Get Rid Of Your Upside-Down Variable Annuity for 110-120% of The Account Value
By Roccy M. DeFrancesco, JD,CWPP, CAPP, MMB - 
Email Editor
Date : February 23, 2010
The program explained in this newsletter is no longer available as of January 2011.
When I saw this variable annuity (VA) rescue structure, I knew I had to put it out in a newsletter. Very quickly you will see the power of this topic and why you’ll want to learn more.
This is Part I of a two-part article. Part II next week will cover how clients who use the structure outlined below can also receive a significant income tax deduction (ordinary) when selling an upside-down VA. |
VAs that are under water
How much money is in VAs that have an account balance of less than where they started? Billions. What does that mean? It means that there are a lot of unhappy VA owners who can take advantage of the rescue program discussed in this newsletter.
Let’s look at a simple example. Dr. Smith had $500,000 in a VA in 2007 (pre-crash). He now has approximately $300,000 in it. He’s grumpy, doesn’t like the VA any longer, but doesn’t know what to do.
What are his options? 1) keep the annuity and hope over time the account value comes back, 2) surrender the annuity for the surrender value, or 3) strip the annuity (by the way, you can use this VA rescue program to buy stripped VAs).
Selling upsidedown VAs for a premium price
Did you know that there is a firm out there that will buy upside-down VAs at a premium price? Now you do, and I think this structure will be the new #1 option for many clients who are looking to get out of certain upside-down VAs.
What is a premium price? 110-120% of the current account balance.
In my example, the client could sell his VA for $330,000-$360,000 cash.
Also, with this program, there is no medical underwriting and no medical information on the seller needs to be disclosed.
Repositioning the money
The #1 reason people will want to use this VA rescue structure is so they can take their money (which is more because of the rescue structure) and reposition it somewhere else.
Where? It depends.
-Some advisors will recommend that the money go into a “properly balanced portfolio.”
-Some advisors will tell their clients to use the money to buy a single premium life insurance policy that provides a significant long-term care benefit and a decent sized death benefit. (Click here to learn more about the power of SPL policies).
-Some will tell their clients to reposition the money into a better annuity (FIA)─one that will guarantee them a rate of return (like 8%) on an accumulation account where the money can be used to provide a guaranteed income for life (and a 10% bonus that immediately vests for income purposes).(Click here to learn about this exciting product).
If my example client was 60 years old and received a 10% premium when selling his VA, he could buy the above-mentioned FIA and have a starting account balance in the FIA of $363,000. At age 70, he could have a guaranteed income per year for life of $51,724. Good luck obtaining this kind of guaranteed income for life if the client leaves his money sitting in the upside-down VA.
Summary
The bottom line with this VA rescue structure is simple: no one knows it exists. Therefore, people who would like to get out of their underwater VAs are not able to because their advisors are not up to speed on this rescue program. Fortunately for readers, Trustmakers is helping spread the word and if you have a VA that’s underwater that you’d like to get out from under, please e-mail info@trustmakers.com and someone will contact you with more information.
| If you would like to discuss the use of trust for you, your family, or even as a marketing tool for your business, give us a call we would love to talk with you about it. Please contact us at info@trustmakers.com |
By Roccy M. DeFrancesco, JD,CWPP, CAPP, MMB
TrustMakers.com
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ABOUT THIS EDITOR:
Roccy DeFrancesco, JD, CWPP, CAPP, MMB - Author and lecturer, Roccy specializes in advanced estate and asset protection planning. Roccy's passion is to teach advisors how to implement lawful strategies that will hold up for the test of time.
02 FEBRUARY
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