1. Tax Advantaged Distribution Strategy
Non-Qualified Annuities & Guaranteed Minimum Withdrawal Benefits

2. When most reps are given the chance to invest a client’s funds into an annuity, they pick their favorite fixed, index, or variable annuity.
Then they deposit the entire amount into that one annuity.
$$$$

3. For argument’s sake, let’s say that the annuity premium of $100,000 grows to an accumulated value of $160,000 at the end of the surrender term.

4. Now the client comes to the rep and asks for $35,000 from their annuity after tax. The annuity distributions are accounted for on the last in first out (LIFO) basis. At a 33% tax bracket, the client would need to take a $52,000 distribution, leaving them with $108,000 annuity value.
Now, here’s what we could have done…

5. $100,000
$25,000 Bundle 1
$25,000 Bundle 2
$25,000 Bundle 3
$25,000 Bundle 4
Company A
Company B
Company C
Company D
$40,000
$40,000
$40,000
$40,000

6. $25,000 Cost Basis + $15,000 Interest (Assumes a 33% tax bracket)
Now if the client wanted $35,000 after tax we could cash in one of the annuities completely and then the client would receive some costs basis along with interest:
$25,000 Cost Basis + $15,000 Interest (Assumes a 33% tax bracket)
$25,000 Bundle 1
$25,000 Bundle 2
$25,000 Bundle 3
$25,000 Bundle 4
Company A
Company B
Company C
Company D
$40,000
$40,000
$40,000
$40,000

7. $120,000 $40,000 $40,000 $40,000 Bundle A cashed-in to provide $35,000
$25,000 Cost Basis
+$15,000 Interest
Bundle A cashed-in
to provide $35,000
for the client
-$5,000 Taxes
Company A
$25,000 Bundle 2
$25,000 Bundle 3
$25,000 Bundle 4
Remaining 3 bundles have a combined value of
$120,000
Company B
Company C
Company D
$40,000
$40,000
$40,000

8. Which would you rather leave your client?
$108,000 or $120,000?

9. Let’s take this one step further.
Let’s discuss the income needs of many of the baby boomers.
Their needs will be income.

10. $25,000 Bundle 1 $25,000 Bundle 2 $25,000 Bundle 3 $25,000 Bundle 4
Why not take these 4 bundles and split them up into 5,6,7 and 8 year surrenders periods…
5 Year Surrender
6 Year Surrender
7 Year Surrender
8 Year Surrender
$25,000 Bundle 1
$25,000 Bundle 2
$25,000 Bundle 3
$25,000 Bundle 4
Company A
Company B
Company C
Company D

11. And while we’re at it, why not use multiple annuity strategies…
5 Year Surrender
6 Year Surrender
7 Year Surrender
8 Year Surrender
$25,000 Bundle 1
$25,000 Bundle 2
$25,000 Bundle 3
$25,000 Bundle 4
Company A
Company B
Company C
Company D
Variable Annuity
Index Annuity
Fixed Annuity
Index Annuity

12. What you have accomplished:
Tax advantaged distribution vehicle
Guaranty Association
Avoid partial 1035 exchange
Diversification
Liquidity
Flexibility/Portability

13. OR……
We could have put the entire pool of money into one of our favorite annuities with a 17 year surrender period!

14. Indexed Annuity Withdrawal Benefits
How They Work and Where They Fit

15. Index Annuity Withdrawal Benefits
Nuts & Bolts
Available with most index annuity carriers
Annual Fees generally range between .30% and .75%
The withdrawal benefit value is not the accumulated value
Interest rates on the withdrawal benefit range between 5% and 8%
The withdrawal benefit is a guaranteed lifetime payment – even if the account value is decreased to $0.

