Safety of Insurance

Phil WassermanRecently, we have all witnessed a dramatic change in the attitudes people have about their money. Investors have begun seeking ways to properly eliminate risk and preserve long-term, guaranteed growth. When people seek safety and protection, they often consider utilizing the services and guarantees of America’s insurance industry. For many years, people have considered annuities to be a safe haven for their life savings. The following is a brief outline that reveals some of the reasons annuities and insurance companies are so safe.

Capital & Surplus Requirements

Insurers use capital and surplus as a buffer to finance growth and pay for emergencies and other business commitments. Each state specifies a minimum dollar amount for required capital and surplus that each insurer must maintain.

Risk Based Capital Ratio (RBC)

This sophisticated formula allows regulators to evaluate whether the insurer maintains sufficient capital in relation to the relative risk within the insurers operations. Each year, the RBC levels for each company are reported to the National Association of Insurance Commissioners (NAIC) and the state where the insurance company is domiciled. These ratios are then compared to the standards set by the NAIC for monitoring. The NAIC prescribes action based on 6 categories within the levels of performance for the RBC Ratio.


Annual Statements are filed with every state where the insurance company is licensed to do business and a copy sent to the NAIC. This allows for a thorough annual review of overall solvency within the company.

Other Ratios and Formulas

The Insurance Regulatory Information System (IRIS) is a system that has been developed to monitor financial conditions and prevent insolvency within an insurer. There are a total of 12 financial tests performed within the IRIS. The Financial Analysis and Solvency Tracking (FAST) system was created for additional analysis of larger insurers. The FAST system is applied to review the insurance company’s financial status every three years. The FAST system reviews both current financial records along with a review of the company’s 5-year history.

Tax-Deferred Fixed Annuity

phil wasserman financeA tax-deferred fixed annuity is an efficient retirement plan that can protect your assets’ values while allowing its value to continue increasing. Similar to a certificate of deposit, a tax-deferred fixed annuity guarantees you a multitude of beneficial guarantees. They include:

– Return of your principal

– Return on your principal

– Defers tax liability until cash is withdrawn

– Lifetime income

– Guaranteed principal

– Guaranteed interest

– Avoids high costs and delays of probate

It’s not only about the guarantees that make this plan alluring to many retirees. It’s also about what you earn over the years. By accruing interest on your principal, your assets are not only secure but growing as your approach your retirement. By compounding your interest, you are essentially adding value atop your already valuable base investment.

Remember, no annuity is built to satisfy the desires of every person and income bracket. Usually, a tax-deferred fixed annuity is best for those able to invest $10,000 or more, but that varies with the product and plan you opt for. Be prepared to make the investment in one swoop as most of these ventures require a one-time investment rather than an incremental approach. In doing so, you have locked in your investment. From there, your account’s value grows over time at a guaranteed rate.

Be sure to check your state laws before making the investment. Depending on which state you live in, your situation could vary to a degree. A multitude of variables including proceeds from state inheritance taxes, medical needs withdrawals and account value protection can alter from state to state.

As is the case with any retirement plan, disadvantages can arise. If a beneficiary receives your investment, they will ultimately be taxed in a higher tax bracket. Remember that all income gets taxed as if it is your standard income. Again, depending on the state you reside in, premium taxes could devalue the amount on future payments.

That’s why you always need to consult with an annuities expert before taking the plunge on any investment. Your future depends on this decision, and your life’s work deserves to be protected. By making the sound choice, be it a tax-deferred fixed annuity or otherwise, you position yourself to have the most enjoyable retirement possible. You’ve put in the hard work your whole life. Now it’s time to make the right choice.

Investing With Lump- Sum Annuities

Phil Wasserman annuities

When individuals consider the list of positive attributes associated with life annuities, i.e., guaranteed payments you cannot outlive, low cost, access to invested capital, and reasonably priced features such as inflation adjustment and legacy benefits, the argument for this income solution in retirement is compelling. By covering at least basic expenses with lifetime income annuities, retirees are able to focus on discretionary funds as a source for enjoyment.

