ANNUITIES

Annuities are legal contracts made with insurance companies. They can provide retirement income based on savings contributions and accrued interest earnings over time. Also, annuities can guarantee retirement income for life. Furthermore, there are some annuities that will match your contributions. This matching could be up to 20% or more! Thus, annuities can provide a very good option for retirement income.

LIFE INSURANCE

Life Insurance can provide peace of mind to your loved ones. Also, there is a type of life insurance that can indirectly provide retirement income payments to you! You take tax-free policy loans, that do not have to be paid back (death benefit is adjusted after death). Additionally, with some careful planning, these payments could last for life. So, this type of life insurance can provide a very good option for retirement income.

HEALTH RIDERS

Many Annuities and Life Insurance policies allow options, called Riders. Some are financial in nature. But, some relate to health. For example, an Annuity or Life Insurance policy may provide a Rider for Long Term Care or Terminal Illness situations. Although it's true that standalone health insurance could also provide Long Term Care protection, most often an LTC Rider with an income product provides a better value.

Retirement Income: Annuity or Life Insurance?

Retirement financial planning utilizes two very important financial tools: 1) Fixed or Indexed Annuities, and 2) Fixed or Indexed Universal Life Insurance. However, which tool should you use? Or should you use both? Or is neither appropriate for you? The following table performs a side-by-side comparison of the two retirement financial tools:

FIXED OR INDEXED ANNUITY (NOT VARIABLE)

Investment Attributes
  • Funds are Nonqualified or Qualified (Trad IRA or Roth IRA)
  • Principal is tax-deferred (Trad) or taxed (Roth, Non)
  • Principal investment is protected from market loss
  • Interest is tax-deferred (Trad, Non) or tax-free (Roth)
  • Interest rate is fixed or market-indexed (never < 0%)
Retirement Income
  • Includes Annuitization or Lifetime Income option
  • Lifetime Income has premium and interest bonus (some)
  • Lifetime Income has anti-inflation increases (some)
Death Benefit
  • Includes Death Benefit of account balance (unless annuitized)
  • Has no option for additional Term Insurance Death Benefit
  • Death Benefit is taxable (Trad) or partially taxable (Roth, Non)
  • Death Benefit has no extra cost
Health Benefit
  • Includes Long-Term Care Insurance coverage option (some)
  • Lifetime Income increases for chronic illness (some)

FIXED OR INDEXED UNIVERSAL LIFE INSURANCE (NOT VARIABLE)

Investment Attributes
  • Funds are Nonqualified
  • Principal is taxed
  • Principal investment is protected from market loss
  • Interest is tax-deferred (withdrawal) or tax-free (loan)
  • Interest rate is fixed or market-indexed (never < 0%)
Retirement Income
  • Includes Tax-free loans that do not have to be re-paid
  • Includes interest bonus (some)
  • Has no anti-inflation increases (manually increase as needed)
Death Benefit
  • Includes Death Benefit amount much larger than premiums
  • Includes option for additional Term Insurance Death Benefit
  • Death Benefit is tax-free
  • Death Benefit has an extra cost (Cost of Insurance)
Health Benefit
  • Includes Long-Term Care Insurance coverage option (some)
  • Has Living Benefit for critical, chronic or terminal illness
Example of annuity retirement income product

Allianz 222 Annuity Example

Like all Fixed Index Annuities (FIAs), the Allianz 222 Annuity offers principal protection from market downturns. Also, it offers interest earnings (based on chosen allocation options), tax deferral, and a death benefit.

Additionally, the Allianz 222 Annuity goes even further:

  • Firstly, you get 2 ways for a bonus. Allianz 222 Annuity credits the Protected Income Value with a 20% premium bonus in contract year one. Also, the Protected Income Value receives an interest bonus equal to 50% of any interest earned from the chosen allocations.
  • Secondly, you get 2 ways for income increases. Income withdrawals increase based on earned interest plus the interest bonus. Also, confinement to an eligible hospital, nursing facility, or assisted-living facility doubles the income withdrawals.
  • Lastly, you get 2 ways for a death benefit. Your beneficiaries get the full accumulation value as a lump sum. Alternatively, the full Protected Income Value is provided as annuity payments for at least five years.
Example of life insurance retirement income product

Allianz Life Pro+ Advantage Example

The Allianz Life Pro+ Advantage Indexed Universal Life Insurance provides more features than standard life insurance:

  • Firstly, a death benefit offers generally tax-free funds to beneficiaries.
  • Secondly, the Life Insurance account accumulates a tax-deferred cash value. Furthermore, an interest bonus increases the account accumulation (available on certain index allocation options).
  • Thirdly, Index Lock provides the ability to capture indexed interest rate. Also, this feature helps protect against a zero-interest credit.
  • Fund options help meet future financial needs with the ability to access available cash value when you want, for what you want.
  • Additional Term Insurance adapts coverage amount as needed.
  • Lastly, health provision protects against chronic or terminal illness.

Retirement Income Insurance Companies

The above highlighted Allianz products are examples of feature-rich annuities and life insurance. As a result, they are flexible to meet general purpose needs. However, there are other less costly products available that correspondingly have less features. Consequently, these products allow paying only for specific features that a client needs. So, at SET, we take the time to understand our client's needs. Consequently, we can recommend an income product best matched to those needs.

SET services the southwest region of the United States. The following insurance companies are available within this region (some variance may exist between the specific states of the region):

ANNUITIES

AIG (MSG)

American Equity

American National

Athene

Annexus Athene (IA)

Baltimore Life

Delaware Life

Fidelity and Guaranty Life

Global Atlantic

Global Atlantic - Elite

Great American

Legacy Marketing Group

Life of the Southwest

Mutual of Omaha

National Western

Nationwide - Annexus

North American

Pacific Life

Security Benefit

Transamerica - Annexus

LIFE INSURANCE

AIG

Ameritas

Life of the Southwest

Lincoln National

Minnesota Life

Mutual of Omaha

National Guardian Life

Nationwide Life

New York Life

North American

One America

Protective Life

Symetra Life

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