Scott R Grande Veterans Financial
Understanding Annuity Options
There are many broad statements made about annuities, and whenever someone says “annuities are not good”, they are almost always talking about variable annuities.
As a financial services agent that works with the senior population, I sometimes recommend annuities to help protect assets and save money on taxes. But I would never recommend variable annuities to a senior.
The reason some people don’t like variable annuities is due to high fees within the product, and they do have market risk. I recommend fixed annuities to my senior clients. Fixed annuities (whether immediate or deferred) usually have no fees involved, and no market risk. They are a conservative option for a senior’s money, and can serve several purposes in estate planning and asset protection.
When people generalize, it is generally not good. It is easy to repeat a one-liner you heard about annuities, or be biased against them due to a business you are in. But fixed annuities have no real negatives that people can come up with. They have their place in someone’s estate planning, but do not make up the entire plan. It depends on liquidity needs and income needs. I do a thorough analysis prior to giving any advice to my clients.
There are 2 basic types of fixed annuities available for estate planning: immediate and deferred. An Immediate Annuity is when you pay a premium to an insurance carrier and they promise you an “immediate” income stream from that asset for a certain period of time or sometimes for a lifetime. It does not offer a very good interest rate, but creating a guaranteed income stream can be useful in certain estate planning situations.
There are often details more important to consider than maximum interest rates. These are conservative products so the interest rates need to be compared to similar conservative asset positions; IE: bank accounts, bonds and such.
A Deferred Annuity is when you pay a premium to an insurance carrier (only life insurance companies can offer annuities) and they promise you a certain interest rate over a certain period of time, and your money sits there and grows tax-deferred. This is a nice benefit to many of my clients, especially for monies that should not be needed for regular lifestyle expenses.
For example, some monies need to be available to help cover your monthly budget. Some monies also need to be set aside for emergencies.
But then some monies might be considered pure savings and the desire to earn a better interest than the banks offer, while getting tax-deferred growth, is met through these fixed deferred annuities. All of these benefits are found in fixed annuities and most times come without fees and without the worries of investment fluctuation. Fixed annuities offer peace of mind because they are passively managed and offer guarantees to the client.
Beyond these basics, annuities can be used in someone’s estate to accomplish certain goals. They are tools in the financial toolbox. In my business, I have partnered with Veterans Financial, Inc., and we sometimes use annuities to help reposition a veteran’s assets to satisfy VA regulations for a particular benefit.
It is not only important to know which annuities to use, but also how to set them up properly to satisfy VA regulations. If annuities are to be used in regards to VA benefit planning, make sure your financial professional has plenty of experience with the VA benefit and understands the intricacies of this planning. If he/she doesn’t have that experience, you might want to find someone that specializes in that area.
Annuities can also be a good tool to create an additional guaranteed income stream that might be needed in certain family situations. Therefore immediate annuities are often used in VA benefit planning, and are often recommended by attorneys in certain asset protection situations. Immediate annuities can also be used to provide an additional monthly income for retirement needs, or to pay for a Long-term Care Insurance policy in a systematic way.
Sometimes these vehicles just provide comfort to a nervous senior that wants guaranteed income, so they don’t have to worry about running out of money. There are even lifetime guaranteed incomes available.
Whatever your concern with annuities, or whatever others may say, make sure you know which type of annuities you are referring to. It is a shame that some people make decisions based on generalizations and/or misunderstandings. And so it is with every area of life.
If you have questions or want more information, feel free to email Scott R. Grande at Veterans Financial, Inc. at sgrande@veteransfinancial.com.
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Scott R. Grande is a Financial Services Agent for VeteransFinancial, Inc., as well as the Founder of an evangelical organization called Christ Saves Ministries.
Scott R. Grande has recently been able to help hundreds of veterans and their spouses qualify and apply for the Aid & Attendance pension, through the help of Veterans Financial, Inc.
Many veterans receive anywhere from $1000-$2000/month to help pay for their care, and Scott is able to help them meet the financial qualifications without charging a fee. For more information, one can visit veteransfinancial.com.
As an Evangelist, Scott works in spreading the good news of Jesus Christ to a lost and dying world. He has been to Pakistan, India, Nigeria, Ghana, and Liberia to share the gospel with unbelievers, and teach and train indigenous pastors and evangelists.
The main belief of his ministry is “Believe in the Lord Jesus and you will saved.”, as stated in the scriptures. For more information one can visit christsavesministries.org.
Scott R. Grande graduated from the University of Rhode Island in 1992 with a bachelor’s degree in Speech Communications. A native of Cranston, RI, Scott now resides in Seekonk, Massachusetts.
