Summary
For a fee, the client can add living benefit features to a variable annuity that guarantee: * The invested principal never is lost, no matter what happens in the market; * A minimum annual withdrawal amount is available for a specified time; * The account value increases above his initial investment are locked in as market performance grows; or * A minimum amount of lifetime income payments is available despite the annuity investment's performance. With immediate variable annuities, the client pays a lump sum and begins receiving regular annuity income payments, which can rise or fall based on the performance of the annuity's investment sub-accounts, the vehicles in which the money is invested (stock portfolio, bond portfolio, and so on). Prospect: "What are the tax advantages of variable annuities?" Taxes are not due during the accumulation phase of a deferred variable annuity, and the client doesn't have to report earnings on his income tax form.
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Extract
Demystifying Variable Annuities
Do prospects break out in a cold sweat when they hear the word "annuity"? Are they confused by surrender charges versus payouts? Do they not understand the difference between immediate and deferred annuities? Is it difficult for the producer to illustrate the difference between a death benefit and a living benefit?
Part of the problem is that the life insurance business has not done the best job of simplifying the annuity concept. We'll address common prospect questions to help demystify th...See the full content of this document
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