16. Minimum Guaranteed Contract Value Election Interest Credited
Illustration Assumes $100,000 premium – unfavorable period – 7% Withdrawal Benefit Interest Rate
Minimum Guaranteed Contract Value
89, , , , ,607
98, , , , ,662
Election Interest Credited
0.00% 6.50% 8.50% 0.00% 8.50%
8.40% 8.50% 0.00% 0.00% 8.50%
Projected MGWB Base
112, , , , ,268
157, , , , ,551
Accum Value
105, , , , ,643
142, , , , ,991
Accum Value
104, , , , ,743
138, , , , ,362
Year Ending
01/31/ /31/ /31/ /31/ /31/1971
01/31/ /31/ /31/ /31/ /31/1976
$11,360/year
Surrender charges may apply

17. Minimum Guaranteed Contract Value Election Interest Credited
Illustration Assumes $100,000 premium – unfavorable period – 7% Withdrawal Benefit Interest Rate
Minimum Guaranteed Contract Value
89, , , , ,607
98, , , , ,662
Election Interest Credited
0.00% 6.50% 8.50% 0.00% 8.50%
8.40% 8.50% 0.00% 0.00% 8.50%
Projected MGWB Base
Accum Value
105, , , , ,643
142, , , , ,991
Accum Value
104, , , , ,743
138, , , , ,362
Year Ending
01/31/ /31/ /31/ /31/ /31/1971
01/31/ /31/ /31/ /31/ /31/1976
$11,360/year
Surrender charges may apply

18. Withdrawal Benefits are Not All Created Equal
Important Questions to ask…
1. What value is the annual fee based on?
2. What happens at death?
3. Can you have a joint withdrawal benefit on qualified money?
4. Who will provide the highest payout at the time of distribution?
5. What product(s) provide the most upside if the client does not need the income in the future?

19. Positioning Withdrawal Benefits in the Retirement Income Plan

20. X
Create a Plan

21. How to Sell Annuities…
Create A New Plan.
Out With the Old.

22. The Annuity Market is Changing
Saving Money
Creating Income
Accumulation Phase
Distribution Phase

23. This also pertains to retirement income
The 21st Century Retiree
With the current economic environment, more consumers are concerned about GUARANTEES than ever before.
This also pertains to retirement income
Many in this group are aware of the need to guarantee a portion of their retirement income, but do not know how to achieve it.

24. $ $$$ The process begins with inventorying retirement savings assets
401(k) $
IRA
NQ Savings
$$$
Total savings available for creating a retirement paycheck

25. Social Security Benefits How long is it expected to last?
The next step is to identify sources of retirement income that are not savings-dependent.
Social Security Benefits +
Pension
Rental
Business
Other
How long is it expected to last?

26. Required Income + Lifestyle Income TOTAL RETIREMENT INCOME
Now we determine the clients’ retirement income needs and desires.
Total Retirement Income Consists of Two Components
Required Income +
Lifestyle Income
TOTAL RETIREMENT INCOME

27. The next step is to determine the “Required Income gap”.
This is the difference between non-savings dependent income and the Required Income
SIMPLE EXAMPLE
Required Retirement
$43,000
Social Security Benefits
- $28,000
Him
$18,000
Her
$10,000
$15,000
Required Income Gap

28. Solving the Required Income Gap
Guaranteed Income Benefits are well-suited for closing the Required Income Gap
The minimum guaranteed dollar amount of the lifetime guaranteed income withdrawal can be precisely determined in advance

29. Solving the Required Income Gap Total Retirement Savings
60 Year Old Male Retirement Age 65
$179,750 Index Annuity with Withdrawal Benefit provides $15,000 of Guaranteed Lifetime Income after 5 Years
Total Retirement Savings
$500,000
$320,000
Average Return of 5%
$520,000 after 10 Years
Income Need at Retirement
$43,000
4% Fixed
5% Index
6% Investments
$28,000
Social Security
$15,000
Annuity Income
$43,000
EXAMPLE CASE

30. Illustration Guaranteed Lifetime Withdrawal Benefit
Premium: $179,750 | Issue Age: 60 | Number of Months Deferred: 60
5% Bonus
7.2% Compounded
5.5% Withdrawal Percentage

31. The Benefits In Withdrawal Benefits
Guaranteed Income You Cannot Outlive
What You See is What You Get – No Questions
More Guaranteed Benefit

32. Potential Disadvantages
Paying for Something You May Not Need
Income Needs May Change
Interest Rate Risk

33. Where Does It Fit? Consumers Seeking Future Guaranteed Income
Consumers With Little Tolerance for Uncertainty
Consumers Seeking a Plan
Allocated as Part of a Consumer’s Portfolio, Not All

34. This Is Not Inflation Protection
Don’t be fooled by the interest rate!
The client does not earn 6, 7, or even 8%!!
The client gets INCOME not INTEREST!!!

