Preventing Interest Starvation

Preventing Interest Starvation Image

NWL Protector One, Accumulator Five and Prevail Seven to the Rescue!

One of the final stages of grief is acceptance … and those lamenting the starvation of nourishing yields in traditional safe money products like CDs and Money Market Accounts have begun reaching that stage. Sufferers have accepted the historically low interest rates of these savings vehicles or at best tolerated the rate limitations of MYGAs (Multi-Year Guaranteed Annuities) in search of higher yields. What’s worse, savers will likely have to put up with “no calorie” returns for another three years at minimum.1

Effectively, consumers are suffering savings starvation. It comes in two forms: barely-worth-it rates in the short term and lack of flexibility in the long term. But your clients shouldn’t give up hope!

National Western Life’s reintroduction of its popular “1-5-7” annuity series can help prevent this undesirable phenomenon. The Protector One, Accumulator Five and Prevail Seven annuities provide better yields today with flexibility and liquidity for tomorrow. The center piece of 1-5-7 is a compelling current rate coupled with an interest rate bonus. Now that’s life affirming!

Current Rate Interest Bonus First-Year Yield
Protector One 2.50% 1.00% 3.50%
Accumulator Five 2.50% 5.00% 7.50%
Prevail Seven 2.50% 7.00% 9.50%

The series is built on a 10-year chassis, combines a minimum guarantee of 1% with National Western Life’s ethical renewal history, and provides plenty of yield-to-maturity potential through interest and bonuses.

A nearly double-digit first-year yield would suggest Prevail Seven is the go-to product within the series. Yet the Protector One and Accumulator Five have a complementary feature you won’t want to overlook – cumulative withdrawals.

Cumulative withdrawals are a “carry-over.” The typical 10% penalty-free annuity withdrawal feature is a “use it or lose it” proposition. If not exercised, that 10% “free out” is forfeited. The NWL Protector One and Accumulator Five allow the withdrawal privilege to grow year by year when not used. With potential withdrawals of up to 30% for the Accumulator Five and up to an astounding 50% of contract value for the Protector One, clients can enjoy plenty of liquidity and flexibility.

Now, what happens if interest rates rise? What happens if markets rebound for those who have already been starved of their ability to obtain a fair rate of return? Protector One and Accumulator Five policyholders, on the other hand, can use their cumulative withdrawal features for savings revival and take advantage of rising interest rates and rebounding markets.

National Western Life is forward thinking in another regard. The company also processes outbound partial 1035 exchanges and rollovers. This nuance permits policyholders exercising the cumulative withdrawal privilege to continue to receive tax deferral on their savings after exchange, keeping them one step from the emaciation of income taxation.

Consider this scenario. In four years and a day, a Protector One policyholder could take half of the value of his or her contract and purchase a new CD, Money Market Account, annuity, stock or bond – or simply pocket the money! This repositioning option also gives the advisor an opportunity to earn a commission on a new suitable product recommendation. Furthermore, compliance issues are minimized because there is no loss in value of the asset (i.e. surrender charges or taxes).

Overall, the tradeoffs in the 1-5-7 product series are simple. More bonus interest, less liquidity. More liquidity, less bonus interest. That’s not a dine or diet choice – it’s an earn now or earn later choice! 

Are your clients looking for …  

  • More bonus? Select the Prevail Seven.
  • More liquidity? Consider the Protector One.
  • A little bit of both? Try the Accumulator Five.

This annuity series has a broad life span. There is no minimum eligibility age, and the product series can be issued to age 75 for non-qualified funds and age 90 for non-qualified funds. Increasingly, there are fewer annuity choices for seniors as they age. Those that continue to be available for people in their 80s generally restrict or eliminate bonus. However, a 90-years-young applicant could get a 5% interest rate bonus and 7.5% first-year yield with the Accumulator Five!

If you want to cultivate continued success, the 1-5-7 commission schedules will help you do just that. In the 0-75 age category, the street compensation rates are: Protector One – 9.50%, Accumulator Five – 6.50%, Prevail Seven – 4.75%*. The commission schedule is then adjusted at the older age brackets. 

Upon the false report of his passing, humorist Mark Twain said, “News of my death is greatly exaggerated.” While the demise of competitive yielding products may be true elsewhere, Protector One, Accumulator Five and Prevail Seven are well-fed and flourishing. And that’s no exaggeration! Call your Creative Marketing Annuity Sales Consultant for a complete rate schedule and your NWL annuity sales kit.

Paul Garofoli

Vice President, Marketing – National Western Life Insurance Company

Paul Garofoli has spent the past eight years representing National Western Life as a Marketing Vice President. His career has spanned 30 years and includes the disciplines of underwriting, product development, marketing and sales. In addition to his professional expertise, Paul brings to NWL some distinguished academic credentials. He is a member of Phi Beta Kappa and a Summa Cum Laude graduate of the University of Massachusetts at Amherst. He is a Fellow in the Life Management Institute. Known alternatively as “The Sheriff of Sales” and “Mr. Incredible,” Paul earned his nicknames with his enthusiasm for servicing and supporting agencies and producers.

* Commissions based on a General Agent (Level 3) Contract.

1 Andriotis, AnnaMaria. Prepare for 0% Yields on Deposit Accounts. SmartMoney, January 25, 2012.


Related terms: Annuities

Join the conversation