Annuities - Life insurance product, Principles of Insurance Video Lecture | Principles of Insurance - B Com

years ago and everyone my name is derek
ifasi I'm the owner of a Fosse Financial
Group in today's topic I'm gonna discuss
with you life insurance annuity now this
is a little bit of a vague title so I'm
gonna break this down into two separate
parts one that's going to explain a type
of hybrid annuity with a death benefit
Rider and then another that you could
actually leverage an annuity contract
turn on income and have that income
purchase a death benefit life insurance
policy tax-free death benefit life
insurance policy so to kind of start off
let's at least talk about how a death
benefit Rider works and and kind of
different things to look out for and to
kind of weed through some of the smoke
and mirrors that a lot of these
insurance companies offer through the
death benefit annuity contracts which
are the ones that I typically recommend
to the clients to help don't to help
understand you know what are some of the
available options for them now what does
that mean well with a hybrid annuity if
you've ever seen any of my other videos
and you subscribe to my youtube channel
you know that I'm a big fan of hybrid
annuities and essentially how this works
is this is a type of fixed annuity that
is tied to upward market movements in
the stock market in the stock event with
the stock market index so what I mean by
that is let's say if you had $100,000
and you go and you place it into a
hybrid annuity contract it all has to be
specific to your age it'll have to be
specific to your goals you know how long
you want this money to grow out etc and
what happens is your first your money's
it goes into one portion known as your
account value side which is your
physical money and then the other
portion known as your income base side
or variation of that word and these are
typically any hybrid annuity you're
gonna see on your statement you're gonna
see okay what your actual account value
did and then what is your benefit base
or income base or variation of that what
that did after exactly one year so with
your account value side you understand
that your money's gonna grow whenever
that stock market index that you choose
increases at a one-year point let's say
that you have a 15% cap and you had an
S&P index and let's say that S&P index
gained 20% well you're gonna be capped
and you would receive 15% that year so
you're a hundred thousand would grow to
$115,000 now that's ratcheted in there
the next year let's say that stock
market index crashes and let's say he
loses 20% well you have that peace of
mind you have that floor that you would
have lost 0% you wouldn't have gained
anything you would have gained exactly
0% and now your 115,000 is preserved and
protected and then you're going on for
the next year so as your accounts values
doing that little number which stepping
up flatlining stepping up flatlining
stepping up flatlining you have a
specific contractual guaranteed through
the insurance company through the claims
paying ability of the insurance company
to give you either a fixed percentage
rate or something that's tied to an
upward market movement on an annual
basis so a lot of the most attractive
annuities might offer you like a 7
percent guarantee or four percent you
know compound interest guarantee that
understands that every year your number
is going to step up 7 percent 7 percent
7 percent 7 percent 7 percent so that
when you're looking to either x ik x ur
size that income rider for income
purposes it's going to be a much higher
value it's going to be whatever this is
multiplied by something known as a
withdrawal rate percentage and that's
what equals your lifetime income amount
now with these hybrid annuities
sometimes individuals don't really care
about the income side and they're just
saying listen I don't need to touch this
money for income but I want to make sure
that my money is growing and a very safe
consistent basis and also growing to
leave as an inheritance so this is where
you can use a hybrid annuity with a
death benefit Rider not an income rider
so not an income it's going to be purely
a death benefit Rider and it's gonna
work exactly the same type aspect so if
you have that hundred thousand dollars
and you said listen I'm not interested
in ever pulling out this money I just
want to make sure that this money is
going to grow consistently and any time
that the market beats out whatever that
specific guarantee is through the
insurance company I want to make sure
that these numbers both step up that my
death benefit steps up my account
you stepping up and everything is
working very very favorable year by year
by year so if you look at the hundred
thousand dollars same thing you're gonna
have an account value side that is going
to have a floor of zero percent and a
cap up to a specific limit so your every
year it's either gonna receive a credit
or it's not gonna receive a credits
gonna receive a credit or it's not gonna
receive a credit on this secondary side
your benefit base is going to be tied
specifically to your death benefit so
maybe you know this might be 4% where it
would step up by 4% 4% 4% 4% 4% or 5%
whatever that is as a bare-bones minimum
meaning that let's say the account value
gained 3 percent this year will your
death benefit stepped up 4% so now
you're a hundred thousand is going to be
a hundred four thousandths god forbid
something happens to you your
beneficiaries are guaranteed one hundred
four thousand dollars the next year
let's say that this stepped up 10
percent and now your account value
sitting out 120 thousand and this would
have given you a four percent guarantee
on your death benefit side because your
account value is now higher than your
death benefit this is going to step up
meet it and now you have a hundred
twenty twenty thousand there the next
year let's say that the account value
that the market crashes you gain zero
percent of your account value side but
this is now stepping up 4% so what's
happening is this benefit base keeps
accumulating accumulating accumulating
to a certain point where let's say god
forbid you pass away your beneficiaries
are not just going to receive this side
