Insights and Resources

Common Questions

How can annuities help with wealth accumulation?

Annuities can help clients accumulate wealth in two different ways: 1) through tax deferred accumulation, and 2) through the efficient funding of retirement income. The additional tax deferral that can be accessed through low-cost variable annuities can be beneficial to high income earners who quickly max out their 401(k)s and IRAs. Academic research shows that annuities can fund retirement income more efficiently than traditional fixed income portfolios. By requiring fewer assets to fund income needs, it leaves a greater share of a client’s portfolio to be invested in long term equity strategies to improve accumulation potential.

Can life insurance be used for wealth accumulation?

Permanent life insurance policies, once the commission is eliminated, provide benefits which can be powerful for wealth accumulation. Without a hefty commission being removed from premiums, client assets grow and can be withdrawn tax free. Talk to your DPL consultant for strategies on how to leverage commission-free life insurance for wealth accumulation.

How do income annuities effect wealth accumulation?

By more efficiently funding income (requiring fewer assets) than traditional fixed income portfolios, income annuities leave more client assets that can be invested in equity portfolios.

What asset classes benefit most from tax deferral?

Asset classes that are income generating, such as bonds, REITs, MLPs and dividend yields stocks benefit most by deferring tax. Also, strategies that have high turnover, such as small cap funds or actively managed investments, can benefit significantly from tax deferral.

Why would I use an annuity for tax deferred investing?

Ordinarily, you would not, as commission-based annuities cost too much and effectively nullify that value of tax deferral. However, low-cost, commission-free annuities are priced to enable clients to reap the value of tax deferral. For high income earners that max out their 401(k)s and IRAs, the value of tax deferral can add between 100bps and 200bps in yield to their portfolio.

Have more questions about strategies for wealth accumulation?

Browse videos, whitepapers and articles to learn more about Commission-Free strategies for wealth accumulation or call to speak to a DPL consultant.