditions

American Pathway DIA: QLAC vs Non-QLAC

Case studies

Prospecting and marketing tools

Quoting resources

How to do QLAC business

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Background

Policymakers’ response to retirees’ concern about outliving one’s retirement savings

Historically, required minimum distributions (RMDs) generally had to begin from all

retirement accounts by age 70½

Treasury Department and the Internal Revenue Service (IRS) sought ways to provide

income at an advanced age

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Overview

QLAC IRAs impact on RMDs

DIA issued as a traditional IRA can be classified as a QLAC and excluded

from RMD calculations

DIA purchasers must designate DIA as a QLAC at time of purchase

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Conditions

Premiums limited to the lesser of:

The applicable IRS QLAC premium lifetime dollar limitation ($125,000 in 2014 subject to

IRS cost-of-living increases in future years) less premiums previously paid for any other

contract intended to be a QLAC; or,

25% of the aggregate account values for all traditional IRAs as of December 31 of last

year less premiums previously paid for any other IRA contract intended to be a QLAC

Income payments must begin by first of month following 85th birthday

Payment types can be single or joint, life only or life with cash refund

Pre-commencement death benefits can be either return-of-premium (ROP)

or no death benefit. ROP plus interest is not permitted

All increase options: CPI-U, 1%-5% simple, compounded or flat dollar

Commuted value and/or cash surrender value provisions not permitted

Issuers will be required to file information annually with the IRS

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Premium limits – example 1

1

QLAC Maximum Premium Worksheets will be made available as a courtesy only. These examples are for

training purposes. Agents should not obtain or retain any QLAC calculations or worksheets and the

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Premium limits – example 2

1

QLAC Maximum Premium Worksheets will be made available as a courtesy only. These examples are for

training purposes. Agents should not obtain or retain any QLAC calculations or worksheets and the

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American Pathway Deferred Income Annuity

(DIA) –

NON-QLAC Version

American Pathway Deferred Income Annuity

(DIA) –

QLAC Version

Overview

• Premiums: $20,000 - $1,000,000

• Issue ages: NonQual/Roth 0-90; Qualified 0-69 • Deferral period: > 12 months – 40 years

• Benefit commencement: >12 months up to age 91

(maximum income start for qualified is age 70½)

• Premiums: $20,000 - $125,000 lifetime (lesser of $125,000 or 25% of aggregated IRA account values)

• Issue ages: Qualified 0-83

• Deferral period: > 12 months – 40 years

• Benefit commencement: >12 months up to age 85 (payments must begin by first day of month following 85th birthday)

Income Payment

Options

Single life, joint & survivor, or joint & contingent: lifetime income only, lifetime income with period certain, lifetime income with cash (lump sum) refund or installment refund, or period certain only

Single life, joint & survivor, or joint & contingent: lifetime income only, lifetime income with cash (lump sum) refund

Payment Increase

Options

•• Consumer Price Index (CPI-U) inflation adjustment: adjusted each January 1 after payments begin Annual payment increase: 1% to 5% on each income start date anniversary (simple or compounded interest, flat dollar increase)

Death Benefit Prior to

Commencement

• Return of premium

• Return of premium + compounded interest

• No death benefit (only available on single or joint lifetime

income only options)

• Return of premium

• No death benefit (only available on single or joint lifetime income only options)

Income Start Date

Adjustment

Client can accelerate or defer the first payment date within five years of the original income start date once during the life of the annuity contract. Not available with any life only payout option.

Advance Payment

Option

Once payments commence, the owner can elect a lump-sum advance of six months’ worth of payments.

This feature may be elected twice during the life of the annuity. Must be at least 59½. Only available on

nonqualified annuities with monthly payment frequency.

