0:13 [Music]
0:15 for clients nearing retirement the
0:18 biggest mindset change is transitioning
0:20 from accumulating Capital to generating
0:24 an ongoing income the my North lifetime
0:27 income account offers a new way for
0:29 financial advisers to frame these conversations
0:31 conversations
0:33 this Innovative Market link pension
0:36 account is designed to pay income for
0:38 the life of a single member or couple no
0:41 matter how long they live the account
0:44 generates income for Life thanks to an
0:48 annual bonus and for financial advisors
0:51 the my North lifetime income account is
0:53 a market first contemporary retirement
0:56 income solution that keeps you in
1:00 control of client outcomes in this video
1:01 we will look at the role of the death
1:04 and exit benefit introduce you to the
1:07 annual bonus and outline the maximum
1:11 income rate and how it's
1:14 calculated the minor lifetime income
1:16 account generates lifetime income
1:19 through an annual bonus rate said from
1:22 the start these bonus rates increase
1:25 with age comprising a larger and larger
1:27 portion of the total income a member
1:30 receives but before we get into how it
1:33 works we must first understand how
1:35 Capital Access Works in a lifetime income
1:37 income
1:40 account members can choose to opt in to
1:43 a death and exit benefit this benefit
1:45 defines the amount payable to a member
1:48 or their beneficiaries in the event of
1:51 death or exit from the account the death
1:54 and exit value is generally equal to the
1:56 commencement balance less any income
2:00 received a figure called the money back
2:02 amount let's consider an
2:05 example for simplicity's sake will'll
2:08 assume income is drawn once at the end
2:10 of each year and there are no changes to
2:14 asset allocation a client depositing
2:17 $100,000 into a lifetime income account
2:21 plans to take $7,000 in annual income
2:24 assuming they receive 6% per year in
2:27 investment earnings in the first year
2:29 their account balance would therefore
2:32 increase INE by $6,000 due to investment
2:36 earnings and fall by $7,000 due to the
2:43 $999,000 separately the money back
2:46 amount in this example would equal the
2:50 initial $100,000 deposit less the $7,000
2:58 $93,000 Fast Forward 10 years and the
3:00 client's account balance would would be
3:01 just under
3:04 $887,000 while the money back amount
3:06 would be
3:08 $30,000 that's because they have
3:11 withdrawn $70,000 in income during that
3:14 period simply deducted from the initial
3:17 deposit regardless of actual balance
3:20 movements remember the death and exit
3:23 benefit can't be higher than the account
3:25 balance and is also limited by the
3:29 legislated Capital Access schedule let's
3:32 return to our $100,000 initial deposit
3:35 example a client with a 20-year life
3:38 expectancy would see their Capital
3:41 Access schedule decrease to zero after 20
3:42 20
3:45 years the death and exit benefit will be
3:47 equal to the lower of the money back the
3:50 account balance or the Capital Access
3:53 schedule in the event of death or exit
3:55 the benefit will be paid to the member
3:58 or their nominated beneficiaries the
4:00 remaining portion of of the account
4:02 balance will then be paid to our
4:05 insurance partner as a one-off premium
4:08 payment this is important because each
4:11 year the applicable annual bonus rate is
4:13 multiplied by the difference between the
4:15 account balance and the death
4:18 benefit it is a combination of that
4:21 value and the annual bonus percentage
4:23 rate which dictate the dollar value of
4:26 the annual bonus to be added each year
4:30 to a lifetime income accounts balance we
4:32 are now going to build in the annual
4:36 bonus so back to our example using the
4:39 death and exit bonus rate if the client
4:42 is eligible for a 1% annual bonus in the
4:45 first year this will be multiplied by
4:47 the difference between their account
4:49 balance and their death
4:52 benefit in this case the year one annual
4:54 bonus would be
4:56 $60 this will then be added to their
4:58 account balance at the end of the
5:00 financial year
5:03 after 10 years the annual bonus rate
5:04 will be
5:07 3.5% which would again be multiplied by
5:09 the difference between the account
5:11 balance and the death
5:14 benefit this time the annual bonus would
5:16 be almost
5:18 $2,000 which is again added to the
5:21 balance for that year fast forward
5:24 another 20 years and their annual bonus
5:26 rate would be
5:29 177% if at that point they had an
5:32 account balance of $660,000 and a death
5:36 benefit equal to $0 their annual bonus
5:38 rate would be multiplied on the full
5:45 $10,200 the annual bonus would continue
5:48 to top up their account ensuring that
5:50 the balance never runs out and that they
5:53 had income for life no matter how long
5:55 they live
5:58 for now there's just one more section to
6:00 cover the income rate
6:03 R like the annual bonus rates the
6:06 maximum annual income rates are set from
6:09 the start and increase as you get older
6:12 however unlike the annual bonus rates
6:15 the income rate is Multiplied against
6:17 your full account balance at the start
6:20 of each Financial year for example if a
6:23 client has an annual income rate of 7%
6:26 and an account balance of
6:31 $100,000 They will receive $7,000 of
6:33 income bringing it all together the
6:36 annual income and bonus rates have been
6:39 designed in conjunction with one another
6:42 as such if a member was to receive 6%
6:45 annual investment returns and draw the
6:48 maximum allowable income they would
6:50 receive the same income the following
6:53 year when investment returns are lower
6:56 than 6% the income will be
6:58 proportionately lower the following year
7:01 when investment returns are higher than
7:04 6% the income will be proportionately
7:06 higher the following
7:09 year there is also a couples option
7:11 which has a separate set of income and
7:14 bonus rates and ensures the income
7:22 spouse the minor lifetime income account
7:24 provides clients the comfort and
7:27 confidence of higher retirement incomes
7:30 that never run out
7:32 it utilizes Innovative features
7:35 including annual bonuses maximum annual
7:39 incomes reversionary options and assets
7:41 and income test discounts to underpin this
7:42 this
7:45 commitment to learn more about my nor
7:48 lifetime Solutions and their benefit for
7:50 advisors and their clients please view
7:53 the full range of videos in this series
7:56 from how the asset test benefits work to
7:59 maximize age pension to the Dynamics of
8:02 creating income for life we provide all
8:06 the details you need when engaging with [Music]
