Well Deserved Honor. . .
By Sarah Kaelberer, CFP
And the winner of the 2003 Entrepreneur of
the Year . . . E. Dennis Zahrbock, Business & Estate Advisers! Our
table, filled with the B & E Team and Dennis’ family
erupted in applause and whistles. Dennis, in his true form,
delivers an acceptance speech thanking all, starting with
God, then Family, then Clients and our Team. What a day!
E. Dennis Zahrbock
2003 Entrepreneur of the Year!
What a Day? What a Year! We opened the year with a transfer
to our new broker-dealer partner, ValMark Securities, Inc.
Then, our Rice Lake Office Grand Opening celebration comes
on the heels of Dennis being named 2003 Entrepreneur of
the Year by TwinWest Chamber of Commerce.
A unique individual like Dennis certainly deserves
this honor! Unique indeed! His unique and creative
ideas create wealth,
save taxes and provide opportunities for his clients. His
unique work style and schedule, adapted from The Strategic
Coach™, have him fully dedicated for 3 – 4 days
and fully “refreshing” on the non-focus days.
But for those 3 – 4 days he is “working”,
he easily covers many hours! The big joke in the office
is who received the e-mail from him the latest – some
are well past midnight! This work pattern requires he place
a great deal of trust in his team. And that he does! His
unique management style has certainly helped him build a
dedicated, top-notch team!
Those of us who work with and
for him, are so very proud of him, as we know his family
and friends are. Next time
you see him, certainly offer your congratulations!
Lake, Wisconsin…Our Second Home Sweet Home
Wisconsin has been “home” to Dennis and Sue for
many years as they developed their beautiful lake home in
Cumberland. B & E has been serving clients in the Western
Wisconsin area for almost a decade now. Opening our first
branch office in Rice Lake just made sense. We officially
opened the doors July 1 of this year.
We offer many thanks to those who worked so
hard to help restore our beautiful building. From the
paint to the exterior landscaping, it was certainly a challenge!
It looks great! We are very proud of this facility
we are the only Financial Services Professionals in
the area to own and occupy our own building. We look forward
to building stronger relationships with existing and
clients in the comfort of our new “home.”
soon the long awaited money will arrive…
after over three years, the money each General American policyholder
is due is to be paid out. The original buyout (MetLife buying
General American) was for 1.2 billion with potential contingencies!
The 1.2 billion has now grown to about 1.4 billion but contingent
claims are in the .2 to .3 billion range. It now appears that
1 billion will be paid out in the summer of 2003 with the remaining
.1 to .2 billion to be paid at a future date. We are told that
305,000 policyholders will share in the payout. We are further
told that approximately 65% will receive $1,000 or less, 25%
between $1,000 and $5,000, 9.8% receiving between $5,000 and
$100,000 and .2% over $100,000! This money is being paid to
policyholders as the “old” General American was
a policyholder owned company and the owners must be paid! Even
though policyholders will receive this one billion plus in dollars
it does not change the values of their policies. This is a once
in a lifetime benefit and benefits those “that were the
right policy owners at the right time”!
By E. Dennis Zahrbock, CFP
Skip-A-Day XIX was our biggest ever. We had
over one hundred in attendance and enjoyed a spectacular
day of fun and golf
followed by one of the best Walleye feasts in the area.
The rain held off until the golfers were done. Mark your
calendars now for Skip-A-Day XX (that’s right #20)
the Monday preceding Memorial Day, May 24, 2004.
Log Cabin Construction continues in our woods.
Last summer E. Dennis started building a 10’ x 16’ log home
from scratch. The plan is to build it at about ?’s
to ¾’s scale . . . of course it’s
for the grandchildren with a real fireplace and an
pump for water. Hopes are for completion by 2005 or
With the log construction going on, Stephanie
and Greg added another future resident of the new cabin.
Quentin was born
on June 10, 2003. So that’s four reservations
for the grand opening.
