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Annuity Examples: What Not to Buy in 2022

Stan Haithcock
April 11, 2022
Annuity Examples: What Not to Buy in 2022

I’m about to tell you what not to buy in the Annuity life insurance space in 2022 or what to be on the lookout for because the sales pitches are flawed. It's like sales asteroids just flip against you.

2021 was a wild year, but if you think that there might be an Annuity purchase in the future for you in 2022, I wanted to be proactive and warn you about what will happen, what you're going to see on the Internet and in your mailbox at the bad chicken dinner seminar and all this stuff. I think the biggest thing you have to understand, and if I could get one thing across to you, if you hear a sales pitch that sounds too good to be true, that sounds fantastic, then it's too good to be true. Without exception, period. If something you hear sounds good and you nudge your spouse and go, we probably should take advantage of that. Don’t until you find out the truth about that sales pitch.

Let me give you some warnings of what will be coming up. You're going to hear a lot about upfront bonuses. This is typically attached to index annuities; disclaimer, we love Fixed Index Annuities. We use them primarily as an efficient and cost-effective delivery system for income guarantees with attached income riders, selling them for accumulation. When people understand that they are CD products and get a typical 2-4 percent return, that's not what you're going to hear. You're going to hear that you will get market upside with no downside. You will hear that you will get a 20 or 25, or 30 percent upfront bonus.

Understand that there are no philanthropists on annuity companies giving money away. There's 100 pennies in the dollar, so if they're given an upfront bonus, they're adjusting something within that contractual guarantee, the upfront bonus is nothing more than part of the overall contractual guarantee, and if you buy an annuity for a bonus, it's like buying a car for the stereo system. I'm pretty harsh when I say the following, but I believe in it. The upfront bonus is candy for the stupid. If an agent is pushing an up-front bonus as a benefit, then they think you're stupid or stupid, and that's not a good combination. You just can't fall for that, period.

You should never buy on fear and greed.

What do you want? When do you want those contractual guarantees to happen? That answer determines whether you need an annuity or don't need an annuity. What type will provide the highest contractual guarantees if you need an annuity?

Another thing you need to be careful about is the index annuity pitch, or this index universal life pitch, is that you get market returns. I know that's what's pitch. I know that you're going to be shown back-tested return numbers.  In a lot of states, that's not even legal to show. I wish it was all 50 states that you can't show the backtest and numbers because you can't make your decisions based upon a backtest at index number; when the index options that these things are based on from a return standpoint, those things change, you can't do that. Be careful, and I hear this a lot, especially on the life insurance type pitch.

Number 1, I believe in life insurance. I don't sell life insurance, but I have a ton of life insurance on the books, and if I show up dead unexpectedly like an accident, then my family has off to me for the life insurance. There's so much there. I believe in it because it's the best return on investment you'll ever see because you're dead. It's the best transfer of wealth that you can ever get because the transfer of wealth is lump-sum, and it's tax-free and probate free.

Life insurance is a great product for, in my opinion, is the best legacy product on the planet if you can qualify for it, but it's in my opinion, it's not an investment, which leads me to the sales pitch that you're going to hear. It's going to sound something like this. You're going to get this life insurance policy, it can grow with an index, and you’ll get tax-free income. Once they say, the tax-free income part is when they've turned from advisor to drifter, from advisor to a liar, from advisor to Shuster, because that's not tax-free income. That's a loan from the policy, and that’s not income anytime you've taken alone. Take a loan from the bank; that’s not income. Take a loan from home equity; that’s not income. Loans are not income.

But for some reason, in the life insurance world, they're pitching life insurance upfront load the policy takes a loan and that loans of tax-free income. No, it's not tax-free income. Anyone who says that can say it's semantics. They can say they're pushing the truth. It's a flat-out lie. It's a loan, you're going to pay interest on that loan, and you have to factor that in.

Once again, if it sounds too good to be true, it is every single time. Now, at this taping, the markets are perceived highest. No one knows if it's high or low, no one knows. No one knows if we're going to see a crash. No one knows that there's going to be volatility, but remember, most things, unfortunately, are sold on fear and greed, the greed pitches, you get walking upside with no downside, which is garbage. The fear pitch is that you need to buy a Fixed Index Annuity or this life insurance policy because the markets will be volatile, and they might crash. That's crap as well.

You should never buy on fear and greed, and what they're going to tell you is where you're going to be able to get market returns and protect the principle. If that's true, then that's all anyone should buy. That's all Goldman should buy, that's all JP Morgan should buy, all the treasury should buy, but they don't. Why? Because it's not true.

With these types of index type products worth, index life insurance or index annuities, can you get a good return one-year maybe, depending on the cap of the spread or the participation rate? But the average rate of return is at the CD type level. Two to four percent. I know that's not what you're going to hear. I know that's not the sales pitch you're going to hear. You're going to hear that you can have it all. You're going to hear that you can have your cake and eat it too.

As Stan The Annuity Man, America's Annuity agent, arguably the top agent in the world, I'm telling you can't. You have to ask yourself, but wait a minute, everyone else is telling me that I can get that, and you, Stan The Annuity Man or the lone wolf out here saying, I can't, wonder why? Because what I'm saying is true, period.

Now, going back to your post office box is full of these big, huge postcards telling you about the global market volatility, learn how we can protect you from the, meet at the steakhouse, go to the steakhouse. I'm telling you right now, go to the steakhouse, swallow the food, don't swallow the pitch. Repeat after me, swallow the food, don't swallow the pitch because they're going to be pitching fear, fear, fear, and greed.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.

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