Locking in basic expenses also means that the retiree’s discretionary funds can remain invested in equities for a longer period of time, bringing the benefits of historically higher returns that can stretch the useful life of those funds even further. Income annuities may also be a vehicle that enables retirees to delay taking Social Security benefits until they are fully vested, bringing substantially higher payments at that point.

Phillip WassermanThe key in all of this is to begin by covering all of the basic living expenses with lifetime income annuities. Then, to provide for additional desirable consumption levels, youwill want to annuitize a goodly portion of the remainder of your assets, while making provisions for extra emergency expenses and, if desired, a bequest. These last two items can be accomplished through combinations of insurance and savings.

When this is undertaken, you can enjoy your retirement without the burden of financial worries and focus on more productive uses of your time and attention!

Hybrid Annuities are the New Wave: Are They Right for You?

The days of long-term care policies has faded in recent years. What used to be a crowded market with every company from John Hancock to Prudential offering policies continues to dwindle to just a few major companies today. In an article for Barron’s last year, Nancy F. Smith pointed out that approximately 100 companies offered these policies just ten years ago.

While a growing number of providers phased out the policies altogether, they are still required to honor the policies already in place. However, this doesn’t exclude the companies from hiking up premiums. In the same Barron’s article, it notes that some states greenlit massive rate hikes. Smith explains that, “State insurance regulators have granted requests for rate increases ranging from MetLife’s 20.5% in New Jersey in 2012 to Allianz’s whopping 75% in Texas in 2014.”

The changes in the market are now ushering in a new trend, especially amongst the wealthy. Long-term care insurance is a single-premium hybrid policy with a multiplier for long-term benefits. As I noted in my book, Outlasting the Storm: A Survival Guide to Retirement Income Planning, new hybrid annuities with guaranteed income riders create guaranteed income financial flows. These are immensely useful because you can turn on the stream as your lump sum continues to earn interest depending on your credit strategy. This provides you an anxiety-free mentality towards loss while granting the retiree the option to control their financial flow.

As more hybrid policies bring long-term care and retirement under one plan, this trend should continue in popularity. When properly executed, it gives retirees the guaranteed income they need to ensure adequate care and financial levels are in place to satisfy the rest of their lives.

Like I just mentioned, you have to have the right credit and policy choice to make any of this work for you. If you choose the wrong plan, your retirement could face a bumpy road. The hybrid policies are currently more alluring to wealthier retirees. However, it might work for you too, even if you don’t think you’re affluent enough.

Take a look at the example below from my book, . This should give you a clearer look at one scenario under the new annuities. Be sure to visit my blog in the coming weeks and months where I’ll have more helpful tips to steer you in the right direction.

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Why Does Ken Fisher Hate Annuities?

Phil Wasserman annuities

I was watching the first Republican debate of 2016 and in the middle of it came a commercial for Fisher investments and why Ken Fisher hates annuities. (Of course, I had seen the commercial before and everyone mentions it to me.) Let’s start with this: I’m Phil Wasserman. I sell annuities and insurance. I love annuities and so should you.

Annuities are designed for income. If you need income, they are a great product and strategy. If you don’t need income, you probably don’t need an annuity today. There are hybrid annuities that include long-term care and in home healthcare without any health questions for people who can’t get the coverage. There are annuities where you can’t lose your principal, so for retirees battered by the recent stock market, they are great vehicles and they are guaranteed lifetime income and with longevity…that’s important.

But let’s go back to my friend Ken Fisher. Ken Fisher is actually not my friend. I’ve never met him but I’ve heard he’s a very pleasant person. But why does he hate annuities? Because Ken has built his own annuity. He is a huge money manager who charges a fee whether the market goes up or down. He’s built his own annuity and he’s reportedly a billionaire. Is Kenneth a smart guy? Absolutely.

Let’s take $1 million. If you are selling a new annuity with that, the average commission is around $60,000 over a ten-year period. That’s not so bad. Some of you might think it’s too high, but I have to service you for ten years.

If Ken has you invest $1 million, he might charge you a 1.5% fee yearly whether the market goes up or down. That’s $15,000 a year. Over ten years that’s $150,000. Wait a second, that’s a lot more in fees! No wonder Ken is a billionaire and I’m not. No wonder he hates annuities. He makes a lot more money under his business model. As I said, he’s a smart guy.

