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Case Study: How an Annuity Could Protect Your Older Clients

Do you have clients interested in buying an annuity? Would they be more interested if they knew those receiving guaranteed lifetime income tended to live longer than those inheriting similar amounts of life insurance? Why does this happen? A lump sum of money from a life insurance policy tends to be spent much faster than the guaranteed lifetime income spread out over multiple years in an annuity.

Are your clients worried that a swindler could take advantage of their aging parents or grandparents? On a daily basis, news reports and articles document how seniors have been targeted by a phone call or email to purchase gift cards or make other fake payments online or through a stolen and authored check.

If someone tries to steal money through these means, your older clients have some protection through an annuity as they only have access to the cash on hand (not the large lump sum), and no matter how little the dollar amount, the monthly annuity income is protected by the annuity contract with the insurance carrier.

Annuities also can be used to try and keep the peace. For a hypothetical example, a mother with Alzheimer’s needs professional 24-hour care, and her two sons are worried about her spending habits due to the Alzheimer’s effect on her decision-making. They didn’t want her to buy things she didn’t need or get conned into giving money to a fake cause.

  • Instead of placing a large lump sum of money into a bank account, one son decided to sell the mother’s house and sent 100% of her assets to the insurance company in exchange for a life and 20-year certain fixed annuity to protect the mother’s legacy, pay healthcare bills, and fairly split the potential death benefit money.
  • In this situation, the second son didn’t understand the concept and accused his sibling of stealing all of mother’s money.
  • To verify his actions, the first son sent a copy of the annuity contract and a copy of the closing summary of mother’s house to his brother.
  • The annuity would provide monthly payments for 20 years certain and life instead of a large lump sum within her bank account that she could access at any time.
  • Based on recent news of bank bankruptcies, the money within the annuity also is protected by the insurance carrier and its claims-paying ability for the selected product.
  • If/when the mother dies within the 20-year certain period, the two boys are listed as 50/50 beneficiaries.

Based on the above hypothetical example, the annuity provides a solution for all parties involved with the protection in place, as the mother’s legacy remains intact without worries of committing a large sum of money to a fake person.

Speaking more about protection, here’s a little-known fact – annuity regulations and protection are at the state level. Every state has a non-profit guaranty organization that each licensed insurance company operating in the respective state must join. If a member company/carrier fails, the other companies in the guaranty association help pay the outstanding claims, and limits vary from state to state. Some states do not allow promoting these guaranty organizations, and some states may require they be promoted. The fund only covers beneficiaries of insurance companies where the insurer is licensed to sell products in that state.

One more fact that may resonate with your clients and prospects involves annuities and retirement. According to a past LIMRA study, 73% of retirees who own an annuity believe they will be able to live the retirement lifestyle they want, compared with just 64% of retirees who don’t. Nearly 7 in 10 retirees who own an annuity are more confident their savings and investments will not run out if they live to age 90, as compared with 57% of retirees who don’t own an annuity.

As an insurance agent, you can see how millions of people would worry far less if they had a guaranteed lifetime income, and these guarantees are available. They are called fixed annuities.

AIP Marketing Alliance has access to multiple insurance carriers with many annuity products designed to fit the best interests of your clients and prospects. Our Business Development team can also provide annuity comparisons and suggest products based on your client’s current situation.

If you would like to learn more, please contact AIPMA’s Business Development team at (800) 783-5206 Press #2 or If you are a consumer reading this blog, please feel free to contact AIPMA, and one of our licensed, professional team members will be glad to assist you.

This information is provided for educational and informational use only and should not be used to make a buying decision. Annuities are long-term policies/contracts designed for income purposes. Product guarantees are subject to the claims-paying ability of the issuing insurance company.

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For more than 40 years, AIP Marketing Alliance (AIPMA), an Integrity Company, serves as a premier life insurance and annuity distribution partner to provide full-service support to independent wholesalers, brokerages and agents from our Troy, Michigan office. NOT AFFILIATED WITH OR ENDORSED BY THE GOVERNMENT OR THE MEDICARE PROGRAM. Copyright 2024