CGFG For Financial Professionals

Index products. There is almost always a moving part!

First off, there are some products that actually do guarantee the cap for the entire term of the annuity. This is a great option if you don’t trust the company. But, there is a trade-off in that Rate versus the products that do have moving parts.

Yesterday, we had a conversation with a guy that was talking about a product that he said had “no moving parts“. We had to burst his bubble and explain that although the caps and the participation rates on the product were guaranteed, the underlying index that was used did indeed have a major moving part. It was an excess return index. Nothing wrong with it, but if he truly knew how these things worked, he would not be able to talk about how there are “no moving parts“. An excess return index is basically like a built-in fee that can go up and down with interest rates. Again, I like some of these excess return indexes, but he was misrepresenting it.

In short, don’t be tricked by some of these products because there are two layers in the pricing formula that need to be looked at. The first layer is the product caps, participation rates, etc. The second layer is the underlying index. Carriers have gotten tricky over the years with what is hidden in the underlying index.

I believe that if call option markets are “efficient” over the long run, all of these strategies will perform about the same. My favorite? The plain vanilla S&P 500 strategy. Of course, I analyze the carriers as well. I won’t say who my favorite carriers are here. Message us if you want to have a conversation.

A simple way of looking at how much “juice” is truly applied to the call option budget is to look at what the fixed account rate is on that index product. Of course there are ways to beef up the “juice“ by additional fees, etc..

Roth IRA conversions.  Talk with your clients about how they can generate more after tax wealth by paying taxes on their pre-tax assets sooner rather than later. 

Roth IRA Conversion Conversations That Will Blow Your Freakin Mind Here is a very high level video that shows you how you can have conversations around Roth IRA Conversions with your clients. If you dont feel comfortable wi...

Long-Term Care Policies and increasing premiums. Although today there are many product options where the insurance company CANNOT increase premiums, the traditional long-term care policies are indeed able to increase their premiums, subject to state regulators' approval.

With that said, we examine a ton of LTC policies every week. Here is what we have found when somebody comes to us and asks if they should stop paying on their LTC policy that is, say, twenty years old. These people are usually upset that the insurance company increased their premiums, yet again. After the analysis, the answer is usually NO, THEY SHOULD NOT ABANDON THEIR OLD POLICY.

As much as it stinks to have 100%, 200%, 300% premium hikes over the years, those policies may still be what is in the clients' best interest. That is because they have paid in for so long, and also because those old policies CAN still be cheaper than new policies today, even after the premium hikes.

Nevertheless, LTC is one of the largest financial crises that many of us will face. If one has no LTC coverage, there are great "hybrid" LTC options that exist today. Inquire with CG Financial Group, LLC