Indexed Annuities

Indexed Annuities

By David A. Kauwe, CLU, ChFC, LUTCF, RFC, 
Associate with Consultus, LLC

Confused about Annuities? Fixed, Deferred, Immediate, Indexed, Hybrid, Single Premium, Flexible Premium, Caps, Fees, Highwater Mark.

What’s it all Mean???

Today I’d like to give you a simplified overview of the Indexed Annuity.

These Annuities are issued by Insurance Companies. They are tax-advantaged products that defer taxes on the interest earned until some future time that the monies are withdrawn.

The early 20th century comedian Will Rogers once said, “I’d rather have a return of my money, then a return on my money!”

Since the beginning of this century we’ve seen some crazy ups and down as a nation financially. The tech boom, 911, sustained growth, the housing crisis, much like a yo-yo!

Thousands have seen their 401-K’s reduced to a pittance of what they once were. We have more Seniors having to continue working or go back to work because of the losses they incurred during this time. What if they had had a product where when the market was doing great, they could have benefited, and when the market was tanking, they could have breathed a sigh of relieve knowing that their accounts would not have lost a single penny! This is the exact results that one will receive if they purchase an Indexed Annuity.

These products tie their returns to your choice of any of the Financial Indices that are out there; The S & P 500(Standard and Poors Top 500 US Companies), The Nasdaq, The Dow Jones Industrials, The Hang Seng Index, The Euro Stoxx Index etc. Because they are tied to these Indices and not the actual individual stocks and bonds, the principal is never at risk. When the market is up, they participate in the rise in equity of the market, hence the name Indexed Annuities. In a down turn in the market, the balance of the accounts do not earn earnings, but more importantly they DO NOT LOSE a Single Red Cent either.

These make a perfect product for the individual who wants to participate in the Upside Potential of the Stock Market, and NOT have the Downside risk of Losing Money! These products certainly are worth looking into to protect your hard earned monies!

David A. Kauwe CLU ChFC LUTCF RFC is an Associate with Consultus LLC, a Financial and Estate Planning Firm located in Durham, NC. dave@hawaiiandaves.com or at (919) 698-8832 cell.

All Things Being Equal!

All Things Being Equal!

By David A. Kauwe, CLU, ChFC, LUTCF, RFC, 
Associate with Consultus, LLC

If you have children, you know that it’s always been a struggle trying to keep everyone happy in the family!  I have 6 kids and going out is always an adventure….I want Chinese…..No, we had that yesterday….I want Mexican….No, that gives me gas…You know the story!!!!

Imagine, you now have come into some money through this blessing and you start a business or you may have already had a business going for some time. Perhaps one of your children participates in the business.  Let’s say the business booms with the added capital you’ve acquired and it becomes worth Millions of Dollars!!!

Fast forward now, you’re no longer here.   The Business is worth $5 Million Dollars and it’s really your only valuable asset in your estate.  Your one child has pretty much ran the business for years and was a major factor in it’s growth.  The other 2 children will inherit some of your estate.  They have not participated in the business. 

The Child in the business feels since they’ve put their blood, sweat and tears into the business that it belongs to them.  How will the other children feel? Will they now want to be partners in the business not knowing anything about it.  Will the Child running the business want them as partners?  The business is worth $5 Million Dollars and your other assets, $300,000.  Can you see a potential problem here?

What could you have done to remedy the situation so that all your children are happy with the outcome?

Estate Equalization:

By doing some prior planning involving the children and utilizing Life Insurance, you could have made the playing field even.  Let’s say you met with your Financial Planner and here’s what you came up with:

The business projected out to be with $5 Million Dollars over your life expectancy.  Your other assets were worth $200,000 and with conservative growth were projected to be about $300,000.

You decide that you want your child to inherit the business totally by themselves and you want the other children to be equally treated. 

Your $5.43 million dollar Federal Unified Credit Exemption pretty much covers any Estate Tax that would have been due.  So the child running the business inherits the business free and clear.  You purchase a $10 Million Dollar Life Insurance policy to be paid to the other two children equally at $5 Million Dollars each.   The other $300,000 would be divided equally among the three children.  The Child running the business is happy with the outcome and the other 2 are as well.  You have treated all the children equally and fair, all through the miracle of planning and Life Insurance.

David A. Kauwe CLU ChFC LUTCF RFC is an Associate with Consultus LLC, a Financial and Estate Planning Firm located in Durham, NC. dave@hawaiiandaves.com or at (919) 698-8832 cell.