Practical Case Studies in Annuity Planning Featured Speaker: John L. Olsen, CLU, ChFC, AEP Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

Featured Speaker John L. Olsen, CLU, ChFC, AEP Olsen Financial Group 131 Hollywood Lane Kirkwood, Missouri jolsen02@earthlink.net Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

Case #1: When Income is Needed, Starting Immediately John, a single 52 year old, wants more income, starting immediately. What questions must we ask before making a recommendation? Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

The 12 Concerns We MUST Ask About Age Annual Income Financial situation and needs, including the financial resources used for the funding of the annuity Financial experience Financial objectives Intended use of the annuity Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

The 12 Concerns We MUST Ask About (Cont’d) Financial time horizon Existing assets, including investment and life insurance holdings Liquidity needs Liquid net worth Risk tolerance Tax status Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

The Job is: More Income, Starting Now What are the appropriate tools? Single Premium Immediate Annuity (SPIA) Single Premium Deferred Annuity with withdrawal benefits (SPDA) Non-annuity tools Sustainable Withdrawal Program Bonds Certificates of Deposit High Dividend Stocks Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

The Job is: More Income, Starting Now The Single Premium Immediate Annuity (SPIA) When might a SPIA be appropriate? When income must persist for life When income is for a definite number of years When might a SPIA be inappropriate? When John needs liquidity When John needs flexibility When John needs “this money” to produce a legacy What about current interest rates? Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

The Job is: More Income, Starting Now Single Premium Deferred Annuity (SPDA) & Withdrawals Many contracts don’t allow withdrawals in 1st year Guaranteed Lifetime Withdrawal Benefit (GLWB) might work, but – “Rollup rate” on benefit base usually stops at 1st withdrawal The longer John waits before taking 1st withdrawal, the greater the guaranteed withdrawal percentage Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

A Deferred Annuity with a Guaranteed Minimum Withdrawal Benefit Annual “Step Up” and 6% “Rollup” The Account Value is available in a lump sum. The “Max Value” is NOT! Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

What about a Combination? Example 1: A 10 Year SPIA plus a Deferred Annuity with a GLWB SPIA pays for 10 years and stops DA+GLWB “benefit base” increases for 10 years In 11th year, John takes Guaranteed Withdrawal Percentage from benefit base, for life Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

What about a Combination? Example 2: A 20 Year SPIA plus a Deferred Income Annuity commencing in 21st year SPIA pays for 20 years and stops In 21th year, DIA provides income for life The amount of both income streams is guaranteed today But.. DIA might not provide death benefit if John dies before 21st year Liquidity issues Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

Case #2: When Need Is To Accumulate Capital What questions do we need to consider here? Risk tolerance Is a guarantee of principal important? Is a guarantee of annual return important? Liquidity Surrender charges Exceptions to withdrawal penalty Tax considerations Legacy considerations Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

Case #2: When Need Is To Ensure a Future Income The “Longevity Annuity” / Deferred Income Annuity Adds a “defined benefit” component to the plan The 2 “Unknowables” in retirement income planning Removes or reduces the second Unknowable Implications for asset allocating the rest of client’s money Behavioral considerations Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

Q&A Q&A

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Webinar Attendees: Save 10% The Advisor's Guide to Annuities, Third Edition By John L. Olsen and Michael E. Kitces Published May 2012 / ISBN: 9781936362851 / 338 pages Use Coupon Code “Webinar10” and Save 10%! Go to: www.nationalunderwriter.com, or call 1.800.543.0874 Brought to you by the publishers of Tax Facts Online © 2012. All Rights Reserved

TECHNICAL ISSUES For technical issues, contact: Richard Niles, J.D. Senior Tax Editor National Underwriter rniles@sbmedia.com