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For Agent Use Only. © 2009 American Financial I'd Like a Way to Fund My Retirement That Will: Index my value to the stock market Protect my money Allow.

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Presentation on theme: "For Agent Use Only. © 2009 American Financial I'd Like a Way to Fund My Retirement That Will: Index my value to the stock market Protect my money Allow."— Presentation transcript:

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2 For Agent Use Only. © 2009 American Financial I'd Like a Way to Fund My Retirement That Will: Index my value to the stock market Protect my money Allow for liquidity Have tax advantages Has growth potential

3 For Agent Use Only. © 2009 American Financial Life is All About Balance Mutual Funds Stocks Variable Annuity Bonds CDsCash Fixed Annuity FIA Possible Gain Possible Loss 10% Cap No Possible Loss RiskLow Risk

4 For Agent Use Only. © 2009 American Financial What is a Fixed Index Annuity: Grow retirement dollars without risking original investment Gains tied to a market index Money is not invested in stocks Locks in gains annually If market index decreases, value does not Provides triple compounding Surrender penalties may apply if product is not held for the term. Based on the claims paying ability and stability of the insurance company

5 For Agent Use Only. © 2009 American Financial Why Fixed Indexed Annuities? OLD CHOICES Lower Risk Fixed Investments – CDs, Savings, Fixed Annuities Rates today are in the 3-4% range Higher Risk Investments – Stocks, Bonds, Mutual Funds, Variable Annuities Value of investments can go up OR down and you pay fees either way

6 For Agent Use Only. © 2009 American Financial The FIA Choice FIAs borrow the low risk guarantees offered from the fixed products while borrowing some of the growth from the variable products. Why Fixed Indexed Annuities? Lower Risk FIAs Higher Risk CDs, Savings, Fixed Annuities Stocks, Bonds, Mutual Funds, Variable Annuities

7 For Agent Use Only. © 2009 American Financial Investors Total Returns Average S&P 500 Returns 16.29% Jan 84 Thru Dec 00 Jan 84 Thru Dec 00 Jan 84 Thru Oct 03 Jan 84 Thru Oct 03 * Source - Dalbar Study as reported in The Advantage Group Index Annuities Power & Protection by Jack Marrion Average Equity Fund Investor 5.32%2.57% 12.22%

8 For Agent Use Only. © 2009 American Financial Investors Fail Investment 101 Investor retention of funds is at its lowest level since 1988 The average equity investor remains invested in a fund for about 2 ½ years, down from a high in 1992 of about 3 ¼ years Source - Dalbar Study

9 For Agent Use Only. © 2009 American Financial Power of Annual Reset

10 For Agent Use Only. © 2009 American Financial The Power of the Annual Reset Case Study Rule number one: Never lose money. Rule number two: Never forget rule number one. Warren Buffett

11 For Agent Use Only. © 2009 American Financial The Power of the Annual Reset Locks in Gains Sell High Resets Buy Low ? As long as the basic concept remained intact – no downside for me and a 50 percent share of the upside – it was an extraordinary deal. Donald Trump from The Art of the Deal

12 For Agent Use Only. © 2009 American Financial Power of Annual Reset

13 For Agent Use Only. © 2009 American Financial Power of Annual Reset This example is intended to highlight the annual reset feature of a fixed index annuity. This is not a comprehensive overview of all relevant annuity features and benefits. Be sure to review all material details about these products. We are using actual S&P 500 data from 1/1/1999 to 1/1/2009, and are assuming the hypothetical product was available for purchase on 1/1/1999 utilizing the monthly sum crediting method with a hypothetical monthly cap of 2.7%. Keep in mind that this represents past information only and results will vary depending on actual market conditions. Past performance may not be used to predict or project future results. Actual results will vary by the specific product chosen, crediting method, caps spreads, or participation rates. No single crediting method consistently delivers the most interest under all market conditions. The minimum guarantee (light blue line) illustrates a market scenario where no indexed interest was earned during the period shown. Although external indexes may affect your contract values, the contract does not directly participate in any stock or other investments. You are not buying bonds, shares of stock, or shares of an index fund. The indexes do not include the dividends paid on stocks underlying a stock index or interest paid on bonds underlying a bond index. Stock dividends and bond interest are not reflected in the interest we credit to your contract. The S&P 500 index does not include dividends.

14 For Agent Use Only. © 2009 American Financial GMWB Income Benefit Riders The evolution of these riders – Here come the boomers GMDBs - GMIBs - GMWBs Comparing 1997 intro to indexed annuities GMWBs

15 For Agent Use Only. © 2009 American Financial Problems with these Riders Look at these riders more like a… PENSION Like Defined Benefit Plan & Social Security What is more valuable to a retiree? Pension or 401(k)?

16 For Agent Use Only. © 2009 American Financial What is a Pension? Guaranteed income Not an individual cash account What is unique about this type of pension? Creates lifetime income Adds an individual cash account option

17 For Agent Use Only. © 2009 American Financial Guaranteed Income with Cash Option Base Annuity $100,000 Base Annuity w/ Rider Premium Bonus Assumed 10-Year Roll-up Income Bonus (5%) Surrender Value Income Age 65 (5.5%) Guaranteed Income of $11,928 /annually OR ( $994 /month) $105,000 N/A $171,034* N/A Accumulation Value $171,034* N/A $105,000 7% N/A $10,328 N/A $216,879 (5%) N/A Rider Income Value $206,551 * Assumes interest crediting of 5% annually – if we assume 0% interest, then the value is $105,000 (Income Rider Values) (Annuity Values)

18 For Agent Use Only. © 2009 American Financial Guaranteed Income with Cash Option Base Annuity $100,000 Base Annuity w/ Rider Premium Bonus Assumed 10-Year Roll-up Income Bonus (5%) Surrender Value Income Age 65 (5.5%) Guaranteed Income of $11,928 /annually OR ( $994 /month) $105,000 N/A $171,034* N/A Accumulation Value $171,034* N/A $105,000 7% N/A $10,328 N/A $216,879 (5%) N/A Rider Income Value $206,551 * Assumes interest crediting of 5% annually – if we assume 0% interest, then the value is $105,000 (Income Rider Values) (Annuity Values)

19 For Agent Use Only. © 2009 American Financial Control, Flexibility, Liquidity GMWB features include… Start & stop Step-up feature due to market increase Walk away feature Lump-sum at death Additional free withdrawals Income for life even if cash goes to zero


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