Clients With CD’s May Be Missing Out

Clients With CD’s May Be Missing Out

Are you talking to your clients about their bank CD’s?

Below is a quick guide on how some of your older clientele could benefit from an annuity versus a CD.

Investment Consideration Non-qualified Guaranteed Annuity Non-qualified CD
Level of Risk Low Low
Current Interest Rates 3.20% for 5 years 2.30% for 5 years*
Taxation Not taxed until funds are withdrawn.
Has the advantage of triple compounding interest by:

– Earning interest on principal
– Earning interest on the interest
– Earning interest on the money that would have been lost due to income taxes

Taxed in the year the interest is earned, even if you don’t take money out
Guaranteed Principal Yes, subject to the
claims paying ability of the carrier
Yes – limited to FDIC
amounts
Avoids Probate Yes – the annuity is passed straight to the named beneficiary No – goes through
probate
Able to take cash withdrawals
without penalty
Generally able to withdraw a portion of account value each year without a surrender charge If you withdraw money prior to the maturity date, you may pay an interest penalty
Guaranteed lifetime
income with additional tax benefits
Yes No
Capable of stretching
to a beneficiary
Yes No

*according to bankrate.com

As you will have noted, there are many potential benefits to an annuity versus a CD. Contact your CPS Annuity Sales Rep to obtain a client approved piece on this topic.