As many of you know Sue has been President
of Bethany Lutheran Church in Rice Lake the
past two years. The
just voted to go forward with a building
project which has been greatly aided by her leadership.
is up in
January but she won’t be retiring as
Lakeview Medical Center (Rice Lake Hospital)
asked her to be
on the board. Congratulations Sue! All of
this and she is working at our Rice Lake
Sarah was honored to be selected as an ad hoc NAIFA Executive
Committee member serving as a liaison to newer industry
Another congratulations to Sarah for receiving her CLU certification
Jules attended the MetLife Investors Due Diligence meeting
held in Laguna Beach, California.
The long awaited, first installment of the General American
Sale Proceeds arrive! First payments hit mailboxes in September!
BULLETIN BOARD OF
Steve, Sarah and E. Dennis travel to Pennsylvania for the
annual “School of Life” sponsored by ValMark
Securities, Inc. Dennis gave a talk on “High
Premium Low Death Benefit” Life Insurance.
E. Dennis and Sue will be going to Palm Springs in mid-October
for the annual Top of the Table meeting. E. Dennis will
be speaking on Charitable Giving.
on 401(k)’s will be conducted by Dennis
and Sarah for the Rice Lake business community
on October 10.
least three trips are planned for the annual duck
hunts at the Delta Marsh (50 miles west of Winnipeg).
Sarah and Darvin visit Deadwood for their semi-annual long
weekend of R & R.
Business & Estate
Advisers will also sponsor Jules in the annual Walk
for the Cure for Diabetes!
Steve will be testing for his CFP certification.
E. Dennis and Sue go to Jamaica for a special “Wheel Chair” event.
With ValMark Securities, Inc., MDRT, and Jamaican
Life Underwriters, they will be distributing hundreds
wheelchairs to people
of need in Jamaica.
Zahrbock and husband Greg Loxtercamp
are proud new parents of Quentin, who
joined the Zahrbock family on
June 10, 2003!
Skip-A-Day XIX Photos
THANKS TO OUR SPONSORS
GenAmerica Financial, Minnesota
Life, AXA/Equitable, MetLife Investors,
AIM Family of Funds, Fidelity Advisor
Funds, Heritage Family of Funds and
Revised by Business & Estate Advisers, Inc. as an insert to
& Estate Adviser's
are they and how do they work?
By: E. Dennis Zahrbock, CFP
“Annuity” is a word familiar
to the insurance industry but not so familiar elsewhere! Annuities come
in many varieties. But before we go into the varieties, let’s
get a few definitions out of the way. The owner is the one who makes
the investment and owns the contract. The annuitant is the one who’s
life on which payments will be based. These two are often the same,
but can be different. Now, back to our “varieties” – there
are two main types:
Annuities: These are financial instruments that pay
a set sum of money for a set period of time to the
An example would be the choice given to someone who wins
the lottery. They can take a lump sum or so much per year
for twenty or twenty-five years. Immediate annuities are
either mathematical or actuarial.
Annuities: These are financial instruments that allow
money to grow in your account on a tax-deferred basis.
This means taxes on the earnings are not due until withdrawn
or converted to an immediate annuity in the future. Deferred
annuities can be either fixed or variable which refers to
the underlying investment. If an annuity is fixed, the underlying
investment is based on a fixed rate, which is much like
a savings account. If an annuity is variable, the underlying
investment is based on your choice of subaccounts, which
are much like mutual funds that fluctuate with the market.
that are mathematical state
that if you place a certain amount with
an insurance company they will pay a
each and every month for a set
period of time. This is mathematical
as it converts a lump sum of money
plus interest to get the payment for
the stated period. It is virtually the
as computing the payments on a
the life of
thus “the law of averages” drives
the payment to be made. The annuitant
is guaranteed to receive payments “for
their life be short, the insurance
wins. Should their life be
insurance company loses.
The law of averages allows
company to have some wins
and some losses.