NA

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Case studies*

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DIA QLAC Case Study 1

Client profile: John

70 male

Savings (IRA) as of 12/31 prior year: $500,000

Wants to withdraw inflation-adjusted $25,000 per

year from this account

In good health and may live long

Worried about outliving assets

Wants to ensure his retirement won’t suffer from

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IRA Only Income

IRA with QLAC

Desired Income

ASSUMPTIONS

IRA Beginning Balance

$ 500,000

IRA Growth Rate

5.00%

Desired Income

$ 25,000

Income Inflation Adjustment

3.00%

QLAC Premium

$ 125,000

QLAC Annuity Start Age

80

QLAC Annuity Income

$ 25,695

Market Correction @ Age 75

-10%

DIA QLAC Case Study 1: More future income, guaranteed for life

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Age IRA Balance Desired Income Required Minimum Distribution (RMD) Actual Withdrawal from Account 70 $ 500,000 $ 25,000 $ 18,248 $ 25,000 71 $ 498,750 $ 25,750 $ 18,821 $ 25,750 72 $ 496,650 $ 26,523 $ 19,400 $ 26,523 73 $ 493,634 $ 27,318 $ 19,985 $ 27,318 74 $ 489,631 $ 28,138 $ 20,573 $ 28,138 75 $ 415,344 $ 28,982 $ 18,137 $ 28,982 76 $ 405,681 $ 29,851 $ 18,440 $ 29,851 77 $ 394,621 $ 30,747 $ 18,614 $ 30,747 78 $ 382,068 $ 31,669 $ 18,821 $ 31,669 79 $ 367,918 $ 32,619 $ 18,868 $ 32,619 80 $ 352,064 $ 33,598 $ 18,827 $ 33,598 81 $ 334,389 $ 34,606 $ 18,681 $ 34,606 82 $ 314,773 $ 35,644 $ 18,408 $ 35,644 83 $ 293,085 $ 36,713 $ 17,981 $ 36,713 84 $ 269,190 $ 37,815 $ 17,367 $ 37,815 85 $ 242,944 $ 38,949 $ 16,415 $ 38,949 86 $ 214,195 $ 40,118 $ 15,191 $ 40,118 87 $ 182,781 $ 41,321 $ 13,640 $ 41,321 88 $ 148,533 $ 42,561 $ 11,696 $ 42,561 89 $ 111,271 $ 43,838 $ 9,273 $ 43,838 90 $ 70,805 $ 45,153 $ 6,211 $ 45,153 91 $ 26,935 $ 46,507 $ 2,494 $ 26,935 92 $ - $ 47,903 $ - $ - 93 $ - $ 49,340 $ - $ - 94 $ - $ 50,820 $ - $ - 95 $ - $ 52,344 $ - $ - 96 $ - $ 53,915 $ - $ - 97 $ - $ 55,532 $ - $ - 98 $ - $ 57,198 $ - $ - 99 $ - $ 58,914 $ - $ - 100 $ - $ 60,682 $ - $ -

