Why Aren’t Advisors Using CDs for Retirees?
Three Key Insights
Guaranteed rate annuities are providing 2.00% higher rates than CDs.
The continued industry shift to long-term financial planning to optimize retirements has led to increased popularity in guaranteed rate annuities.
MYGAs have Consumer-friendly features that CDs do not.
At their core, CDs provide safety, guaranteed rates, and a variety of term lengths. The same is true for MYGAs, but MYGAs also provide consumer friendly features:
Liquidity During Term- Most MYGAs allow you to withdraw interest or 10% liquidity each year.
Tax-Deferred Growth- Non-Qualified money in MYGAs is tax deferred.
Generally Higher Rates- The highest non-callable CD rate is barely over 4%, and the highest MYGA rate is over 6.00%.
Spotlight Client Solution*
Earn 6.85% a Year for 30 Years or Buy a Lifetime Income Annuity?
A 60 year old depositing $100k is guaranteed $10,865 of income each year starting at age 65 with Delaware Life's TruePath Income. If the client lives to age 90, the IRR is 6.85% and total cash flow is $282k.
A 6.85% IRR means you'd need to earn 6.85% net each year for 30 years from investment(s) to match the cash flow that Delaware Life guarantees!
Advisors who use RightCapital, eMoney, MoneyGuide Pro, and other financial planning software have shared in most cases, a modest allocation into a client portfolio has increased the probability of success, allowed them to be more aggressive with the rest of a client's portfolio, and leaves the client with more ending assets.
Notable Client Solutions*
45% Death Benefit Bonus
This concept has come up twice in the past week, so I wanted to share a couple use cases for Allianz's 222.
• Older clients with large gains in non-qualified variable annuities who want to lock in their gains.
• Clients who want to pass money to their kids but can't qualify for life insurance.
Allianz's 222 provides a 45% bonus day 1 to the death benefit account. Additionally, gains are credited at 150% to the death benefit account each year. The death benefit is a 5 or 10 year payout to help beneficiaries spread out taxes.
6.00% Guaranteed for 7 Years
Revol One's DirectGrowth MYGA tops the charts for guaranteed cash growth.
• 6.00% guaranteed rate for 7 years.
• Liquidity and/or death benefit riders for 0.10% reduced rate.
• Excellent service.
Revol One is a new insurance company founded by lifelong entrepreneur and the former CEO of Allianz, Mark Zesbaugh. Their goal is to provide simple, consumer value oriented products.
Stay tuned as they continue to launch more products in the coming months!
*Rates may be subject to premium banding. Products may not be available in all states. Replacement must be suitable and meet all requirements.