It’s always said that a picture is worth a thousand
words. In this case we can’t create a picture of an
annuity, but we can create a story or two to paint the picture.
retires fifteen or twenty years ago. To provide annual
cash, the individual invests
and withdraws funds
from their retirement accounts. Unfortunately, the down
stock market of the early years of the twenty-first century
result in a dismal future for this individual’s retirement
needs. Even though the concept of investing and withdrawing
made sense fifteen or twenty years ago, the attractiveness
of an “immediate annuity” may look better now!
What funds remain in the investments are given to the insurance
company and the annuity company agrees to pay for life to
the annuitant. The older you are the more they’ll
pay. It is not uncommon to receive a 15% annual payment
if one is 85 years old or older. In other words you give
the insurance company $100,000, they may agree to give you
$15,000 per year for life! The insurance company is hoping
that “life is short,” as they get to keep the
balance at death. The annuitant is hoping that “life
is long,” as they get $15,000 per year for their entire
life. In today’s low interest rate environment receiving
a 15% cash flow is very attractive for many income needs.
wants to be in the Stock Market (risk investments)
but wants some security in case
the market doesn’t
do well! In today’s annuity market, the individual
could purchase a Variable Annuity that offers two rider
guarantees (guaranteed by the insurance company, not the
federal or state government). The investment in the variable
annuity will increase or decrease based on the market returns
of the chosen investment risk. If it goes up and up and
up, the individual is happy and gets the growth.
happens if it goes down? Here’s
where the two rider guarantees come in. Death Benefit
Rider says that
should the annuitant die, their beneficiary will receive
the highest of 1) the actual account value, 2) the original
investment compounded at a stated rate (usually 5%-6%) or
3) the highest anniversary value since they invested in
the annuity. These death benefits can offer great comfort
for survivors. The second, an Income or Living Benefit Rider
says that should the amount remain invested (generally for
a minimum of 10 years) that they can convert to an immediate
annuity. The immediate annuity value will be based on the
highest of 1) the actual value, 2) the original investment
compounded at a stated rate (usually 5%-6%), or 3) the highest
anniversary value since they invested in the annuity.
Let’s look at a hypothetical example: Our investor invests
$100,000 in 2003. In 2008, (5 years later) the account is
worth $250,000. Then in 2009 and beyond it keeps going down
until 2015 (year 12) when the account value is only $10,000!
Let’s further assume the investor will receive $6
per $1,000 for an annuity payment. The annuitant’s
new alternatives are:
They could take the $10,000
and purchase the annuity that would pay them
$60.00 per month. Or they could take
The original $100,000 compounded at 6% for 12
years. Money doubles in 12 years at
6% so this computation would be based
on $200,000 so they could take $1,200 per
month. Or, finally
they could take
The highest anniversary value
between start and annuity date. In this case
it hit a high in 2008 of $250,000. The
annuity payment based on this would
obvious that a person would choose the $1,500 per month!
this a “free lunch?” No not at all! Annuities
charge a fee to provide their guarantees. Generally speaking,
an investment professional’s fees for a “no
guarantee” mutual fund would run about 1% of account
value annually. An annuity with the two guarantees would
cost about 3% per year. That’s 2% more expensive.
Is it worth it? If your account goes up and up and up of
course not. But if one wants the guarantees to protect the
downside and be certain the day they start of at least a
5% or 6% return and maybe (due to actual or highest anniversary
value) more, this expense may be worthwhile.
asked, if fire insurance a good deal since houses hardly
ever burn down. Obviously it’s not a good deal
unless it’s your house that burns down. Variable Annuities
with the two guarantees are not a good deal either if the
market goes up and up and up. But if it’s down when
you need it to be up, these can be a good deal for you.
The stories above are not an actual clients, the examples
are hypothetical to illustrate the general experience of
Annuities allow for investments in Mutual Fund
like investments. T F
Annuities are primarily for tax-deferred growth.
Riders can guarantee a future return on investment.
calculations are used for fixed period annuities.
Annuities are less expensive than Mutual Funds. T
CORRECT ANSWERS WILL RECEIVE A PRIZE! PLEASE MAIL OR FAX
RESPONSES TO P.0. Box 679, WAYZATA, MN 55391 OR FAX (952)