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Out With The Old: Why It’s Never Been Easier To Upgrade Underperforming Annuities

Many annuities sold in 2020 and 2021 were written during one of the lowest interest rate environments in modern history. At the time, those products may have offered the best available guarantees — but a lot has changed since then.

Today, we’re in a drastically different rate environment, with interest rates near 18-year highs.

That shift has created a rare opportunity for advisors and their clients:

The ability to replace underperforming in-force annuities with newer contracts offering significantly better guarantees and growth potential.

Even more compelling is the current wave of aggressive cash value bonuses — many exceeding 20% — offered by top-tier carriers. These bonuses don’t just improve the value of the contract on day one—they also offer a powerful solution to one of the biggest barriers to replacement: surrender charges.

Here’s how it works:

If a client has a contract that’s still in its surrender period, a high-value bonus can offset those charges, and in some cases even immediately increase the overall account value. This gives both the client and advisor the flexibility to reposition assets without waiting out a full surrender schedule — and the opportunity to secure stronger long-term accumulation potential starting today.

For clients in older contracts with lower caps, weak fixed rates, or limited index options, this is a chance to upgrade their annuity without penalty — and position them for greater success in retirement.

Send our Annuity Team any current annuity statements for a no-obligation review, or give us a call to discuss how today’s top bonus products can help you unlock more value for your clients.

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New Research Points To 3.7% As The Updated Safe Withdrawal Rate – But There’s A Smarter Way To Generate Retirement Income

Morningstar’s recent study suggests that the safe withdrawal rate for retirees has now shifted to 3.7%. For a 60-year-old with a $5 million portfolio, that translates to an annual withdrawal of $185,000 — offering a solid chance that the portfolio will last through retirement.

But is there a way to ease the burden on the income-producing portion of a retirement portfolio while preserving longevity? And what are the potential advantages of doing so?

Top advisors are turning to Fixed Indexed Annuity (FIA) income riders to help meet these goals.

More importantly, you don’t need to replace all income with annuities to reap the benefits. Even a partial allocation can have a major impact. For example, by allocating just 27% of the portfolio — $1,340,580 — toward a top-performing FIA income rider, clients can generate about half the income ($92,500 per year) they would from the entire $5 million portfolio. This portion is guaranteed for life, removing uncertainty around at least half of the retirement income.

Contrary to common misconceptions, this strategy can actually enhance liquidity in the overall portfolio.

While annuities are long-term vehicles and not known for liquidity, the reliable income they provide can allow other parts of the portfolio to remain more flexible.

Additionally, with a portion of income secured, clients may feel more comfortable taking on additional market risk in the rest of their portfolio — potentially capturing higher returns. Monte Carlo simulations support this strategy, showing improved outcomes when these guaranteed-income tools are included in the broader retirement plan.

Partner with us on your next income planning case.

We can help generate a personalized income portfolio report for your client, showcasing how FIAs with income riders offer one of the most efficient income-generating solutions available today.

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A++ Carrier Raises Rates on Flagship FIAs — With Powerful Cap Lock Guarantee

We’re always looking to bring our advisors and their clients access to top-tier annuity solutions that provide security, growth potential, and peace of mind. That’s why we’re excited to announce a significant rate increase from one of our premier carriers, MassMutual Ascend — a name synonymous with strength, backed by an A++ rating and a legacy dating back to 1851.

Rate Increases You Can Count On

Effective immediately, MassMutual Ascend is increasing the S&P 500 annual point-to-point cap on its two best-selling fixed-index annuities:

  • American Legend 7: Cap increased to 8.5%
  • American Landmark 5: Cap increased to 8.0%

These are strong caps in today’s fixed-index annuity landscape — but what truly sets these products apart is MassMutual Ascend’s unique “Cap Lock” guarantee.

What Is a Cap Lock Guarantee — And Why Does It Matter?

Most FIAs are subject to renewal rate risk — the possibility that, after the first year, the carrier may lower the cap rate on your indexed account. While the initial rate might look attractive, there’s no guarantee it’ll stick.

MassMutual Ascend Changes That

With the Cap Lock guarantee, clients can rest easy knowing that their initial S&P 500 cap rate is contractually guaranteed not to decrease for the life of the policy. That means no surprises at renewal — and no erosion of upside potential due to market volatility or shifting carrier economics.

Why Renewal Rate Risk Is A Real Concern

Renewal rate risk is one of the most underappreciated threats in the annuity world. While interest rates rise and fall, carriers can adjust caps, spreads, and participation rates after the first contract year — sometimes significantly. These changes can dramatically reduce a client’s long-term growth potential, particularly if they’re relying on that annuity as a core part of their retirement income strategy.

In uncertain markets, the Cap Lock feature provides a critical level of transparency and predictability — two qualities every retirement investor craves.

Putting It All Together

For clients seeking market-linked growth without market risk — and without the uncertainty of shifting renewal terms — the American Legend 7 and American Landmark 5 offer a compelling story:

  • Top-tier cap rates — now 8.5% and 8.0%, respectively
  • A++ rated carrier strength
  • Guaranteed S&P 500 cap lock for the life of the contract
  • Tax-deferred growth, principal protection, and lifetime income options

These enhancements make a great product even better — and now is the time to take a closer look.