All you have to do is follow the money.

If you’re interested in discussing this with me, call me at 800–254–9567. And here’s my cell number 941–726–3183.

To make it clear, I’m calling Ken out. I’m challenging him to a debate that we can post on the Internet.

And here’s something for all of you to think about; Mr. Ken Fisher, billionaire who hates annuities, his firm is one of the largest shareholders in one of the best annuity companies in the country. That’s right! I didn’t believe it myself, but it’s right there on the Internet.

By the way, here’s a disclaimer, Ken. I’m not a billionaire but I’m a pretty darn good debater.

To receive your free copy of Why I Love Annuities and You Should Too, please email me at

Phil Wasserman’s Customer Review of Life Insurance

A small review about Life Insurance:

The purpose of life insurance is to create wealth for heirs.  Recently, we had a person approach us with some cash on hand, wanting to make an investment in the stock market that would provide the best possible returns for his granddaughter. He had little need for the money, had plenty of money outside this investment, and was quite clear that this money was being put to use for one reason and one reason only: to leave behind to his granddaughter. In his case, we told him to stay away from the stock markets and instead invest the money into a life insurance policy. Why?…..The investment into the life insurance policy instantly more than doubled his money and guaranteed it to his granddaughter upon his demise. The risk of the market and the time it would take to potentially grow the money to equal the life insurance’s guaranteed death benefit were completely eliminated, thereby making the investment into the life policy well worth the effort and the monies left to her are tax free.

-Phillip Roy, Lakewood Ranch, FL

Life Insurance Secrets

“People always have a huge misconception with life insurance. They think its just an expense, they think it can expire or they simply don’t want to think about death,” Says Phillip Wasserman. However Phil wanted to show a few ways that people may have never seen insurance before.

“Some insurance is an expenses and some can expire, most insurance today is whole life insurance. its an asset that can grow just like any other financial product. What can life insurance do that no body knows… It can provide Tax Free Income, depending on how the life insurance policy was designed, there could be significant cash buildup within the policy. With cash in the account, as mentioned above, it is highly possible that you could withdraw cash from a life policy tax-free. Generating income from the cash value within a low-cost, high-quality life insurance policy could make this one of the strongest benefits of adding some life into your life.”What else?….. Free Up Principal. We meet many people in retirement who are saving as much as they possibly can for their family. For a fraction of the estate value, they may want to consider investing a small portion of their investments into a life insurance policy that guarantees the value of the estate at death. Doing so often provides the insured peace of mind knowing that if they wind up spending all of their money down to the last penny, they will still leave the value of the estate behind thanks to the life insurance policy. “


What is an Annuity?

A contract between you and an insurance company.

Purchased through: – A one-time, lump-sum payment, or – A series of on-going payments over time.

Can provide regular, periodic payments for income.

Amount invested depends on: – Short and long-term financial goals – Composition of current portfolio – Tax situation.

Investment grows tax-deferred.

No limits on the amount you can invest.

Avoids probate.

Creditor proof.

– Phillip Wasserman, Lakewood Ranch, FL.

Rating Services in Insurance

Ratings Services

Insurance companies are among the most closely monitored business entities in the United States. Most active insurers are scrutinized by ratings services such as Weiss, Standard & Poors, Fitch, and the premier insurance rating company, A.M. Best. Companies like A.M. Best do more than simply make sure the company is meeting the minimum standards for regulatory clearance. Most ratings services are measuring the amount that the insurance company actually EXCEEDS the minimum requirements. This additional monitoring level cannot be overstated. Nobody thinks twice when a consumer asks, “What is that insurance company rated?” In fact, most agents don’t wait for the question to be asked. They often offer the current company ratings to the client because it is assumed that they expect to receive this type of information. Why? Because the insurance industry is safe and measurable to a high degree. Now think carefully; when was the last time you asked, “What is my bank rated?” or how about, “I wonder what the credit rating of my local stock broker is?”

