IALC At FinCon14: Where Money and Media Meet

This week, the IALC will be heading to FinCon 2014 in New Orleans, LA. FinCon brings together journalists, bloggers and financial strategists to talk shop on financial planning, personal finance, investment, retirement and more.

We look forward to talking with media and money experts from across the U.S. about the benefits of considering a fixed indexed annuity as part of a balanced financial future. After all, we want everyone to have a chance to have a secure retirement future. Follow us on Twitter @IALCouncil throughout the event and participate in the conversation by sharing your dream retirement using the hashtag #DreamRetirement.

If you’re headed down to the Big Easy as well, be sure to stop by the IALC booth for more information on fixed indexed annuities, fun and a chance to win an iPad Mini!

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Employee Retirement Income Security Act Faces Scrutiny in a Changing Retirement Landscape

The Employee Retirement Income Security Act (ERISA) just marked its 40th birthday. It was with high hopes that President Gerald Ford, on Labor Day 1974, signed it into law as a consumer protection law. Today, after several amendments, ERISA sets standards of protection for participants in most pension and health plans in the private sector. A recent Pensions and Liability article on ERISA explored the 40-year history of the law that was supposed to protect consumers, but is now motivating employers to adopt retirement plans providing a less secure future for employees.

What’s the problem? ERISA has resulted in employers shying away from the investment risk of defined benefit plans and moving to defined contribution plans, like your 401(k), where employees bear the investment risk of their retirement futures.

Since defined contribution plans focus on retirement asset accumulation and not retirement income as defined benefit plans do, it is important that you take control of your retirement income plan. One important way you can do that is by considering a Fixed Index Annuity (FIA). An FIA allows you to set aside a principal amount that will remain protected in the event of a market downturn, with capped interest growth if the market rises. An FIA will protect your nest egg and give income options providing a retirement income you can depend on for life.

Visit our Smart Buyers Checklist to ensure you are asking the right questions when purchasing an annuity and preparing for your retirement.

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New Study Shows One-Third of Americans Have Zero Retirement Savings, Why?

When Americans imagine retirement, they think of the lifestyle shown on television filled with travel, golf, family and new adventures. Unfortunately, many Americans are unprepared financially to support that dream.

Thirty-six percent of people in the U.S. have no retirement savings, according to a recent study conducted by Bankrate.com. This includes 26 percent of adults between the ages of 50 and 64 – one of the most crucial age groups for retirement planning and saving. This generation acknowledges the importance of saving, with 32 percent of people feeling less comfortable with their overall savings than they were a year ago. So if they know they should be saving, why aren’t they?

Here are three reasons why many Americans don’t have enough saved:

  1. They do not know how much they need. As life expectancy continues to rise, more money is needed for retirement to cover basic costs. In addition, more money will be needed for health care as the population ages. Make sure you know how much you will need by using one of our retirement calculators.
  2. They are sandwiched: Many eager-to-retire Baby Boomers are part of the sandwich generation, which means they help support both their grown children and their parents.
  3. They were hit hard by the Great Recession: Many 50-64 year olds were dedicated savers, but the stock market crash and housing bubble impacted their lifetime savings. Many lost much of their savings in the stock market, which emphasizes the importance of having a diversified portfolio.

With the volatility of the stock market and less guaranteed employer income, the importance of having a diversified financial plan is more acute than ever. Fixed indexed annuities can play an important role in solidifying your retirement plan by offering peace of mind through guaranteed income. In addition to mitigating risk in down markets, fixed indexed annuities offer the opportunity to earn additional interest when the markets are doing well. Check out our video on the basics of fixed indexed annuities for more information on how this product can fit into your plan.

For more information about this retirement trend visit Bankrate.com.


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Save now, See the World Later

Retirees often look forward to spending time with their families, enjoying leisure activities, and for a majority of Americans – travel.

Though many Americans plan to spend their retirement seeing the world, according to a recent study by The Global Coalition on Aging (GCOA) and Transamerica Center for Retirement Studies (TCRS), less than 20 percent of Americans have seriously factored travel expenses into their retirement savings plan.

Travel is an excellent way to maintain health and mental vigor throughout retirement. In fact, people who travel during retirement show higher levels of satisfaction physically, emotionally and financially than non-travelers, but it needs to be planned for. According to the same study, nearly a quarter of Americans believed travel was worth saving for and it was the second place for retirement goals, only slightly surpassed by spending time with family.

