Life - Annuity Arbitrage

The best concepts are the ones that have been around for a long time. This tends to lend credibility to the concept, standing up to the test of time.

Life-Annuity Arbitrage is not brand new by any means, but is a concept that most forget is in their repertoire. We have developed a one page presentation to help explain the concept to your client.

The Life-Annuity Arbitrage is a versatile concept that can be used in many different scenarios. Substituting interest only income from a CD or Fixed Annuity, maximizing the amount of money left to beneficiaries from a stale asset, or efficiently funding for estate planning needs.

Knowing where and when to apply this concept is where we excel!

The basic Arbitrage is where you put a lump sum of cash into a life only Single Premium Immediate Annuity, purchase a Life Insurance policy to replace the initial lump sum at death, using the payments from the SPIA to pay the premiums for the Life Insurance and provide a lifetime income for your client.

In today’s low interest rate environment, you can expect the equivalent of between 5-6% rate of return for your client, better if they are healthy! This is significantly higher than what they could expect at the bank, or even a Multi-Year guarantee Annuity. (Example 1)

Another use for the Arbitrage is to maximize the amount of money left to the beneficiaries. For example, a client has money set aside that they are not wanting to touch, just grow as much as possible to leave to their kids. You can take all of the money generated by the SPIA to maximize the death benefit, and making it an Income Tax free death benefit as well! (Example 2)

There are many scenarios where this concept can add value to an overall plan. To learn how this can benefit your clients and boost the value of their financial plan, call your Annuity Marketing Consultant at Great Plains today!