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The Missing Link inRetirement Portfoliosby Elizabeth CranstonAllstate’sTreasury-Linked Annuity16 the edge
Generally speaking, with securitycomes complacence and with opportunitycomes risk. In planning forretirement, customers generally seek safetyin their investments; however, that doesn’thave to mean that opportunity will pass themby. They can have the best of both worlds– safety and opportunity – in the Allstate ®Treasury-Linked Annuity (T-Link).This recently patented product givesyou a unique edge in selling annuities. First,with the patent in place, no other insurancecompany can create a product that offersT-Link’s unique method to establish a fixedannuity crediting rate. Second, becauseT-Link may keep pace with interest rates,money saved is money that earns, and thatmay help customers keep up with the everincreasingcost of living.The benefit of having safety with higherinterest rate potential also helped to spurT-Link product sales, as more customersdiscovered it over the past year. “As interestrates have risen, so have sales. Throughthe end of the second quarter of 2006,product sales were nearly eight timesgreater compared to the first six monthsof 2005,” 1 says Sarah Donahue, AssistantVice President, Annuity Products, AllstateFinancial. “It’s clear that producers whounderstand this product and its value mayhelp customers capture the upside potentialthat rising interest rates provide.”their own subaccounts and have their ownguaranteed interest rates set for five years.During those five years, the customer willnot earn less than the minimum guaranteedbase interest rate; however, he may earn moredepending on the performance of the 5-yearU.S. CMT Rate. On the one-year anniversary ofa purchase payment, if the 5-year CMT Rate ishigher than it was on the date of the deposit,the difference will be added to the guaranteedinterest rate for the next year. If it is lower, thecustomer will simply earn the guaranteed5-year rate. At the end of the 5-year period,the guaranteed interest rate is reset basedon market conditions at that time. Also, afterfive years the customer has a 45-day windowto withdraw all or some of the contractvalue, without incurring company imposedsurrender charges. 3, 4 Surrender charges expireafter 10 years for each subaccount.T-Link vs. Other Fixed AnnuitiesAs you can see, the potential for growthcould be appealing to anyone interested intrying to maximize retirement savings.Over the long term, T-Link may performbetter than a different fixed annuity with ahigher interest rate. How? Just consider theOther T-LinkFeatures• No up-front loads,expense charges,or annual fees• Waivers, includingwaiver of withdrawalcharges for the inabilityto perform two or moreactivities of daily living 4, 6• High premium incentivesfor contract values$100,000 or more• 10% free withdrawals 7T-Link ExplainedSo how exactly does this product work,and how can a customer get his retirementsavings tied into its growth potential? T-Linkis a flexible premium deferred annuitythat provides safety with greater growthpotential. When a customer purchases acontract, he or she is guaranteed a baseinterest rate for five years. 2 He or she also hasthe opportunity to add minimum purchasepayments of $100 at any time. Interest ratesfor new purchase payments are based ontotal contract value at the time of the newpurchase payments. These additions createThis example is for illustrative purposes only and not intended to represent the actual performance of T-Link.Rates and returns are hypothetical. Real rates are subject to change.Example assumes a 100% participation rate.1 This statement is based on submitted new business sales figures for T-Link. Actual increase was 786%.2 Guarantees are based on the claims paying ability of Lincoln Benefit Life Company.3 Loss of principal due to surrender charges ranging from 0% to 9% in the first 10 years may occur if the annuity is surrendered in the early years since the purchase payment was made.4 Distributions taken prior to annuitization are generally considered to come from the gain in the contract first. If the contract is tax qualified, generally all withdrawals are treated asdistributions of gain. Withdrawals of gain are taxed as ordinary income and, if taken prior to age 59 ½, may be subject to an additional 10% federal tax penalty.the edge 17
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