With travel as a highly beneficial and highly desired aspect of retirement, it is important to begin saving early and budget the right amount. Make sure to examine if your finances are able to keep up with the lifestyle you have envisioned. Travel, especially international, has high costs. As part of a balanced retirement plan, fixed indexed annuities (FIAs) can offer an opportunity for a steady, guaranteed lifetime income, which can be used for bills and other expenses; which can give you peace of mind and even the financial ability to travel.

Visit our Smart Buyers Checklist to ensure you are asking the right questions when purchasing an annuity and preparing for future travels.


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Annuity Riders Protect Aging Seniors

As baby boomers age and face the rising cost of care, many may experience anxiety about how they will pay for their increased living expenses. According to a recent article in SeniorHomes.com, though high health care costs could be a big problem, an annuity properly used can help seniors fund their health care costs.

An FIA can provide the policyholder with the financial support they need to pay for unexpected health expenses. FIAs offer solutions to these problems by offering riders to policies that either are or may be added to an annuity to protect policyholders’ future long term and immediate health costs needs.  These riders can provide additional financial flexibility as unforeseen health costs confront the insured. This includes certain amendments that expand the purchased policy’s benefits.

Two riders are available for fixed indexed annuities to ensure consumer protection in extenuating health circumstances: Nursing-Home Riders and Terminal Illness Riders.

Nursing Home Riders: As life expectancy rises, the cost of late-life care is also increasing. In order to ensure that consumers can access their funds if long-term care is needed, either in-home care or in a nursing home, the industry put nursing home riders in place. By accessing the funds, seniors may be able to put more of their retirement income towards nursing home needs. The specifics of these riders can vary with each annuity product, but they can help increase the monthly income-for-life feature on your annuity or allow you to access more of the accumulated value of your annuity.

Terminal Illness Riders: Terminal illness riders are available for many fixed indexed annuities. If an insurance holder is diagnosed with a terminal illness, the insurance company will allow you to access a portion, up to the entire premium without having to pay early withdrawal fees or surrender penalties.

Ask your agent about what riders are included in your policy and what other amendments are offered. Also, be sure to visit our Smart Buyers Checklist to ensure you are asking the right questions when purchasing an annuity.

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Why Uncapped Does Not Mean Unlimited

The insurance industry is constantly innovating to meet the individual financial goals of consumers or the public–and the latest addition to the fixed index annuity market is the “uncapped” Volatility Control Index Strategy. This crediting method is now offered on many fixed index annuities today and enables the consumer to take advantage of well-performing market indices without an index cap.  However, it is important to continue to ask the right questions when considering adding any annuity to your retirement plan.

An important point to keep in mind about these new product offerings is that “uncapped” does not mean “unlimited”.  A volatility controlled index shifts assets between a risk component and a risk-free component to reach the targeted volatility level.

Therefore, although an uncapped annuity strategy does not use index caps to limit the returns for consumers, there are still limits on the potential returns due to the volatility control mechanism itself.

The Indexed Annuity Leadership Council promotes the transparent marketing of products to consumers. IALC recommends marketing the product as a “volatility controlled indexed crediting method” versus an uncapped annuity, to ensure that consumers understand the product there are purchasing.

In the industry today, we are seeing the product being marketed as a low-risk, high-reward with unlimited potential for earnings while still being a safe vehicle for savings. The positioning of the product in this manner could set up unrealistic expectations for consumers.

Are you unsure which questions to ask prior to purchasing an annuity? Use the Smart Buyer Checklist. This list provides a question guide to use when purchasing annuities.


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The Changing Price Tag on Healthcare?

With both health care costs and life expectancy continuing to rise, many Americans are forced to commit more of their financial resources to health care plans. One solution growing in popularity is concierge medicine.

Through a membership program, concierge medicine allows patients to have unfettered access to their primary care physician. Patients are able to make personal calls to their doctor, receive house calls and communicate via email about ongoing conditions.

Typically, concierge practices come with a hefty price tag, but currently there are an estimated 5,500 concierge medicine practices with about two-thirds charging less than $135 per month, on average.  Doctors who participate in concierge medicine take on fewer patients, with many taking on only 10 percent of the patients that traditional doctors treat.

Many patients participating in concierge medicine find that they benefit from the personal attention given to them by their concierge doctors. There is more focus on long-term diagnosis, individual lifestyle issues and discussion of preventative care plans, which can impact the bottom dollar of healthcare costs.

Whether you choose to participate in a concierge medicine program or plan to stay with the traditional health care model it is important to financially prepare for the increasing costs of health care. According to the latest retiree health care costs estimate calculated by Fidelity Benefits Consulting, a 65-year-old couple retiring this year is estimated to need $220,000 to cover medical expenses throughout retirement.

