As I’ve discussed with many top producers, the newest product niche today is the added Death Benefit feature popping up on products all over the industry. Rightly so. According to LIMRA, 85% of all in-force annuity dollars will be inherited. In the last several months, many new products or riders have hit the market bringing an inheritance story to the already powerful safety and income stories you’re already selling daily.
I generally see two types of Death Benefit products:
a) Combo Income/Death Benefit – These products offer riders which serve both purposes: income for the client while living with the Income Account Value then becoming inheritable to their beneficiaries at death if paid out over a 5-year period.
b) Death Benefit Only – These products offer death benefit rider which can be used in conjunction with an income rider or as a standalone feature. The products typically have a lower roll-up rate but allow the Death Benefit Value to pass to beneficiaries in a lump sum payment.
Today, I wanted to share a few products I’ve found to be the most unique and beneficial in these two instances and share some specific ways they might fit your clients’ needs. The main feature separating these two products from others is the duration of the Death Benefit roll-up. Most Death Benefits hitting the street today are capping the Death Benefit at twice the initial premium for inheritance.
1) Combo Income/Death Benefit Scenario -Forethought® Bonus AdvantageSM
- 8% Premium Bonus applied to Contract Value at issue, subject to a 10 year vesting schedule
- 6% Compounded growth to the Income Base at each Contract Anniversary2
- Accelerated Income Benefit-Temporarily boost income payout percentage to 8% of the Income Base if income start date deferred for 10 years
- The Death Benefit portion of the Rider subject to a cap of up to 250% for ages 55-69
- 8% comp (5% for ages 76-80)
2) Death Benefit Only Scenario – Aviva BAA™
- 7% Premium Bonus on a 12-year chassis
- 4% Compounded benefit to age 85 (or 8 years – whichever is LONGER)
- Dollar for dollar reduction on partial withdrawals and RMDs (up to 4%)
Obviously, I can’t go into all the opportunities to use these two features in a single post, but if you have a client whose main goal is not just maximum income in retirement, contact me to discuss the different ways we can use these combination products and maximize their benefits to your client.
Truth be told, your competition is often walking in with one story and one solution. I’ve combed the latest releases for you, and I’m here to help present a tailor-made recommendation for your next appointment. Take care and finish July strong.