but they will be able to receive your
death benefit benefit base side so it's
just just a way on how you could
leverage your money to make sure that
you're not just throwing it in a cash
account and you're not receiving any
interest on it you're leveraging an
insurance company to give you some sort
of contractual guarantee to make sure
that you could leverage your dollars the
best way possible and provide your
beneficiaries with the highest benefit
possible so it's very very important on
how exactly those different things work
now one of the things I mentioned the
beginning of this video as I said I want
you to to weed out some of the smoke and
mirrors what do I mean by that well you
have some contracts which you might have
a very favorable death benefit growth
the benefit base growth of 7% or 10%
year by year by year by year but some of
the caveat to it is after you have this
large lump sum you're going to have your
account value let's say you know in that
scenario of a hundred thousand dollars
and say after ten years your account
value sitting at 200 thousand and your
death benefit your benefit base is
sitting at 300 thousand well some
carriers they say okay yes your
beneficiaries will be able to receive
this three hundred thousand dollar
number but the caveat the
smoke-and-mirrors is they have to
receive it in five consecutive years
meaning that instead of having it as
three hundred thousand dollars lump sum
they would have to it would have to be
sixty thousand dollars every single year
for five years because obviously sixty
thousand multiplied by five years equals
the three hundred thousand dollar number
so they would have that option to either
pull out this is a pure lump sum of the
account value side or pull out this
benefit base death benefit as a
five-year increment now understand this
benefit baseness does not mean when
you're looking purely as income income
riders typically companies they either
are going to give you a death benefit
rider or they're going to give you an
income benefit rider typically they
don't offer both of those and if they do
offer both of those the fees are going
to be astronomical where I would
recommend against doing that so
understand is the product that the
specific company is offering you are
they going to be able to pay you this
this death benefit this benefit base in
a lump sum option which some companies
do offer that which I highly recommend
or is it going to be some smoke and
mirrors where they're going to pay you
out in a five-year increments not going
to be as favorable as you would think so
you know it's it's all about how exactly
you leverage the best products out there
understand you have over 1200 different
scenarios over 300 different product
lines to choose from based upon your age
based upon your specific dollar amount
that you're placing in there based upon
your specific goal I mean there's so
many different ways to skin that cat and
rather than just going into a blind
you have to understand and you have to
be educated every step of the way and
understand exactly what is going to be
the best solution that's what one of the
things that I always mentioned and
during every videos give her a 1-800
number a call what we do is you might be
speaking with myself you might be
speaking with some of my other
representatives but what we do is we
help you understand what your goals are
and we ask you certain questions to get
your get your brain thinking on what
exactly is it that you truly want with
your money what do you want your money
to do for you and how to do that on a
very safe basis and how you can leverage
certain types of annuity contracts maybe
it's meant specifically for income
purposes for lifetime income purposes
maybe it's meant specifically for death
benefit purposes but what time and time
again people call our office because
they're terrified that the markets gonna
have another 2008 market crash and they
do not want their money to crash and not
be able to leave anything to their loved
ones so that's the first aspect remember
I told you we have either the hybrid
annuity with the death benefit Rider or
you could take either a hybrid annuity
or a single premium immediate annuity
pull out income from that and purchase a
a death benefit only policy through life
insurance and this is a really really
neat way on how to how to do this and I
do this a lot with people that come in
to certain types of pension scenarios so
you could do this through their annuity
product lines you could do this through
people have like TSP plans that they're
taking the single life only pension
option as opposed to the joint life
pension option so actually let me pull
up a new screen and show you I'll show
it to you on the pension option that I
have clients that call in and then I'll
show it to you on the annuity option
let's say somebody has a TSP plan and or
they just have some sort of pension plan
and they are through work and they have
that option to either choose a single
life only option or they could pull out
a they could take the joint life only
option now let's say if they choose the
single life only option
this person's age 60 and their spouses
let's say age 60 if they choose the
single life only option let's say the
company's going to pay them $50,000 a
year but if they take the joint life
option
then the company's only going to pay
them $30,000 a year what I explained to
them and this only works if the person
is insurable so this entire strategy
only works that this person is insurable
this person has some crazy ailments such
as cancer some some sort of terminal
illness this will never work and I
highly recommend against doing this but
it works perfectly for the correct
person you could essentially say rather
than give up that $20,000 of income to
say that you both you and your spouse
are going to be covered what you could
do is have that first individual take
out the single life only option for
$50,000 let's say they get paid $50,000
and they could essentially purchase a
$10,000 a year in that scenario I mean
there's there's a whole different ways
you could skin I can't you could take
the $50,000 option purchase a ten
thousand dollar life insurance policy
