Stoever Glass Insurance Agency

Stoever Glass Insurance Agency

BENEFITS:
  • There is no market fluctuation and gains grow on a “tax deferred” basis.
  • Participation in the stock market gains without the risk of losses.
  • They avoid probate---passing the value to a beneficiary avoids the lengthy delays and the expenses of probate, making for a simplified way to transfer funds to beneficiaries.
  • Investors can make unlimited contributions, unlike IRA’s and 401K’s.
  • After the first year of purchase, most Fixed Rate Indexed Annuities allow for a 10% withdrawal of the premium amount invested
  • All Fixed Rate Indexed Annuities we recommend have a Beneficiary Put Provision at the account value. This means that the annuity issuer guarantees at a minimum that upon your death, we will recommend a policy that will return to your beneficiaries at the very least the account value. There are several different variations of the put provision, each available at additional cost depending on your preference. In some contracts, the Company will pay a death benefit to your beneficiary if you die before the income payment starts. Most common is the contract vale or premiums paid, whichever is more.
  • The Insurance Companies we offer are highly rated A+ or better by AM Best and/or S&P. Companies such as North American Life Insurance Company, Mutual of Omaha, Protective Life, and Lincoln Financial are examples.
  • A Fixed Rate Indexed Annuity has several layers of security. First and foremost from the insurance carrier that enters the contract with the investor. The companies we recommend are highly rated by A.M Best and/or S&P A+ or better. Lastly, the principal is protected by the State Guaranty Association backing is from 100 up to 300 thousand depending on the investor’s state of residence. That backing can be viewed at http://www.nolhga.com. The State Intervention Fund backing is also included in the contract which must be signed before a purchase is completed. Still for some unknown reason selling the State Intervention Fund as the primary selling point is not critique.
  • Investors receive a contract similar to a prospectus.
  • Various riders can be added to the contract that might be helpful depending on the expense versus the added value.
  • Our licensed insurance Agent with over twenty-five years of experience is Steve Sapirstein who is “Agent of Record” on the Annuity contracts.
NEGATIVES:
  • Fixed Rate Indexed Annuities do not capture the full upside of the stock market.
  • You are locked into the contract until maturity unless you exercise a surrender clause which will lower the yield but shorten the maturity.
  • Ordinary income tax owed on earnings during the withdrawal of income payout stage.
  • As with all investments, there is a10% IRS penalty on withdrawals prior to 59 ½.
  • You can convert an annuity into payments based on your needs-whether that be payments for life or over a specified period. This is called Annuitizing which we seldom recommend because there is no principal left after the specific terms are concluded.
  • Market Value Adjustment-    A MVA is the increase or decrease in the value of the assets held by the insurance company. Your annuity contract could increase the surrender value, thereby benefitting you if you should decide to terminate your annuity. This increase or decrease in value is than passed on to you on withdrawals in excess of the free amounts which includes full surrender. How is the MVA determined? Along with the annuity contract, the issuing company purchases treasury bonds based on your commitments to remain in the annuity for the life of the contract. If you decide to surrender the annuity early, the insurance company will then adjust the surrender value up or down. This could result in an increase or decrease of the surrender charge. When this MVA is positive, it adds dollars to your surrender value, meaning that the surrender cost is lower. Of course the opposite is also true. 
  • Statement may reflect fluctuation in market value based upon the contract if it has a Market
  • Value Adjustment (MVA) clause. If you want to surrender your annuity prior to the end of the guarantee period, an adjustment will be made. It could be a positive or negative adjustment, depending upon current market conditions. If interest rates are higher at the time of withdrawal than when the contract was purchased, a negative MVA will apply. If interest rates are lower at the time of withdrawal than when the contract was purchased, a positive MVA will apply. This market value adjustment may make the cash surrender value higher or lower. Since, you and your insurance company share this risk, an annuity with an MVA feature may credit a higher rate than an annuity without this feature.

  • It is possible during a down year in the stock market to earn zero interest.
  • New York State is a difficult state for annuity products; therefore, New York State will typically have state-specific annuities that may not be competitively priced. We wonder if they have given sufficient consideration to Fixed Rate Indexed Annuities.