Scenario 1: IRA without QLAC

IRA Balance Desired Income QLAC Amount Desired Withdrawal Amount Required Minimum Distribution (RMD) Actual Withdrawal from Account Total Income $ 375,000 $ 25,000 $ - $ 25,000 $ 13,686 $ 25,000 $ 25,000 $ 367,500 $ 25,750 $ - $ 25,750 $ 13,868 $ 25,750 $ 25,750 $ 358,838 $ 26,523 $ - $ 26,523 $ 14,017 $ 26,523 $ 26,523 $ 348,931 $ 27,318 $ - $ 27,318 $ 14,127 $ 27,318 $ 27,318 $ 337,693 $ 28,138 $ - $ 28,138 $ 14,189 $ 28,138 $ 28,138 $ 278,600 $ 28,982 $ - $ 28,982 $ 12,166 $ 28,982 $ 28,982 $ 262,099 $ 29,851 $ - $ 29,851 $ 11,914 $ 29,851 $ 29,851 $ 243,860 $ 30,747 $ - $ 30,747 $ 11,503 $ 30,747 $ 30,747 $ 223,769 $ 31,669 $ - $ 31,669 $ 11,023 $ 31,669 $ 31,669 $ 201,705 $ 32,619 $ - $ 32,619 $ 10,344 $ 32,619 $ 32,619 $ 177,540 $ 33,598 $25,695 $ 7,903 $ 9,494 $ 9,494 $ 35,189 $ 176,448 $ 34,606 $25,695 $ 8,911 $ 9,857 $ 9,857 $ 35,552 $ 174,920 $ 35,644 $25,695 $ 9,949 $ 10,229 $ 10,229 $ 35,924 $ 172,925 $ 36,713 $25,695 $ 11,018 $ 10,609 $ 11,018 $ 36,713 $ 170,002 $ 37,815 $25,695 $ 12,120 $ 10,968 $ 12,120 $ 37,815 $ 165,776 $ 38,949 $25,695 $ 13,254 $ 11,201 $ 13,254 $ 38,949 $ 160,148 $ 40,118 $25,695 $ 14,423 $ 11,358 $ 14,423 $ 40,118 $ 153,012 $ 41,321 $25,695 $ 15,626 $ 11,419 $ 15,626 $ 41,321 $ 144,255 $ 42,561 $25,695 $ 16,866 $ 11,359 $ 16,866 $ 42,561 $ 133,759 $ 43,838 $25,695 $ 18,143 $ 11,147 $ 18,143 $ 43,838 $ 121,397 $ 45,153 $25,695 $ 19,458 $ 10,649 $ 19,458 $ 45,153 $ 107,036 $ 46,507 $25,695 $ 20,812 $ 9,911 $ 20,812 $ 46,507 $ 90,535 $ 47,903 $25,695 $ 22,208 $ 8,876 $ 22,208 $ 47,903 $ 71,744 $ 49,340 $25,695 $ 23,645 $ 7,473 $ 23,645 $ 49,340 $ 50,504 $ 50,820 $25,695 $ 25,125 $ 5,550 $ 25,125 $ 50,820 $ 26,648 $ 52,344 $25,695 $ 26,649 $ 3,099 $ 26,648 $ 52,343 $ - $ 53,915 $25,695 $ - $ - $ - $ 25,695 $ - $ 55,532 $25,695 $ - $ - $ - $ 25,695 $ - $ 57,198 $25,695 $ - $ - $ - $ 25,695 $ - $ 58,914 $25,695 $ - $ - $ - $ 25,695 $ - $ 60,682 $25,695 $ - $ - $ - $ 25,695

