Susan has a fixed annuity earning 3% interest annually, which is great. Each year, Susan stops by to deposit another $10,000 into this account. However, this time around she was asked what her plans are in the future for this money. Do you intend to begin drawing on it? Using it for something? Susan replies that no, her intention is to keep it growing and leave the money to her children. She has income to live on comfortably and take a vacation every once in awhile so she is content with leaving her annuity collect interest until she passes away. The current balance within the annuity is $103,000.
Her insurance agent, being super smart (and handsome) runs a quick illustration and says. The annuity is great, there aren’t too many places you can earn 3% interest anymore. But let me run this idea past you. If we took $100,000 out of your annuity, and were able to get you qualified for a single premium whole life policy with preferred rates, we would be able to turn that $100,000 into a guaranteed death benefit of $196,930. While this transaction wouldn’t qualify for a 1035 tax transfer and you would owe some tax after pulling the $100,000, the amount gained that would go to your heirs would far, far outweigh that option. We could then leave the other $3,000 in the existing annuity to keep it active and open, so that you can continue making future contributions at the guaranteed interest rate of 3%.
Susan agreed that the idea was worth pursuing and submitted an an application to the insurance company for consideration. After medical exams, pulling records, and going through underwriting Susan and her super smart agent were informed that her application was approved as applied for and if she wanted to accept the new policy to give approval and arrange the premium deposit.
Susan was elated, gave approval, and the transfer of funds was performed.
Now, instead of Susan having $103,000 to pass on to her children, she now has a total of $199,930.
Susan for the win.
To learn more about how you can maximize the financial legacy you leave to your heirs, contact Joseph Beck at 419-446-2777, email joe@beckinsurance.com, or click here.