FIXED RATE INDEXED ANNUITIES

Fixed Rate indexed Annuities are the new generation of annuities because they provide tax deferred income plus a chance for additional gains since they also includethe fortunes of stock market indices like the S & P 500.

HOW TO USE FIXED RATE INDEXED ANNUITIES FOR GUARANTEED LIFETIME INCOME AND A LONG TERM CARE OPTION

These options are not cost free, however the extra cost might be well worth the extra benefits particularly for those with a propensity for Alzheimer’s or those who can’t qualify for life insurance.

HOW TO USE FIXED RATE INDEXED ANNUITIES (FIRAs)) FOR GUARANTEED LIFETIME INCOME

FIRAs can be a very helpful tool for managing your retirement savings.  With a Guaranteed Lifetime Withdrawal Benefit (GLWB) contract, you can turn some of your savings into a pension-like income stream that will last the rest of your life and the life of your spouse as well.

We believe FRIAs with a GLWB rider along with Social Security and pensions, can provide a steady income you can use to cover essentials, helping you develop a spending strategy for at least some of your retirement nest egg.  (We don’t recommend putting all your savings in an FRIA, or anything else for that matter.)  Weather or not you will outlive your money is always a concern at a time when lifespans are growing and retirements are stretching many years. 

With a GLWB, you basically pay the insurer a fee in exchange for a guarantee that you will continue to receive a fixed amount of money from your annuity even if you deplete your investment.  That means that even if the amount of money in the annuity falls to zero the insurer will still pay the guaranteed minimum amount of income for the rest of your life.

When you buy a GLWB rider, you turn some of your savings over to an insurance company, which then provides a tax deferred building up of your savings over a set period.  You also have the option of boosting your returns by having an FRIA track a stock index, such as the S& P 500.  The insurer then guarantees that your original principal won’t fall in value unless you make excessive early withdrawals, there is no stock market fluctuation risk and gains grow on a tax deferred basis.  Gains are locked in and cannot be lost going forward.  Some of the more innovative strategies now have no caps and most FRIAs allow for partial withdrawals of up to 10% for liquidity purposes.   A GLWB income rider can be attached to an FRIA which will guarantee a lifetime of either single or joint account income.  A Long Term Care provision is available with some insurance companies that will double the income for up to five (5) years if confined to a nursing facility or hospital at no cost.  A "Death Benefit" provision is available with some insurance companies for those clients who can’t qualify for life insurance can be at zero or minimal cost.

An FRIA with a GLWB has two parts.  The first part is the actual contract value, reflecting the amount invested and accumulated which you can withdraw up to the annual limit.  The second part calculates your lifetime income, which is called the payment basis.  Withdrawals in excess of the annual limit could be subject to surrender charges which reduce the payment base.

FRIAs might not make sense for every investor, especially those who are willing to take on more risk by investing in the stock market or those who want to take more risk for a chance for more gain.

Disclaimers:

Data contained herein form third parties is obtained from reliable sources.  However, its accuracy completeness or reliability is not guaranteed.

All annuity guarantees are subject to the financial health and paying ability of the issuing insurance company, Neither Stoever Glass & Co, Inc., nor its affiliates provide insurance company guarantees.

A guaranteed lifetime withdrawals benefit is a rider that is available for an additional cost.  It does not have contract value, cannot be accessed like a cash value, and will not reserve your account value which will deplete with each withdrawal until it reaches zero, though payment sunder the terms of the rider will still continue for life.  Withdrawals in excess of the specified annual payout amount will permanently reduce future income.

Stoever Glass Insurance Agency, Inc., offers life insurance and annuity contracts that are issued by non-affiliated insurance companies.  Not all products are available in all states.

The information presented does not consider your particular investment objectives or financial objectives or financial situation and does not make personalized recommendations.  This information should not be construed as an offer to sell or a solicitation of an offer to buy any security.  The investment strategies and the securities shown may not be suitable for you.  We believe the information provided is reliable, but Stoever Glass & Co., Inc. and its affiliates do not guarantee its accuracy, or its completeness.  Any opinions expressed herein are subject to change without notice.

 

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