for five hundred thousand dollars making
sure that something happens to that
single life individual the income
doesn't stop because now the spouse will
receive a lump sum of five hundred
thousand dollars of tax-free death
benefit that now they can live off of
for income and either place that into an
annuity contract later on so what's
happening there is when you do this
aspect of taking the single life only
option
you're netting ten thousand dollars more
then taking the joint life option making
sure that both spouses are covered with
this option when you take the fifty
thousand dollars and you take ten
thousand dollars out to purchase the
life insurance the spouses could've
gonna going to be covered tenfold and
you're still netting pure profit of ten
thousand extra dollars year by year by
year where do I get this ten thousand
dollars extra well with the joint life
option you would have been thirty
thousand dollars or with a single life
option you would have been fifty
thousand dollars that's a net of twenty
thousand dollars now out of that net a
twenty thousand dollars you're taking
ten thousand purchasing the life
insurance to receive the to to make sure
that you have a five hundred thousand
dollar death benefit there so in this
scenario let's say that the first spouse
spouse be the one that doesn't have the
single life option on their life let's
say they pass away first
now they're making out like a bandit and
they could cancel their life insurance
if they want to and just increase their
net profit to $20,000 or if that
individual a the person that has the
pension option is is let's say they pass
away well now 500,000 or tax-free money
gets paid out to their beneficiaries and
the this couple was netting ten thousand
dollars year by year by year by year by
not taking that joint life option but
like I mentioned before it's only works
if you have the specific situation if
you are insurable if you're not
insurable then it's not going to work
for you now one of the other things that
I'd mentioned was you could also
leverage an annuity contract
some people say hey listen I want to
have you know I want $100,000 and I want
to throw it into a death benefit annuity
and I always say well listen are you
insurable because if you're insurable we
could essentially take this money place
it into a hybrid annuity meaning that
you're a hundred thousand dollars you
would receive you have your account
value of a hundred thousand you have
your income base that would start off
you have some companies that would pay
you an income base of let's say you know
seven thousand dollars from the first 30
days well you could use this hundred
thousand dollars that you just wanted to
be left to your beneficiaries take a
hundred thousand dollars place into a
hybrid annuity contract have that hybrid
annuity get turned on instantly with
lifetime income understand that you're
still gonna have a count value growth
there well your Calva is going to gain
flatline gain flatline gain flatline you
have a set income stream on your life
only four seven thousand dollars year by
year by year you take the $7,000 and
let's say you purchase a life insurance
policy for three hundred grant and
that's how much it's going to cost you
for a three hundred thousand dollar life
insurance plan so now let's say you pass
away after a couple of years
god forbid you pass away after a couple
of years your beneficiaries would
receive what's ever remaining in your
account value side and they would
receive 300 thousand dollars of tax-free
death benefit so the point that I'm
trying to make is understand if you have
a specific goal for a maximum death
benefit and you are insurable you could
take your money that you were just
looking about leaving in a cash account
anyways and you can multiply that up to
three times and also have that have that
money go to your beneficiaries in a
tax-free manner as opposed to something
that could potentially be taxable so
there's there's so many different ways
to you know to really skin this cat and
you just have to understand that you do
hold the power you have the power of
leverage that you should never go into
one size fits all strategy each
individual is different meaning that if
you're at a seminar and someone's
talking in a seminar and let's say
there's 20 people or 50 people at a
seminar the odds that all of those
individuals are going to have the same
goals the same strategies is going to be
impossible it's absolutely impossible
not everybody's the same age not
everybody has the same life where they
have to have each one has to be tweaked
specifically to their situation and you
know that's one of the things that we're
very passionate about and you know
that's kind of why you hear the
excitement of my voice is because this
is something that we deal with on a
daily basis we have many satisfied
clients we are a plus rated on the
Better Business Bureau and we've never
had complaints we've always had good
reviews and the reason being is because
the way that we educate the way that we
try to help you understand that you do
hold the chips you don't have to just go
into this with with a big question mark
and not understand that you do have
options there so you know once again one
of the things I mentioned in every
videos please give our 1-800 number I
call it's one eight hundred five six six
one zero zero two we offer 24/7 customer
service we will educate you too you know
till we're blue in the face and and
you'll be able to whether you're dealing
with myself or some of my other
representatives you know you're going to
be able to see that will will definitely
show you some neat little strategies
there's over 1,200 different scenarios
different strategies that we go per
individual that calls in and you know we
have different software we have
different case design teams that really
help us out and you know at the end of
the day all we're trying to do is really
solely trying to give you as much
benefit as possible
once again my name is derek ifasi I want
to thank you very much for watching this
video please make sure to subscribe to
our YouTube channel retire sharp so you
could have access to the most updated
videos and I want to thank you once
again for watching
take care