Page 138 - Ready Set Retire

Stephen J. Kelley

What’s the benefit now?

$100k - $150k = -$50k = $0

So again, it’s zero. No benefit. But this is where it really gets
good from the insurance company’s standpoint. Remember
the cost of the rider was .79% of the greater of (that egregious
charge) the premium paid or contract value? So now the cost
of this rider that isn’t buying you any benefit at all is

.79% x $150k = $1,185

Right! As the insurance company’s exposure to risk goes down,
the cost goes up! I only wish I could get into a business like
this. Oh, wait...I am! I just don’t quite have the chutzpah to sell
these things to my clients.

So you are now in to the tune of $102,500 over a ten year
period on your $250,000 annuity. Again, I ask, what have you
received for it? Unlike the death benefit rider which has no
good purpose (a 62 year-old in medium good health can buy a
20-year term life policy for $100k for just $654.60, and the
premium and death benefit both stay steady for a full 20 years),
this income rider can have some benefit.

Now let’s look at the other rider...the minimum income
withdrawal benefit. This is another favorite of mine, for a

128