Maximizing Potential Income – Ashley Hoy
Background
Paul purchased a non-qualified variable annuity in 2011 with a living benefit rider that would provide guaranteed income in retirement. The current account value was $279,000 and would provide $19,820 annually- guaranteed for life.
Paul wants to maximize his guaranteed income sources in retirement and reduce his overall market exposure. He and his wife have a household net worth of approximately $5 million.
Recommendation
We reviewed new annuity contracts that are available on the market and found a product that offered $26,500 annually if Paul waited until year 5 to activate income. The product also provided a nursing home multiplier, which provides double his annual income if he confined to a nursing home for more than 90 days. This product also provided a death benefit base of 125% of his initial premium, payable to beneficiaries over a 5-year period, provided the contract has an accumulated value at the time of his passing.
Results
Paul enacted a tax-free 1035 exchange to fund his new policy. Paul will receive an additional $6,680 annually for as long as he lives compared to the old policy. His new income stream is guaranteed for life. Paul gained both a nursing home multiplier and a death benefit option that were not available on his original contract. We reduced his market exposure and volatility in his overall portfolio through this exchange.
Want to Learn More?
Call Bicking Financial Services at 781-862-9792 or visit www.bickling.com to learn more and schedule an appointment!
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