TIP OF THE MONTH
(July 2003)
Sales Tip
Tip #1 Liquidity has a
cost, the greater the liquidity the lower the return. If you had $50,000 dollars
and kept it
in a coffee can at home you would have 24 hour penalty free access to the money
but your
return would be return would be 0%. If you put the money in a savings account
at a bank you
would have penalty free access only during banking hours and your return
would be 1%
to 1.5%. If you put the money in a 1 year CD now your penalty free access
is only 7 to
10 days that year and your return would be 1.5% to 2.%. If you put the money
in an annuity
with a 7 year surrender charge the return would be from 3 to 3.5%. In most
annuities you
have access to 10% of your money every year after the first penalty free.
Tip #2 Compare the
liquidity to a CD. If you had a 1 year CD for 10 years your money would be
invested for
a total of 3650 days (10 X 365). At the end of each year you would have a
penalty free
grace period of 7 days for a total 70 penalty free days during the 10 years.
In an annuity
penalties do not reappear every year they disappear in 7 years
(7 year
surrender product). Which means in years 8,9, and 10 their are no penalties.
As you can
see the annuity has more liquidity over the 10 year period, 1095 day (3 X 365)
vs. 70 days.
Cash benefits in long
term care policies are becoming more popular. Here are the benefits
of the comprehensive monthly indemnity rider available on the Generation
Protector the
new long term care product from Allianz Life.
Separate Pool.
Benefits increase with inflation rider.
Can be used for anything.
Requires only 1 hour of care per month to access benefits.
Paid in addition to daily benefit.
Choose from $250, $500, $1,000, $1,250 or $1,500 per month.
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