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There are several ways to help guide clients to a financially secure future through the sale of an annuity or life insurance policy. However, steering individuals to the right plan can be a difficult task without the right preparation. Check out this new series on product sales tactics to brush up on your skills and learn how you can enhance your clients’ portfolios!
Annuity Wealth Transfer Strategy
Deferred annuities are one of the best places to grow assets tax-deferred because the build-up is not taxable until distributed. Assets grow faster if they are not taxed annually and can compound free of taxes. Many of our clients purchased deferred annuities many years ago and the growth of the account has dramatically increased the value of these annuities.
For those individuals who will not need their deferred annuities for retirement income, there is a way to use these funds to provide a larger benefit for their families. Using distributions from the deferred annuity, the Annuity Wealth Transfer Strategy leverages up these distributions into a significantly larger death benefit upon the annuitant’s death.
Double Taxation Trap
While deferred annuities are a good place to grow money, there can be issues. The reason is that if you have a large estate you may pay taxes twice on the money. First, the entire annuity is taxable in the individual’s estate. Secondly, after a partial deduction for any estate taxes paid on the deferred annuity, the remaining gain in the annuity is taxed to the beneficiaries of the annuity, potentially leaving a fraction of the deferred annuity for heirs.
In next blogpost, we will discuss the annuity wealth transfer strategy.