Questions or illustrations?

Reach out to our team today and see how MassMutual Ascend’s Cap Lock FIAs can fit into your clients’ long-term plans.

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Unlocking New Opportunities With FIAs In Today’s Market

Over the past decade, we’ve seen dramatic shifts in the interest rate environment, directly impacting the performance of annuity products.

Between 2018 and 2021, historically low interest rates resulted in lower Fixed Indexed Annuity (FIA) cap rates and modest fixed interest crediting strategies.

While these products still beat the fixed rate environment with market linked growth and protected assets, the growth they provided a few years ago pails in comparison to what is on the table with todays FIAs.

Fast forward to today, and we find ourselves in a much more favorable interest rate climate. Insurance carriers have responded by offering significantly improved FIA cap rates, participation rates, and even premium bonuses—an upfront boost that increases the cash value of a contract from day one.

The Power of Premium Bonuses

One of the standout features of many modern FIAs is the premium bonus. This bonus, which can range from a few percentage points to double-digit figures, is immediately applied to the contract value. For clients who may feel locked into an underperforming FIA from the low-rate era, this presents a unique opportunity. In many cases, the premium bonus can completely offset surrender charges, allowing them to exit an old contract without financial penalty and move into a more competitive, higher-growth potential annuity.

Why This Matters for Agents and Clients

For financial professionals, this shift in the market creates an incredible opportunity to revisit clients’ existing annuity contracts. With a complimentary annuity review, you can assess whether a client’s current FIA is still serving their best interests or if transitioning to a new product could provide them with greater growth potential, better guarantees, and enhanced benefits. Not only does this help clients maximize their retirement savings, but it also generates new business opportunities for agents looking to strengthen client relationships and expand their portfolios.

Take Advantage of the Current Market

If you or your clients hold an FIA that was purchased during the low-rate years, now is the time to explore options. A strategic annuity exchange could mean more earning potential, a stronger retirement plan, and greater peace of mind.

We offer a free annuity review service to help financial professionals evaluate existing contracts and determine the best path forward for their clients. Contact us today to see how you can leverage today’s improved annuity landscape to create better outcomes for your clients — and grow your business in the process.

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Tax-Efficient Income And Principal Protection With Annuities

With the Federal Reserve’s interest rates at a 15 year high, fixed-rate annuities continue to offer the best tax-deferred guarantees available. A 60-year-old with $250,000 in after-tax funds can secure a guaranteed growth rate of 5.65% for 10 years — an excellent, fully guaranteed rate.

Annuity products also serve as an income source. By withdrawing interest, that same 60-year-old could generate $14,125 in gross annual income while preserving their initial $250,000 investment. After accounting for a 35% tax bracket, the net income would be $9,181.25 per year. While this is a solid option, a more tax-efficient approach can further enhance income using a split annuity strategy, which combines a fixed deferred annuity and a single premium immediate annuity (SPIA).

A More Tax-Efficient Approach

By strategically dividing the $250,000 investment:

  1. $144,292.90 is placed into a fixed deferred annuity at 5.65%, ensuring it grows back to $250,000 over 10 years.
  2. The remaining $105,707.10 is used to purchase a 10-year period certain SPIA, leveraging favorable exclusion ratios to minimize taxable income.

This SPIA generates $12,943.68 per year, with 82% of the income excluded from taxes as a return of principal. After taxes, the net annual income increases to $12,128.23, providing an additional $3,000 per year compared to simple interest withdrawals—all achieved through smart tax planning.

Maximize Your Clients’ Tax Efficiency

With tax season approaching, now is the time to introduce clients to strategies that optimize income while preserving wealth. Contact us today to explore more tax-efficient solutions that capture your clients’ attention and help them make the most of their financial future.

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Growth Without Fear: Lock in Double-Digit Potential with Fixed Indexed Annuities

In today’s unpredictable market, retirees and pre-retirees face a difficult choice — pursue growth and risk losses or play it safe with minimal returns. But what if they didn’t have to choose?

Right now, top Fixed Indexed Annuities (FIAs) offer caps in the 12% range on the S&P 500, providing the potential for annualized returns of 8% to 10% — all while protecting principal from market downturns.

The Hidden Cost of Market Volatility

Market fluctuations impact more than just portfolios — they affect overall well-being:

  • Emotional stress – Watching retirement savings fluctuate can create uncertainty and anxiety.
  • Health risks – Financial instability has been linked to high blood pressure, heart disease, and depression.
  • Family strain – Retirement plan disruptions can create tension and difficult financial decisions.
FIAs: Growth Potential Without Market Risk

Fixed Indexed Annuities provide a balanced approach, allowing clients to participate in market gains without exposure to loss:

  • Zero Market Risk – Principal remains protected, regardless of market conditions.
  • Market-Linked Growth – Gains are tied to index performance, offering strong upside potential.
  • Locked-In Gains – Once credited, earnings can never be lost due to future market declines.
Help Your Clients Secure a More Confident Retirement

With FIAs, your clients can achieve growth without fear, ensuring a retirement strategy built on both opportunity and security. The best options in today’s market are highly competitive—now is the time to take action.

Contact your Annuities Associate for assistance on how you can give your clients peace of mind.

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