Reducing Capital Gains Tax and Estate Tax

Two Trusts That Can Help

By: Wasserman, Phillip Sarasota, FL

How would you like to lower your capital gains and estate taxes at the same time? Yes, it can be done through a charitable remainder trust (CRT) or a private annuity trust (PAT). Setting up either of these trusts will allow you to reduce your estate taxes. But hardly anyone knows that depending upon which you choose, you will also be able to defer paying capital gains taxes on highly appreciated assets — such as real estate and stocks — or avoid paying them altogether. With the CRT, you make an irrevocable gift of assets (such as appreciated securities, real estate, or cash) to a trust. For the remainder of your life, you (or a party you designate) receive the investment income from the assets held within the trust. Upon your death, the principal value of the assets is transferred to your designated beneficiary, which must be a recognized non-profit organization.

People typically shy away from the CRT because while the donors receive income for life, the “donated” asset gets left behind to charity, which disinherits heirs. To solve this problem, many people who do set up a CRT “sweep” some of the income off the income stream and use it to pay for a life insurance policy that replaces the amount of the donated asset tax-free upon their death. There are a number of benefits to setting up a CRT, but the three major reasons pertain to reduced taxation. First, you won’t pay any capital gains tax on the appreciated assets in the trust, making CRTs ideal for assets with a low cost basis but high appreciated value, such as real estate. Second of all, contributions to a CRT are considered charitable contributions, so they qualify for an income tax deduction (and any deduction not taken in the year of contribution can be carried forward for the next five years). And third, the value of the assets held in a CRT trust is considered “outside of your estate” by the Internal Revenue Service (IRS), meaning it’s excluded from the calculation of your estate taxes. This could reduce your estate tax rate by as much as 46 cents of every dollar, given current estate tax rates.

To summarize the workings of a CRT, when including life insurance as part of the plan, the donor: 1.) avoids capital gains tax when donating the asset and selling it; 2.) gets income for life from the CRT, which has its own tax breaks given the donation of the asset itself; 3.) removes the asset from the estate, which would lower the estate tax, if there is any; and lastly, 4.) replaces the donated asset tax-free to heirs through the life insurance policy.

It’s really not a bad deal, and it is something that certainly should at least be considered by those who are planning to sell highly appreciated assets and have lots of taxes awaiting them.A PAT is another type of trust that’s similar to a CRT. With a PAT, you transfer the desired assets into the trust, the assets are then sold, and the proceeds are used to purchase an annuity. As with a CRT, the assets held in a PAT are excluded when calculating your estate taxes. But part of each payment you receive from the PAT will contain a portion of the capital gains which were due on sale. So while a CRT eliminates the capital gains tax, the PAT spreads them out over the rest of your life.

This latter point may make the PAT less desirable than the CRT. Yet some people consider the PAT a better option because over time, the investor and the investor’s family receive all proceeds from the sale of the asset. Thus, if you create a PAT, upon your death the asset will be removed from your estate and your heirs will receive whatever portion of the asset remains, free of estate taxes, gift taxes, generation-skipping taxes, and transfer taxes. However, your heirs will have to pay any remaining capital gains tax due.

How much income can you receive from a CRT or PAT? That depends. With a CRT, for example, your income will be based on the amount of income your assets generate while inside the CRT, as well as the “payout percentage,” or the size of the payments you choose to receive. The IRS requires CRTs to distribute a minimum of 5 % of the net fair market value of its assets annually. If you don’t need income from the CRT in one year, you can defer it through a “makeup provision,” but the CRT’s net distributions must eventually equal 5%. This means that you don’t have to start taking income right away. In some cases, if you defer taking the income, you can potentially take more income out later than if you would have taken the distributions in the first place. One caveat here: The higher the payout percentage, the lower your charitable income tax deduction will be, so you’ll want to talk to an advisor about striking the right balance
between the two.

I would strongly urge anyone considering a CRT or PAT to speak with a qualified estate planning attorney. Although the concepts as presented here are somewhat simple, the complexity of the taxation, along with one’s estate and income requirements, all need to be well factored into the decision making process. This is not run of the mill type planning, and it definitely takes an experienced individual to assist you.

That said, don’t be shy. A CRT or a PAT can be an excellent choice in helping you reduce taxes, create lifetime income and of most importance to some — leaving a legacy behind.