Annuity FYI Visitor Blog

The National Association of Unclaimed Property estimates that there is $33 billion of money out there unclaimed, according to World Buzz Now’s Kevin Ruelan.  His article “Unclaimed Money From The Government: Do You Think Your Missing Money?,” explains that the average person owed unclaimed funds has at least $280 waiting for them.  This money comes from a variety of different places.  Sometimes it’s from accounts you’ve forgotten about, other times you may not have even known about the money because of an inheritance or tax refund.  There is a lot of money in the U.S. Treasury just waiting to be claimed and growing at a staggering rate.

Many people out there receive a death benefit annuity when the person who owns the investment dies.  It’s possible that you would not even be aware of this annuity, so the money is sitting out there owed to you.  People that don’t keep good track of their accounts with financial institutions or companies that have lost contact with you or become inactive may have money out there.  A lot of times people forget to change their addresses with everyone when they move or forget to cash a check.  Checks get lost in the mail as well.  Money could be from checking or savings accounts that haven’t been closed, stocks, annuities, dividends, uncashed paychecks, refunds, payments from insurance companies or over payments.  It won’t hurt to research whether or not you have unclaimed funds out there.

Jackson National Life Insurance Company had a press release Monday introducing their newest annuity option, “Jackson Introduces LifeGuard Freedom 6SM Net GMWB.”  The guaranteed minimum withdrawal benefit allows investors to increase their withdrawal amounts, thereby increasing their overall income and reducing their tax liability.  The benefit is optional and comes at an extra charge.  It is available on all of the variable annuities in Jackson’s Perspective group of products.  Those who opt for this LifeGuard Freedom 6 Net can lock in yearly increases to the guaranteed withdrawal balance if there is an increase in the value of the contract greater than the withdrawal adjusted premium payments.  Investors may also be able to receive a bonus of 6% annually by not taking withdrawals for the first ten years of the contract.

Annuities with this GMWB may allow for a 4 to 7% withdrawal, depending on the age at which they take their first withdrawal.  A portion of taxable earnings on this annuity can be covered by investors’ ability to gross up their withdrawals.  Jackson’s goal with this new product is to offer more flexibility and customization to advisers.  The LifeGuard Freedom 6 Net also offers a Joint Option which will provide death benefits to spouses.  The options available from Jackson are all meant so that investors can take advantage of what works for them and their individual goals.  Investors only pay for the options they want and have no obligation to use those they do not.

In the Globe Gazette’s article “Ease the sting of tax bite,” Laura Bird gives advice to help those who were hit hard by Uncle Sam this year.  For people who owed a lot of money in taxes this year, the easiest way to change that might be updating your withholding information at work.  Having more withheld from each paycheck will decrease the likelihood of you owing the government tax money April 15 of next year.  Tax deductible investments are also a great way to decrease your taxable income.  Putting money into an annuity, IRA, or 401k will lower the amount of taxable income that you claim when filing your taxes.

If you qualify for an IRA or have an employer sponsored 401k plan, contributing to retirement plans like that help come tax time.  Not everyone qualifies for those types of plans though.  Compare annuities to IRA’s and 401k’s and you still get some tax relief.  Most annuities are tax-deferred, so that you don’t pay taxes on any of the income you are earning until you actually start taking your earnings out of the annuity.  That typically happens during retirement when your income and tax brackets are lower.  Tax-free bonds and energy tax credits for appliances and work done on your home are other ways to lessen your tax burden for next year.

According to the National Underwriter’s article “Annuity With LTC Rider Debuts,” Genworth Financial Inc. has a new annuity product to introduce.  The Total Living Coverage Annuity is a linked-benefit policy linking this single premium non-qualified deferred annuity and a long term care insurance rider.  Genworth Life Insurance Company is the underwriter.  This annuity contract enables investors to buy long term care insurance that is up to three times the amount of their single premium by using their annuity value.  By doing this, they essentially have a “pool of benefit dollars for their LTC expenses.”  Once a claim is filed, benefits come first from the annuity value and then out of the pool that remains.

The Pension Protection Act of 2006 makes the LTC claim payments tax-free for the investor.  It may also be possible for some consumers to purchase the policy with a tax-free 1035 exchange from an annuity or life policy they already have.  Some of the highlighted annuity features include LTC coverage that is renewable and guaranteed, a simplified underwriting process, inflation protection as an optional addition, and the waiver of a monthly provision for LTC charges.  This new product is one of the best annuities for people with assets over $200,000 to protect that are near or in retirement, know that the need for LTC could be in their future and could financially hurt them if not insured against, and are already self-insuring against the LTC risk for their future.

Sunday’s vote passed the health-care reform bill, upsetting an insurance coalition made up of five organizations.  Insurance News Net posted the letter sent to federal legislators by the insurance associations.  They are not protesting the actual bill, but an annuity tax included in it that consists of a 3.8% Medicare contribution collected from individual annuity income.  Americans use annuities to secure their retirement, which the coalition argues is even more important since we have just suffered the largest economic crisis after the Great Depression.  We no longer have access to the pension plans of past generations that provided a lifetime of retirement income.  Because of this fact and the consequences of people living longer lives, many Americans use annuities to guarantee a lifetime income from their retirement savings.

While President Obama’s Middle Class Task Force chose to compare annuities to other retirement options as one of the best out there, the insurance coalition wonders why this health-care bill’s annuity tax seems to contradict that.  An added tax on annuity income will surely discourage Americans from using this retirement tool to secure lifetime income.  The coalition asks legislators to create more incentives for retirement vehicles like annuities, similar to the recent Retirement Security Needs Lifetime Pay Act & the Lifetime Income Disclosure Act.  They may not rest until the tax on annuity income is removed from the bill and another solution is found to fund the health-care reform bill.