By making savvy financial decisions, many retirees are finding it possible to participate in a concierge medicine plan by setting money aside in a financial product such as a fixed indexed annuity.

What is a fixed indexed annuity? Learn more here. 

With FIAs, your money has the ability to grow tax free, only taxed at time of distribution; your principal is protected; and will never decline in value. The guaranteed income from a fixed indexed annuity could be used to supplement the membership costs of concierge medicine.

Set yourself up for a healthier retirement by making healthy financial decisions.

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Indexed Annuity Leadership Council Open Letter to the Editor of AARP Magazine

May 22, 2014
Indexed Annuity Leadership Council Open Letter to the Editor of AARP Magazine

Dear Editor:

We recently read the financial planning article by Allan Roth in your March/April issue and were disappointed to see factual inaccuracies, as well as open-ended questions, that could lead to confusion among readers regarding fixed indexed annuities (FIAs).

FIAs are a type of fixed annuity that earns interest on the premium, based on positive changes in a market index. The interest rate is guaranteed to never be less than zero, even if the market goes down. That is because the index is used as a benchmark only and an index annuity policy owner is not actually invested in the market.  This offers balance and protection, so once interest is credited it can never be lost, even during market downturns.

For more details on the basics of fixed indexed annuities, we have created this educational video.

We acknowledge that FIAs are not for everyone and shouldn’t be viewed as an individual’s sole retirement vehicle. In fact, issuing companies are required in most states to evaluate every indexed annuity sale for suitability based on the customer’s age, financial situation and goals.

As such, in 2010 the National Association of Insurance Commissioners (NAIC) enhanced the regulatory framework that holds insurers responsible with suitability compliance. Within this framework producers must have ‘reasonable grounds’ to believe that the annuity recommendation is suitable based on 12 areas of ‘suitability information’ disclosed by the consumer. The model regulation further provides FIAs can only be sold by licensed insurance professionals who are mandated to receive product-specific training.

Mr. Roth questions the validity of FIA guarantees in the article- let’s look back to 2008 and 2009 when Americans lost an unprecedented amount of retirement savings because of stock market volatility. Those who had fixed indexed annuities lost nothing due to market downturns.  FIAs have minimum guarantees and are backed by some of the world’s largest, most reputable insurance companies.

Insurance companies must show they have the financial capacity and ability to make these guarantees and their products have been reviewed and approved by state insurance regulators. In addition, insurance companies are continually audited by these same regulators and must comply with stringent requirements to ensure they have the ongoing ability to meet these commitments.

The article also questions fees and how FIAs can deliver market-like returns without risk. While agents are paid commission, no sales compensation is ever deducted from the annuity’s principal. Fixed indexed annuities are a safe retirement vehicle that protects a consumer’s nest egg and are guaranteed by the issuing insurance company.

The author’s final question asks about disclosure documents – the Indexed Annuity Leadership Council (IALC) advocates for the consumer and on behalf of insurance companies for full transparency and disclosure.  In addition to state required disclosures about the specific product, an agent should help a client read through the content and answer any and all questions before the customer signs on the dotted line.  Further, insurance products have Right to Examine or ‘free-look’ periods mandated by state law in which a customer may, for any reason, return their contract for a full refund of the premium within that timeframe.  If a customer isn’t sure what questions to ask about FIAs, we offer educational resources.

On behalf of the IALC, if AARP is looking for additional resources or experts I am happy to be a part of the next story on retirement financial planning to ensure readers are given a comprehensive review of savings options to help them navigate this important topic.


Poolman Signature copy

Jim Poolman
Executive Director
Indexed Annuity Leadership Council


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John Jamieson from Daily Finance talks retirement preparedness: Part II


The Indexed Annuity Leadership Council recently interviewed DailyFinance contributor John Jamieson on preparing for retirement, the importance of a balanced portfolio and the benefits of fixed indexed annuities. This interview has been split into two parts. The opinions expressed in this articles are those of the interviewee, John Jamieson and do not necessarily reflect the views and opinions of the IALC.

Part II: Annuity Myths Debunked

Is a 401(k), alone, enough for a person to retire on?

No, and I don’t even believe anyone starting out needs a 401(k) to retire successfully.

What’s one or two well-known myth(s) of fixed indexed annuities that people should debunk?

(1)   The biggest myth is that because there are fees in the product, it’s automatically a bad product.