Scenario 2: IRA with QLAC

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DIA QLAC Case Study 2

Client profile: David

70 male

Savings (IRA) as of 12/31 prior year: $500,000

Wants to withdraw inflation-adjusted $25,000

per year from this account

In good health

Wants to enjoy a long retirement without

becoming a burden on his family

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IRA Only Income

IRA with QLAC

Desired Income

ASSUMPTIONS

IRA Beginning Balance

$ 500,000

IRA Growth Rate

5.00%

Desired Income

$ 25,000

Income Inflation Adjustment

3.00%

QLAC Premium

$ 125,000

QLAC Annuity Start Age

85

QLAC Annuity Income

$ 50,838

Market Correction @ Age 75

-10%

DIA QLAC Case Study 2: More future income, guaranteed for life

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Age IRA Balance Desired Income Required Minimum Distribution (RMD) Actual Withdrawal from Account 70 $ 500,000 $ 25,000 $ 18,248 $ 25,000 71 $ 498,750 $ 25,750 $ 18,821 $ 25,750 72 $ 496,650 $ 26,523 $ 19,400 $ 26,523 73 $ 493,634 $ 27,318 $ 19,985 $ 27,318 74 $ 489,631 $ 28,138 $ 20,573 $ 28,138 75 $ 415,344 $ 28,982 $ 18,137 $ 28,982 76 $ 405,681 $ 29,851 $ 18,440 $ 29,851 77 $ 394,621 $ 30,747 $ 18,614 $ 30,747 78 $ 382,068 $ 31,669 $ 18,821 $ 31,669 79 $ 367,918 $ 32,619 $ 18,868 $ 32,619 80 $ 352,064 $ 33,598 $ 18,827 $ 33,598 81 $ 334,389 $ 34,606 $ 18,681 $ 34,606 82 $ 314,773 $ 35,644 $ 18,408 $ 35,644 83 $ 293,085 $ 36,713 $ 17,981 $ 36,713 84 $ 269,190 $ 37,815 $ 17,367 $ 37,815 85 $ 242,944 $ 38,949 $ 16,415 $ 38,949 86 $ 214,195 $ 40,118 $ 15,191 $ 40,118 87 $ 182,781 $ 41,321 $ 13,640 $ 41,321 88 $ 148,533 $ 42,561 $ 11,696 $ 42,561 89 $ 111,271 $ 43,838 $ 9,273 $ 43,838 90 $ 70,805 $ 45,153 $ 6,211 $ 45,153 91 $ 26,935 $ 46,507 $ 2,494 $ 26,935 92 $ - $ 47,903 $ - $ - 93 $ - $ 49,340 $ - $ - 94 $ - $ 50,820 $ - $ - 95 $ - $ 52,344 $ - $ - 96 $ - $ 53,915 $ - $ - 97 $ - $ 55,532 $ - $ - 98 $ - $ 57,198 $ - $ - 99 $ - $ 58,914 $ - $ - 100 $ - $ 60,682 $ - $ -

Scenario 1: IRA without QLAC

IRA Balance Desired Income QLAC Amount Desired Withdrawal Amount Required Minimum Distribution (RMD) Actual Withdrawal from Account Total Income $ 375,000 $ 25,000 $ - $ 25,000 $ 13,686 $ 25,000 $ 25,000 $ 367,500 $ 25,750 $ - $ 25,750 $ 13,868 $ 25,750 $ 25,750 $ 358,838 $ 26,523 $ - $ 26,523 $ 14,017 $ 26,523 $ 26,523 $ 348,931 $ 27,318 $ - $ 27,318 $ 14,127 $ 27,318 $ 27,318 $ 337,693 $ 28,138 $ - $ 28,138 $ 14,189 $ 28,138 $ 28,138 $ 278,600 $ 28,982 $ - $ 28,982 $ 12,166 $ 28,982 $ 28,982 $ 262,099 $ 29,851 $ - $ 29,851 $ 11,914 $ 29,851 $ 29,851 $ 243,860 $ 30,747 $ - $ 30,747 $ 11,503 $ 30,747 $ 30,747 $ 223,769 $ 31,669 $ - $ 31,669 $ 11,023 $ 31,669 $ 31,669 $ 201,705 $ 32,619 $ - $ 32,619 $ 10,344 $ 32,619 $ 32,619 $ 177,540 $ 33,598 $ - $ 33,598 $ 9,494 $ 33,598 $ 33,598 $ 151,139 $ 34,606 $ - $ 34,606 $ 8,444 $ 34,606 $ 34,606 $ 122,360 $ 35,644 $ - $ 35,644 $ 7,156 $ 35,644 $ 35,644 $ 91,051 $ 36,713 $ - $ 36,713 $ 5,586 $ 36,713 $ 36,713 $ 57,055 $ 37,815 $ - $ 37,815 $ 3,681 $ 37,815 $ 37,815 $ 20,202 $ 38,949 $50,838 $ - $ 1,365 $ 1,365 $ 52,203 $ 19,779 $ 40,118 $50,838 $ - $ 1,403 $ 1,403 $ 52,241 $ 19,295 $ 41,321 $50,838 $ - $ 1,440 $ 1,440 $ 52,278 $ 18,748 $ 42,561 $50,838 $ - $ 1,476 $ 1,476 $ 52,314 $ 18,135 $ 43,838 $50,838 $ - $ 1,511 $ 1,511 $ 52,349 $ 17,455 $ 45,153 $50,838 $ - $ 1,531 $ 1,531 $ 52,369 $ 16,720 $ 46,507 $50,838 $ - $ 1,548 $ 1,548 $ 52,386 $ 15,931 $ 47,903 $50,838 $ - $ 1,562 $ 1,562 $ 52,400 $ 15,087 $ 49,340 $50,838 $ - $ 1,572 $ 1,572 $ 52,410 $ 14,191 $ 50,820 $50,838 $ - $ 1,559 $ 1,559 $ 52,397 $ 13,264 $ 52,344 $50,838 $ 1,506 $ 1,542 $ 1,542 $ 52,380 $ 12,307 $ 53,915 $50,838 $ 3,077 $ 1,519 $ 3,077 $ 53,915 $ 9,692 $ 55,532 $50,838 $ 4,694 $ 1,275 $ 4,694 $ 55,532 $ 5,248 $ 57,198 $50,838 $ 6,360 $ 739 $ 5,248 $ 56,086 $ - $ 58,914 $50,838 $ - $ - $ - $ 50,838 $ - $ 60,682 $50,838 $ - $ - $ - $ 50,838

