Commissions are paid to the agent by the issuing carrier…..and is built into the product. In other words, you don’t see it. Commission levels depend on the product type. The simpler the product, the lower the built in commission.
MYGAs and SPIAs can be 0.50% to 2%. Indexed and variable annuities can have commissions ranging from 5% to over 10%. Once again, it depends on the product and carrier.
If you have a specific product in mind, I can tell you the commission range.
This is an easy one question to answer. A person that is 94 years old has NO BUSINESS BUYING ANY TYPE OF ANNUITY. Anyone that tells you otherwise is a crook.
Concerning your questions, you can contractually structure the “Joint Life” payout so that if both of you die, 100% of the remaining balance will go to the listed beneficiaries on the policy. In other words, the annuity company doesn’t keep a penny. There is no way to calculate ROI or a death benefit until both of you die. Up until that point, it’s a pure transfer of risk.
“Point to Point” refers to an indexed annuity, and has nothing to do at all with a SPIA. SPIAs are for immediate income. There is no such thing as a “Point to Point Annuity.” Sounds like someone is trying to sell you an indexed annuity. Be careful.
You can purchase a SPIA with Roth IRA $$……and the income stream would be tax free. Just like you would buy a stock, mutual fund, ETF, etc…you would buy a SPIA the same way.
The answer to your question depends on what type of annuity you purchase within your IRA. If it’s a SPIA, then income will be coming out of your IRA immediately….and will be taxable. If it’s a QLAC, then you can defer to as far out as age 85.
How does the application process work in terms of how an insurance company qualifies your application for ability to pay the premium? Do you need to show proof of funds? How does it work specifically? Once you determine the amount you care to purchase, say $100,000, can they provide all the specifics of the contract before receiving payment or guarantee of payment?
The application process is very simple with all of the Annuities.direct®® sites:(SPIA.direct, DIAS.direct, QLAC.direct, and MYGA.direct)®. 95% of the process is done online, with online forms…with the final 5% handled by a licensed administrative person (non-agent). The application process involves suitability questions. The vast majority of annuities are single premium. You can either write a check, or wire the funds directly to the carriers. Regarding do you need to show proof of funds? No. You fill out the application by answering the suitability questions. Regarding how does it work specifically? Not sure if you are talking about the application process, or carrier suitability. Please call me so I can clarify. Regarding, once you determine the amount you care to purchase, say $100,000, can they provide all the specifics of the contract before receiving payment or guarantee of payment? Yes.
In my opinion…NO. SPIAs with a COLA sound good in theory, but the annuity company drastically lowers the payment when compared to the exact same SPIA without a COLA. The best COLA annuity on the planet is Social Security.
Let’s look at this example to answer your question. If you have a total Traditional IRA asset of $500,000 and you purchase a $250,000 lifetime SPIA, the RMDs from that $250,000 are covered from the income stream you receive. You will be responsible for the RMDs on the non-annuity $250,000.
When you buy a SPIA the payment you receive is a combination of principal and interest. If you use non-qualified money you will pay taxes on the interest portion of the payment. The principal part of the income stream is “excluded” from taxes. The exclusion ration will go away as soon as all the principal has been paid out.
SPIA.direct® does not allow period certain quotes………because that represents less than 1% of all quotes. SPIA.direct® provides “Life Only” and “Life with Balance Refund” (which is a period certain based on your life expectancy) because that is pretty much what people buy. In addition, we did focus groups across the nation for over a year before the site went live….and those results combined with extensive consumer research was the impetus for SPIA.direct®. Please contact us for a custom quote.
- I decide how much income I want monthly and use the quote calculator to determine how much I need to deposit.
- Or, I decide how much money I want to deposit and use the quote calculator to see how much income I will get monthly.
- This is in reference to the guaranteed contractual income payment. Life with a Balance Refunded is when I die my beneficiary(s) will receive the balance of my initial premium payment in either a lump sum or remaining installments.
- No, not until I die.
- The ROI on a SPIA depends upon how long I live, or how long both my spouse and I live if we have a joint contract.
- The longer I/we live the greater the return.
- Yes, if I contribute money from my Traditional IRA to a SPIA my monthly income will cover my RMDs starting at age 70 1/2.
- I do realize that all other IRA money will not be covered by my SPIA income.
- For example: If I have $300,000 in my Traditional IRA and purchase a $150,000 lifetime income SPIA, the RMDs from the $150,000 are covered from the income I receive. But, I will still be responsible for the RMDs on the non-SPIA $150,000.