1 for agent use only. not for dissemination to the public. annuities 101 for agent use only — not...

1For agent use only. Not for dissemination to the public.

Annuities 101

For Agent Use Only — Not for Dissemination to the Public.


Agenda

What is an annuity?

Types of annuities

How do I identify a prospect?

NOT FDIC INSURED | MAY LOSE VALUE | NOT A DEPOSIT | NO BANK GUARANTEE | NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY


What is an Annuity?

Annuity

A contract between you and an insurance company, under which you

make a lump-sum payment or series of payments. In return, the

insurer agrees to make periodic payments to you beginning

immediately or at some future date.


The “Who” and “What”

■ Contract between ● Insurance company ● Contract owner (your client)

■ Insurance company● Accepts the client’s premium● Issues an annuity contract to the contract owner● Credits interest per the terms of contract

■ Until the contract owner● Surrenders the contract or dies● Withdraws all funds● Converts into a stream of payments


Why purchase an annuity?

■ Higher interest rate than other options■ Tax deferred accumulation of assets■ Pay no taxes until you withdraw the money■ Ability to create a guaranteed income stream


Types of Annuities

■ Deferred

● Fixed

Traditional

Index

● Variable

■ Immediate Income


Phases of a Deferred Annuity

AccumulationPhase

Deferred Annuity

Payout Phase


Accumulation Phase

Funds are paid into the contract by the owner

Traditional Fixed: Pays declared interest rate

Fixed Index: interest is based on performance of an index or indices

Variable: owner selects sub-accounts, interest based on accountperformance.Deferred Annuity


Payout Phase

Payments can be distributed over a period of time

Payments can be distributed for annuitant’s lifetime

Longer of Annuitant’s Life or Certain Period

Payment can be based on lifetime benefits riderDeferred

Annuity


Common Features:Traditional Fixed and Index

Minimum guaranteed interest rate

No contract fees or product charges (other than surrender charges for early withdrawal)

Maximum premium without company approval: $1,000,000.

Issue Ages 0 – 90

Minimum Guaranteed Withdrawal Value


Single premium and periodic flex payment options

Fixed and indexed account choices

Declining withdrawal charges over 3 - 14 years,

sometimes longer

Partial withdrawals (usually 10% per year) without charges

Market Value Adjustment

Death benefits that waive all charges

Common Features:Traditional Fixed and Index (cont’d)


Safety

Tax Deferral

Yield

Liquidity

Estate Planning

Fixed Annuities Have…S T Y L E

S

T

Y

L

E


Immediate Income Annuity

Payments don’t fluctuate, regardless of market changes.

Payments based on Age and Interest Rate at the time of issue.

Guaranteed for a certain period of time or for the life-time of the owner.

Converts a lump-sum into guaranteed

stream of income payments


Identifying Prospects

CHARACTERISTICS OF CLIENTTraditional

Fixed Annuity Prospect

Fixed Index Annuity

Prospect

Income Annuity

Prospect

Savings in CDs, MoneyMarkets, EE Series Bonds or Traditional Fixed Annuities

Prefers to avoid taxes on interest growth in the near term. Is concerned about market risk Wants protection of their principal Seeks guarantees, not huge risk takers, want to know exactly

how their money will grow and what they can access when they take withdrawals.

Wants to try to improve on traditional fixed rates, looking to have a higher return and more opportunity for growth.

Needs guaranteed income stream and has assets to convert.


Uses Of Annuities

Accumulate $s

Create supplemental income

Long term care expenses

Estate planning

Tax deferred CD alternative

Emphasize the insurance features of annuities:

• death benefit

• lifetime income options


■ 64 year old widower■ No market experience■ Looking for safe vehicle to place funds

received from deceased wife’s life insurance

■ Wants these funds for his children■ Doesn’t want a long-term commitment■ Accustomed to CDs

Do You Recognize This Client?

Solution: Traditional Deferred Annuity


■ 68 year old woman, retired■ Moderate investment portfolio with

dominant amount of equity investments■ Not in need of immediate income■ Looking for diversification ■ Wants principal protection


Solution: Index Annuity



■ 70 year old husband and his 68 year old wife, retired

■ Current life insurance owner

■ Accumulated Assets■ Need more Income

Solution: Income Annuity


How to Start the Annuity Conversation

■ Beneficiary reviews

■ Prospecting letter

■ Client Appreciation events


Fixed Annuity Products

Traditional Fixed Annuities: AG HorizonPlus (bonus)

AG HorizonMYGSM (bonus)

AG HorizonSelect®

AG HorizonSecure

AG HorizonFlex® (bonus)

Fixed Index Annuities: AG VisionMaximizer® (bonus)

AG VisionAdvantage®

AG HorizonIndex® (bonus)

AG Global IndexSM Annuity Series

Income or Immediate Annuities: AG Platinum Income Annuity®


Q & A

Thank You !American General Annuity Marketing

888.438.6933, option 3


Disclaimers

Annuities issued by: American General Life Insurance Company (AGL) 2727-A Allen Parkway, Houston, Texas 77019 and The United States Life Insurance Company in the City of New York (USL), New York, New York. AG Horizon Plus Annuity Form Number 040362, AG HorizonFlex Contract Number 04371, 04371N (New York), AG HorizonSecure Contract Number 05376, AG HorizonSelect Contract Number 05377, AG Global Bonus Index Contract Number 07109, AG Global 6 and Global 8 Index Contract Number 07371 or 07371N (New York), AG Vision Advantage Contract Number 06401, AG VisionMaximizer Contract Number 05490, AG HorizonIndex 04367.Extended Care Rider Form Number (if applicable) 04049, 03049, 03049N (New York). The underwriting risks, financial and contractual obligations and support functions associated with products issued by AGL and USL are the insurers own responsibility. AGL does not solicit business in the state of New York. Annuities and riders are not available in all states. State variations may apply contracts forms and applications and riders not available in all states.

The information presented is general industry information and does not specifically describe any of our products; it is meant to be purely educational.

American General Life Companies, www.americangeneral.com, is the marketing name for the insurance companies and affiliates comprising the domestic life operations of American International Group, Inc., including AGL and USL.

Withdrawals may be subject to Federal and/or State Income taxes. A 10% Federal penalty tax may apply to the taxable portion if withdrawals or surrender are made before age 50 ½. Annuity owners should contact a tax advisor regarding their specific situation.

Important: Prior to soliciting business, be certain that you are appropriately licensed and appointed with the insurer and that the product has been approved for sale by the insurer in that state. If uncertain, contact your American General Life Companies representative for assistance.

© 2009 All rights reserved.

1 for agent use only. not for dissemination to the public. annuities 101 for agent use only — not...

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