35. What is the client’s #1 concern?
Index/Fixed vs VA
“Why would I sell a Fixed or Index Annuity when I can sell a variable with a Withdrawal Benefit?
What is the client’s #1 concern?

36. Three Things Clients Do With Their Money
Save It
Invest It
Spend It

37. Three Things Clients Do With Their Money
Save It
Invest It
Spend It (Now)
Spend It (Later)

38. Savings
Investments
Protection
Potential
Income
Income

39. Savings Investment Income
Protection
Potential
Income

40. If Potential Growth is the primary goal for consumers…
A Variable Annuity provides more potential earnings than Fixed and Index Annuities. (EVERY TIME.)

41. If Protection of Principal is the primary Goal…
Fixed and Index Annuities provide the most protection on your clients principal, with a minimum interest rate guarantee.

42. If Guaranteed Income is the Primary Goal…
Index Annuities provide the highest Guaranteed Income.
8% Annual Compounded Roll-up
10% Bonus (on income benefit)
Competitive withdrawal benefit percentage

43. INCOME SAVINGS INVESTMENTS

44. Thank You for Joining Us Today.

45. Index Annuity Withdrawal Benefits
Nuts & Bolts
Available with most index annuity carriers
Annual Fees generally range between .30% and 1.25%
The withdrawal benefit value is not the accumulated value
Interest rates on the withdrawal benefit range between 4% and 8%
The withdrawal benefit is a guaranteed lifetime payment – even if the account value is decreased to $0.

46. Minimum Guaranteed Contract Value Election Interest Credited
Illustration Assumes $100,000 premium – unfavorable period – 7% Withdrawal Benefit Interest Rate
Minimum Guaranteed Contract Value
89, , , , ,607
98, , , , ,662
Election Interest Credited
0.00% 6.50% 8.50% 0.00% 8.50%
8.40% 8.50% 0.00% 0.00% 8.50%
Projected MGWB Base
112, , , , ,268
157, , , , ,551
Accum Value
105, , , , ,643
142, , , , ,991
Accum Value
104, , , , ,743
138, , , , ,362
Year Ending
01/31/ /31/ /31/ /31/ /31/1971
01/31/ /31/ /31/ /31/ /31/1976
$11,360/year
Surrender charges may apply

47. Minimum Guaranteed Contract Value Election Interest Credited
Illustration Assumes $100,000 premium – unfavorable period – 7% Withdrawal Benefit Interest Rate
Minimum Guaranteed Contract Value
89, , , , ,607
98, , , , ,662
Election Interest Credited
0.00% 6.50% 8.50% 0.00% 8.50%
8.40% 8.50% 0.00% 0.00% 8.50%
Projected MGWB Base
Accum Value
105, , , , ,643
142, , , , ,991
Accum Value
104, , , , ,743
138, , , , ,362
Year Ending
01/31/ /31/ /31/ /31/ /31/1971
01/31/ /31/ /31/ /31/ /31/1976
$11,360/year
Surrender charges may apply

48. Withdrawal Benefits are Not All Created Equal
Important Questions to ask…
1. What value is the annual fee based on?
2. What happens at death?
3. Can you have a joint withdrawal benefit on qualified money?
4. Who will provide the highest payout at the time of distribution?
5. What product(s) provide the most upside if the client does not need the income in the future?

