Life Policy Is Meant to Help Elderly Pass On Tax-Deferred Income

Many owners of investment marketing firms are leaving the business, but Gere and Armand Smith are just getting their firm off the ground.

Through their Annuity Plus LLC in Portland, Ore., the Smith brothers have begun pitching to banks an insurance product geared toward elderly customers with estate planning needs.

The product, Capital Rewards Mark II, is designed for customers accruing savings in annuities or other tax-deferred investments who realize they want to pass the money onto their heirs.

Underwritten by Boston-based Commercial Union Life USA, the product has no customers yet, but the Smith brothers insist it's an easy money-maker.

"There have been so many annuities sold through banks, you don't have to do a huge amount of business to make it worthwhile," said Gere Smith.

To be sure, the Smith brothers are not the only ones pitching this kind of product to capitalize on the millions of dollars sitting in annuity contracts that banks have sold to their customers.

But the co-founders of Annuity Plus claim their product is distinctive for two reasons.

First, they offer customers "bonus" interest rates - an average of 8% - to encourage the transfer of money from an annuity account to Commercial Union's life insurance product.

Second, the product comes with simplified underwriting; customers don't have to take the usual medical examinations to get approved for such insurance.

Though Annuity Plus is a nascent effort, neither Mr. Smith nor his brother are rookies in this business. They were co-founders of Marketing One Inc., a company in Portland that markets annuities and mutual funds to banks.

They sold the company in 1986 to insurance underwriter Integon Corp., Winston-Salem, N.C. Shortly after, they went their separate ways. Armand Smith formed another third-party marketing firm, Prime Financial Group.

Gere Smith bounced around from one project to another, including working for BankCall System, Portland, helping it design a telephone calling card service for bank customers of Bank USA, Kihei, Hawaii.

The brothers hooked up again in 1992, after Armand called on his brother and friends at Commercial Union to work out a problem he was having at his company.

Insurance agents for competing companies were stealing customers from him by offering clients annuity products with bonus interest rates, he said.

"That's when I went to Commercial Union and said, 'We've got to build a product to stabilize this business,'" Armand Smith said.

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