Scenario 2: IRA with QLAC

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New prospecting tools for QLAC

Brochure

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QLAC quoting resources – AIG National Sales Desk

Dedicated call center: 1-888-438-6933, Option 2

Email at:

Internal.AnnuitySales@aglife.com

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DIA QLAC sample quotes –

American Pathway Deferred Income Annuity

Purchase Age

Annual Payout

at Age 75

Annual Payout

at Age 80

Annual Payout

at Age 85

60

19.72%

33.78%

67.14%

65

15.53%

27.09%

53.93%

70

11.80%

20.42%

40.66%

Male, $100,000 IRA, ROP death benefit, life with cash refund

Male, $100,000 IRA, no death benefit, life only

Purchase Age

Annual Payout

at Age 75

Annual Payout

at Age 80

Annual Payout

at Age 85

60

15.86%

25.41%

46.01%

65

12.44%

20.05%

35.68%

70

9.64%

15.08%

25.99%

In exchange for higher income, deferred income annuities permanently convert principal into

a guaranteed payment stream. Annual payout is a percentage of the purchase price paid out

each full year and includes both interest and return of principal. It is not an interest rate.

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How to do business – SPIA and DIA

Complete the SPIA/DIA product specific training

Quest CE

https://learn.questce.com/naicsuitability

Obtain QLAC quotes from your AIG Internal Wholesaler

(888-438-6933, Option 2)

Application kits (and the QLAC Election Form) can be

obtained on Forms Depot

Submit a completed QLAC Election Form and copy of

the quote with application paperwork

Access QLAC marketing pieces on playbook:

www.aig.com/diaplaybook

Do not calculate premium limits or obtain or retain a

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Questions ?

AIG Annuity Sales Desk

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Tax-qualified contracts such as IRAs, 401(k)s, etc., are tax deferred regardless of whether or not they are funded with an annuity. If you are considering funding a tax-qualified retirement plan with an annuity, you should know that an annuity does not provide any additional tax-deferred treatment of earnings beyond the treatment by the tax-qualified retirement plan itself. However, annuities do provide other features and benefits such as income options.

This information is general in nature and may be subject to change. American General Life Insurance Company, its agents and representatives are not authorized to give legal, tax or accounting advice. Applicable laws and regulations are complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties. For advice concerning your situation, consult your professional attorney, tax advisor or accountant.

Annuities issued by American General Life Insurance Company (AGL).

Guarantees are backed by the claims-paying ability of American General Life Insurance Company.

Issuing company AGL is responsible for financial obligations of insurance products and is a member of American International Group, Inc. (AIG).

American General Life Insurance Company

2727-A Allen Parkway Houston, Texas 77019

© 2014 American International Group, Inc. (AIG). All rights reserved. AGLC108229 (10/2014) J94327

AGLC106230, AGLC106377, AGLC106378, ICC14:QLAC, DIA-ISDC-413 May not be available in all states and product features

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