It is not about what you pay (although the fees in most of these products are reasonable).  Remember, it is not about the fees, but what you receive in return for those fees. However, remember that a fixed indexed annuity is very different than a variable annuity.  Most of the variable products come with less value and more fees due to the active money management inside the product.

(2)   Those who sell FIAs make commissions when they are sold, so they are a scam or rip off. 

Understand that the commission is paid from the carrier, not from the purchaser’s cash account. The purchaser only ends up paying the commission out of their pocket, if they cash in the product early and get charged an early termination fee.  However, if the agent does a good job of educating the consumer about what money should be placed in an FIA and what kind of money should not be placed in an FIA, early withdrawals won’t be an issue for most annuity purchasers.

Also, to put early withdrawal fees in perspective, if you cash out your $100,000 annuity and pay a 10% or $10,000 loss, that is never a good way to build wealth.  Yet, how many investors will lose 10 percent to 60 percent of their market value during market corrections and not really be all that concerned?  So, even in a loss situation, your stop loss, if you will, is 10 percent in many products. This only happens if you take out more than a certain percentage of money in the first five to 10 years on most products.

Everyone makes money doing their job. So, that shouldn’t be frowned upon. But, the good financial planning companies, like mine, educate their clients and match the client with the product retirement and financial goals. Additionally, good planners, educate their clients on how the product works and advises on all the upsides and downsides.

Any other parting words or advice to share with our readers about preparing for retirement?


  • Take some time and spend a little money to become educated on your choices
  • Question all accepted norms in the financial world.
  • Be careful of who your financial “guru” is.
  • Always think for yourself and be open to reason and alternative ways of thinking.
  • Study true wealth, not flash wealth, i.e. who is driving the best car or living in the best homes.  Those two flash items can be a sign of wealth but many times they are a sign of high income and little to no net worth.  As they say in Texas, “all hat and no cattle.”

Study who controls most of the wealth in the world and how they grow and protect their wealth.  You will quickly discover it is not with 401(k) plans or IRA’s.

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John Jamieson from Daily Finance talks retirement preparedness: Part I

The Indexed Annuity Leadership Council recently interviewed DailyFinance contributor, John Jamieson on preparing for retirement, the importance of a balanced portfolio and the benefits of fixed indexed annuities. This interview has been split into two parts. The opinions expressed in this articles are those of the interviewee, John Jamieson and do not necessarily reflect the views and opinions of the IALC.

Part I: Balancing Your Portfolio

What is the most important element to a balanced portfolio?

A balanced portfolio is actually called “modern portfolio theory,” which is basically having your money in different sectors of the stock market using mutual funds to balance risk. An important thing to understand when building a modern portfolio is how the money in your portfolio is invested and how each fund is growing.

A traditional financial planner will always ask, “What is your risk tolerance?” In other words, how much and how often can you afford to lose a lot money?  This will help the financial planner determine what funds match your risk tolerance. Additionally, it is essential to understand things like average rate of return and how it differs from a compound growth rate of return.

It should be noted that there are programs and products out there that guarantee the principle against loss, as well as guarantee a compound growth rate of return.  These products are in the insurance world, and there are many conditions and terms on these insurance products. Therefore, it is important to deal with people that have expertise on the subject. There are also other investments outside of the stock market and mutual funds, like real estate and private lending. These investments can have risk, but they can be mitigated depending on the strategy used to invest.

What should millenials entering the workforce do to start preparing for retirement?

Save early and save often.  Educate yourself on other alternatives to the standard 401(k) or IRA route that is so massively promoted in the media and the general financial world.  Those programs have many downsides, and there are alternatives that I believe are a better fit.  Millenials also need to understand true compound interest and put it to work in their favor as early as possible.

What are the three most important questions a person should ask when purchasing a fixed indexed annuity?

You should always ask what the fees are, what riders are available and what the fees are for those riders. Just like anything, it’s important to understand the value of your purchase. So, ask about the value, or benefits, you will receive for any fees.  For instance, one value might be a lifetime income rider, guaranteeing you monthly income for you and your spouse’s lifetime – no matter what becomes of the actual cash in the annuity. Other benefits could be: guaranteed growth, guaranteed principle protection, home health care or long term care protection. For benefits like that, I am willing to pay a reasonable fee.

You should also find about the early withdrawal penalties.  Almost all of these products have these kinds of penalties, and it’s important to know the exact terms.

Another really important question to ask is what kind of guarantees are included and what caps are on the product. Many products might cap the amount of growth your cash account will be credited.

It’s important to consider: Just like most retirement savings, you should not put in money you will want for other purposes in the next five to 10 years.

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