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Taxation | Not taxed until funds are withdrawn.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 |
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.