Are Annuities a Rip-Off?
Boy, you must be angry. You pulled this one up. Are annuities a rip-off? "Come on, Stan, tell me the truth. Are annuities a rip-off? Are they ripping me off?" No, annuities are contracts. The rip-off comes on the sales pitch part, which we'll discuss, but annuities are not a rip-off. Annuities are transfer of risk contracts, period. Annuities have a bad rap. There are people out there saying, I hate all annuities, or saying that all annuities are expensive. They are just ridiculously misinformed or agenda-driven stuff, which has led to you watching a video called Are Annuities a Rip-off? It was essential to address it because there's a lot of bad information out there, and there are bad actors. So, you have to be very, very careful. We will go through all of that, some of the details of what you perceive as a rip-off, and how to protect yourself from a potential annuity rip-off.
And at the end of the day, you'll feel a lot more comfortable about the products, the industry, and the fact that it really isn't a rip-off. But let's look at it seriously because it is a serious topic. Now, at the end of the videos, I'm going to tell you how you can get all my annuity owner's manuals for free. So, hang in there with me on this rip-off, ripping the knob off the annuity scab. Are annuities a rip-off? Let's find out.
Okay, so are annuities a rip-off? I have a couple of questions for you. Is Social Security a rip-off? Is your pension a rip-off? Are CDs a rip-off? No? Really? Okay, well then, I described many of the annuity types out there. Let's talk about CDs. That's a Multi-Year Guarantee Annuity. That's a CD-type annuity. Is that a rip-off? No, they're paying you a guaranteed percentage for a specific period of time that you choose. There are no annual fees. That's not a rip-off. How about your pension? No. Stan, I don't think that's a rip-off because I get lifetime guaranteed payments. My social security is not a rip-off because I get guaranteed lifetime payments. Well, guess what? Annuities provide lifetime guaranteed payments, so that cannot be a rip-off as well. How have people even concluded that they might be a rip-off?
Bad Chicken Dinner Seminars
It's because of many of the sales practices out there. Now, once again, the annuity industry does not have a monopoly on bad sales practices. It's not the carrier's fault. The carriers put out the products, do the research, put the disclaimers in and all that stuff, then hand it over to the Agent Army, and the Agent Army goes out there and sells it, and the annuity companies can't control what they say. So that's the rub, that's the problem. Currently, in the sales environments for Indexed Annuities, many Indexed Annuities are sold at what I call the bad chicken dinner seminar circuit, where you get an invitation in the mail. It says, "We're going to talk about volatility and all this stuff, and we're going to talk about how not to lose money but make money." And so you go and eat the food, and I've seen recent ones that I get, or my mom gets. By the way, to the agent's out there, a side note, my mom lives somewhere in Florida, and she goes to two or three of these things a week and eats the food. Thank you for feeding her; she's an 80-year-old that loves the bad chicken dinner seminar circuit. She goes and eats your food and doesn't buy anything. But I've recently seen that they have them at really nice steakhouses, which fills in the blank on where the commissions are. But in that world, it's a one size fits all world, regardless of a hundred people in the room that come to the bad chicken dinner seminar. They're selling one product, which is unfortunate because everybody in that room, A, doesn't need an Index Annuity, or B, doesn't need an annuity at all.
Bad Sales Pitches
And then, some of them might need a different annuity type, like an Immediate Annuity or a Deferred Income Annuity, or QLAC. But in the bad chicken dinner seminar circuit, it's one size fits all, and I don't care what your problem is, we're going to sell you this. And that's where the whole rip-off thing comes in. Also, the rip-off part of it surrounds the agent sales pitch. And I always tell people there are no good answers to annuity questions, just bad sales pitches. There are no perfect answers. Everyone has a different situation. So how do you protect yourself from what you perceive as a rip-off? When you get pitched by somebody, write down everything that you hear. In other words, the person's pitching you this product, write it down just like you hear it, all the good, all the whistles and bells, and all the sizzle. Write it down just like you understand it, sign and date it, flip that page around, and have that agent sign and date that sales pitch. Now, if they sign and date it, "Hey, great." If they're lying, you got them. You got it in writing. But many times, that pen starts to weigh a thousand pounds, and they'll say, "Well, it's not really like that. It's like this," but that's the only protection you have. It's not the carrier's fault, but if you're going to protect yourself from a sales pitch, write it down and have them sign off on it. Or you could say, "Hey, send me a specimen policy to read because that's what I'm going to get. I'm going to get a contract. Send me that before I even sign the paperwork." Any good agent will send you that.
If someone boxes and says, " I can't send you that, " move on to someone else. But if you said, "Hey, send me a specimen policy." We can do that. Or, "Send me a copy of the application to review before I sign it," we can do that. The bottom line is to go slow. Go at your own pace. Go at your own terms because you're buying a contract. So are annuities a rip-off? I don't think so. They're contracts, but how they're sold is a little sketchy.
What Do Annuities Solve For?
Another way to protect yourself from an annuity scam, an annuity rip-off, or just bad sales pitches is to understand that they solve for four things. Annuities solve for principal protection, income for life, legacy, and long-term care. That acronym is PILL. And then always ask yourself just two questions to find out what type of annuity, if you need one at all, what do you want the money to contractually do, and when do you want those contractual guarantees to happen?
It's pretty simple from there. And then, if you want to see quotes, you have to quote all carriers. We can obviously handle that for you at our website if you conclude that you want to at least look at specific contractual numbers. And really, if you do just one thing, if you own an annuity for what it will do, not what it might do, you're going to be very happy. And the rip-off thing will not come into play because annuities are contracts. You're buying the contractual guarantee. So, if someone's showing you a back tested return, a potential return, or a proposed return, that if all the planets align themselves, this is the return you'll get. Never, ever, ever make a decision on that non-guaranteed number. Only make the decision on the contractual guarantees of that policy.
Okay, we've talked about rip-offs. We've gotten through that. You feel better now. Nod your head. I've done a video on “What Is The Purpose Of An Annuity?” which correlates with what we've just been talking about, but I dug further into it. Also, subscribe to my YouTube channel because I want you to, and that would be a nice thing to do because it's just a click of a button. How hard is that? Plus, I put out videos every day. And you get the books. Remember the books? The books, the books, the books, the books, the books, the books, the books. Click here to download all of my annuity owner's manuals for free, and if you want quotes or if you want to talk to us, please book a call. And with that, thank you for joining us today, and I will see you on the following Stan The Annuity Man blog.
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