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Sponsored by Travelers Life and Annuity Annuity Funded Life Helping Your Clients with Life Insurance & Annuities.

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Presentation on theme: "Sponsored by Travelers Life and Annuity Annuity Funded Life Helping Your Clients with Life Insurance & Annuities."— Presentation transcript:

1 Sponsored by Travelers Life and Annuity Annuity Funded Life Helping Your Clients with Life Insurance & Annuities

2 What We’ll Cover Issues Faced by Clients with Existing Deferred Annuities Materials to help Support your sale

3 What About Life & Annuities Annuities Useful for retirement planning Offer tax deferred growth Wide range of distribution options Life Insurance Premiums purchase death benefit Risk borne by life insurance company In some client situations can these can be used together?

4 The Life of an Annuity Accumulation For most annuity owners, this is how they have treated their annuity.

5 But there is a whole other side to Annuities AccumulationDistribution

6 Why Do the Numbers Work The Way They Do? Erosion can be steep –But it’s never equal to the tax rates - WHY? Income with Respect to a Decedent -IRD Assets where growth was deferred - FACES –Estate tax –Income tax Heirs receive an itemized deduction

7 One of Many Tools Available Step by Step IRD Calculator Travelers Life & Annuity Producer Website

8 Basic Result with No Planning Only a few key items needed Here tax rates were –50% estate –40% income Why not 90% loss Result is 65% loss

9 How Did we Get There? Under the IRD Calculation –Estate taxes first –Income tax next Result from combined taxes

10 Let’s See Some Client Numbers Hypothetical situation –67 Year old client –$500,000 annuity growing at 5% year –Client’s estate tax bracket – 45% –Heir’s income tax bracket – 31% Federal & state Can Planning help the client’s heirs?

11 How Did These Numbers Work? Without Planning Each Year’s Annuity Growth Eroded by Taxes Heirs Often Disappointed ** Each year’s annuity year end balance reduced by estate and income taxes.

12 How Did These Numbers Work? With Planning Each Year Enough is Withdrawn to Pay Premiums After-Tax Amounts are Gifted to Trusts What Heirs Receive * Annuity withdrawals are shown on a last in first out basis. Once gain is recovered, the annuity owner can withdraw basis.

13 Year By Year Numbers – 25 Year Graph

14 What is Your Result You have made a client happy –Shown the benefit of planning with their annuities –Shown how life insurance can be used as an asset replacement tool Heirs are happy

15 Issue for those Not Planning to Tap Annuities The Double Tax Issue Estate taxes - client Income taxes – heirs Erosion at top income brackets in the 70% range Based on a $1,000,000 annuity with a $350,000 basis. Client estate tax rate is 50% and heir’s income tax rate is 40%.

16 Your Clients Have a Choice The Annuity is going to face income tax one way or another –In your clients hands –In their heirs hands This becomes the planning approach –Take income today –Use after-tax amounts to reposition the asset

17 Classic Case Distributions to client

18 Classic Case Distributions to client Life Insurance Proceeds to Heirs Gifts to Trust

19 Classic Case Distributions to client Gifts to Trust Life Insurance Proceeds to Heirs Any Remaining Annuity to Heirs

20 What is Your Result You have made a client happy –Shown the benefit of planning with their annuities –Shown how life insurance can be used as an asset replacement tool Heirs are happy

21 Ideal Client Age 60 or older Annuity(ies) not needed for retirement Has a potential estate tax problem –Estate of $3,000,000 or above

22 Sales Support

23 Support from Travelers Life & Annuity Client presentation Client materials Strong Advanced Sales support –Provides you with back-up on the concept

24 Customized Client Presentations

25 Important Disclosure from Travelers Life insurance products are issued by The Travelers Insurance Company or The Travelers Life and Annuity Company, One Cityplace, Hartford, CT Variable products are offered by Travelers Distribution LLC as principal underwriter. Investments in variable life insurance are subject to market risk, including loss of principal. IMPORTANT NOTICE: The foregoing discussion involves complex tax and legal issues. This discussion is not a legal opinion, it is only meant to provide guidance. The decision whether or not to implement these ideas rests with the client’s tax and legal counsel. Neither Travelers Life & Annuity nor its representative are authorized to offer tax advice. Clients must consult with their own independent advisors.

26 What’s Next? Review your book of business Identify potential clients Call your owR Marketing Representative to find out about support materials for this concept.

27 Administrative/Sales Offices: (888)2 GET-owR (201) Frederick J. Wertlieb, CLU, CFP, ChFC, EAP, Managing Partner (Ext 201) April Bisson, Director of Life Marketing (ext. 211) John T. Vybihal, CSA, LTCP Director, Long Term Care (ext 221) Gary Maher, Director of Annuity Sales Steven Little, CLU Brokerage Manager (Ext 250) NJ Sales Office: (888) (609) Richard M. Slamowitz, J.D., LLM,CLU, ChFC, Managing Partner NY Sales Office: (212) Kevin J. O’Connor, CLU, Managing Partner Westchester Sales Office: (914) Les Von Losberg, CLU, ChFC, Managing Partner If You Can Sell…We Can Help


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