49. Positioning Withdrawal Benefits in the Retirement Income Plan

50. X
Create a Plan

51. How to Sell Annuities…
Create A New Plan
Out With the Old

52. The Annuity Market is Changing
Saving Money
Creating Income
Accumulation Phase
Distribution Phase

53. This also pertains to retirement income
The 21st Century Retiree
With the current economic environment, more consumers are concerned about GUARANTEES than ever before.
This also pertains to retirement income
Many in this group are aware of the need to guarantee a portion of their retirement income, but do not know how to achieve it.

54. The process begins with inventorying retirement savings assets $ $$$
401(k) $
IRA
NQ Savings
$$$
Total savings available for creating a retirement paycheck

55. Social Security Benefits How long is it expected to last?
The next step is to identify sources of retirement income that are not savings-dependent.
Social Security Benefits +
Pension
Rental
Business
Other
How long is it expected to last?

56. Now we determine the clients’ retirement income needs and desires.
Total Retirement Income Consists of Two Components
Required Income +
Lifestyle Income
TOTAL RETIREMENT INCOME

57. The next step is to determine the “Required Income gap”.
This is the difference between non-savings dependent income and the Required Income
SIMPLE EXAMPLE
Required Retirement
$43,000
Social Security Benefits
- $28,000
Him
$18,000
Her
$10,000
$15,000
Required Income Gap

58. Solving the Required Income Gap
Guaranteed Income Benefits are well-suited for closing the Required Income Gap
The minimum guaranteed dollar amount of the lifetime guaranteed income withdrawal can be precisely determined in advance

59. Solving the Required Income Gap Total Retirement Savings
$196,078 Index Annuity with Withdrawal Benefit provides $15,000 of Guaranteed Lifetime Income after 5 Years
60 Year Old Male Retirement Age 65
Total Retirement Savings
$500,000
$304,000
Average Return of 5%
$495,184 after 10 Years
Income Need at Retirement
$43,000
4% Fixed
5% Index
6% Investments
$28,000
Social Security
$15,000
Annuity Income
$43,000
EXAMPLE CASE

60. Illustration Guaranteed Lifetime Withdrawal Benefit
Premium: $196,078 | Issue Age: 60 | Number of Months Deferred: 60
2% Bonus
10% Simple
5% Withdrawal Percentage

61. The Benefits In Withdrawal Benefits
Guaranteed Income You Cannot Outlive
What You See is What You Get – No Questions
More Guaranteed Benefit

62. Potential Disadvantages
Paying for Something You May Not Need
Income Needs May Change
Interest Rate Risk

63. Where Does It Fit? Consumers Seeking Future Guaranteed Income
Consumers With Little Tolerance for Uncertainty
Consumers Seeking a Plan
Allocated as Part of a Consumer’s Portfolio, Not All

64. This Is Not Inflation Protection
Don’t be fooled by the interest rate!
The client does not earn 6, 7, or even 8%!!
The client gets INCOME not INTEREST!!!

65. What is the client’s #1 concern?
Index/Fixed vs VA
“Why would I sell a Fixed or Index Annuity when I can sell a variable with a Withdrawal Benefit?
What is the client’s #1 concern?

66. Three Things Clients Do With Their Money
Save It
Invest It
Spend It

67. Three Things Clients Do With Their Money
Save It
Invest It
Spend It (Now)
Spend It (Later)

68. Savings
Investments
Protection
Potential
Income
Income

69. Savings Investment Income
Protection
Potential
Income

70. If Potential Growth is the primary goal for consumers…
A Variable Annuity provides more potential earnings than Fixed and Index Annuities. (EVERY TIME.)

71. If Protection of Principal is the primary Goal…
Fixed and Index Annuities provide the most protection on your clients principal, with a minimum interest rate guarantee.

72. If Guaranteed Income is the Primary Goal…
Index Annuities provide the highest Guaranteed Income.
One of the highest guaranteed income riders includes:
10% Annual Simple Roll-up
2% Bonus
Competitive withdrawal benefit percentage

73. INCOME SAVINGS INVESTMENTS

74. Thank You for Joining Us Today.