Built for low-cost tax deferral, Jackson Retirement Investment AnnuitySM can be a simplified resource for clients seeking shelter for non-qualified assets.
The Market
At nearly $2 trillion in size1, it’s no surprise that nearly half of investors own an annuity, and even more are interested in the idea of guaranteed lifetime income.2 Annuities are often purchased by investors to generate guaranteed lifetime income, but can provide additional benefits to potentially help increase retirement income, maximize tax-efficiency of assets, or ensure a legacy for loved ones.
Why DPL Likes Jackson Retirement Investment AnnuitySM
To enable accumulation potential, the product allows investment freedom, even with the election of optional benefits. This allows the portfolio to be tailored exactly to a client's specific risk tolerance with more than 100 institutionally priced funds from well-known managers.
Jackson Retirement Income Annuity features Jackson +ProtectSM (not available in NY), a lower-cost optional living benefit with pricing based on the phase of the policy. During accumulation, the benefit costs 30 bps, helping to minimize fee-drag on account performance while providing future income. When clients elect to receive distributions, the charge increases to 75 bps to provide guaranteed lifetime income.
How to Think About Commission-Free VAs
When your client needs:
ANNUITY RESCUE+: For clients looking to move assets from their high-cost traditional annuity into a low-cost, Commission-Free product, a “1035 exchange” may be appropriate. Annuity Rescue+ may help clients achieve:
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Low cost — if the goal is simply to achieve the lowest cost, DPL recommends using an investment-only variable annuity.
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Guaranteed income — often clients purchase an annuity because they like the guaranteed income feature. Depending on your investment approach, DPL will find the product that is best suited for you and your client.
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Tax-efficient withdrawal — if your client needs to begin taking income from an annuity, DPL can bring products and strategies to tax-efficiently withdraw funds.
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Return of premium — utilizing a 1035 exchange into a solution with a return of premium benefit can be a thoughtful way of essentially “locking in gains,” as the amount of the new premium will include any gains from the previous annuity. DPL brings several very low-cost and innovative strategies.
TAX DEFERRED GROWTH: For high income earners, low-cost annuities can provide tax deferral to benefit portfolio growth during a client’s accumulation phase. Studies show that tax deferral can add 1.00% to 2.00% of additional net return to a client’s portfolio, when locating tax-inefficient investments within the annuity.3
GUARANTEED LIFETIME INCOME: While other product types are generally better options for guaranteed lifetime income, variable annuities can provide the greatest investment flexibility of the product types that offer this feature — potentially generating additional growth of the portfolio. It may be more appropriate to use a low-cost VA during the accumulation phase and then, when the client is ready to begin taking out guaranteed lifetime income, move into the best available income product or utilize an income rider.
Product information is provided by DPL. For more complete product information, please see www.jackson.com.
Product information sourced directly from: https://www.jackson.com
1Insured Retirement Institute, 2019; https://www.myirionline.org/newsroom/newsroom-detail-view/iri-issues-second-quarter-2019-annuity-sales-report.
2Insured Retirement Institute (IRI), “The Language of Retirement 2017: Advisor and Consumer Attitudes Toward Income in Retirement.” https://www.myirionline.org/docs/default-source/research/iri_whitepaper_final_singlepg.pdf?sfvrsn=2
3Morningstar Report: The Value of a Gamma Efficient Portfolio, 2017; https://www.morningstar.com/content/dam/marketing/shared/research/foundational/831611-GammaEfficientPortfolio.pdf
Your clients should consider a variable annuity’s investment objectives, risks, charges, and expenses carefully before investing. Go to jackson.com for prospectuses containing this and other information. Encourage them to read it carefully.
Variable annuities are contracts purchased from a life insurance company that are designed for long-term retirement goals and are subject to market risk, including loss of principal.
No investment strategy insures a profit or protects against losses in a down market.
All guarantees are based on the financial strength and claims-paying ability of the issuing insurance company.
The purchase of an annuity within a retirement plan that already provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefits. An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral. All annuity features, risks, limitations, and costs should be considered prior to recommending the purchase of an annuity within a tax-qualified retirement plan. In addition to surrender charges, withdrawals are subject to income tax.