How to Buy an Annuity Gift Guide: It’s About More Than Money
Hi there. Stan The Annuity Man, America's annuity agent licensed in all 50 states. Today we're talking about how to buy annuities as a gift and about being more than just money. It can't all be about money, can it? No, it cannot. Money cannot buy you happiness. That's just wisdom, is what that is. Now, we're going to talk about some gift guides and some giving ideas using annuities.
I get a lot of calls about the grownup son or the grownup daughter calling on behalf of their mom or dad to buy them an annuity. The mom and dad are probably not as cognitively there as they have been in the past, we're all going to get to that place, and they're trying to put something in place, whether it's a principal-protected product or a lifetime income stream product. They are looking for a product so that for the rest of their parent's life, their parents can live well and not have to worry about either money or markets or losing money. The recent call that I got this past week was from a gentleman. His mom was moving into an assisted living center. She was in her early 80s to mid-80s, and this gentleman and his sister wanted to put in place an Immediate Annuity lifetime income payment that not only would cover the cost of that assisted living facility but also would provide that income for their mom so she could live a very good life and not worry about markets or losing money. Her husband, which would be their father, passed away, and he was the person that always managed the money and looked at the markets. And sometimes, it's the reverse. But in this case, the mom wasn't interested in anything like that. She just wanted a lifetime income stream. So, we shopped all carriers for the highest contractual guarantee lifetime income stream for the mom. We set it up to where, if and when she passes away, 100% of the money goes in a lump sum to the beneficiary, the kids. We let them know the evil annuity company won't keep a penny, even though they're on the hook to pay, regardless of how long their mom lives.
Many of these situations, and you might also have this situation. You have a family member, an aunt, an uncle, or even a spouse that you want to take care of in case something happens to you or just to ensure their lifestyle is intact. Yes, you're going to miss out on market opportunities. Yes, you're going to miss out on the next Bitcoin. Yes, you're going to miss out on the next Apple or whatever growth stock. But when people reach that chapter two version of their life, and some people are in chapter three, you can set up an annuity product to pay them for the rest of their life and ensure that 100% of the money will go to the family. One of the misconceptions out there is, "Well, I don't want to buy an Immediate Annuity, Stan, because when this person dies, money goes poof." That's only one of about 40 ways to structure it. If your goal is "We want to take care of our family member, but if she dies tomorrow, we want all that money to return to the family," it can be structured that way. Listen to me. This is important. The annuity company does not have to keep a penny even though they're on the hook to pay for as long as this person lives. You have to understand that because that's a big misconception out there.
This is a time to start thinking about family and family members. If annuities haven't been in the back of your head, bring them back out because these are guarantees. These are contractual guarantees that primarily solve for four things. The acronym is PILL. P stands for Principal protection. I stands for Income for life. L stands for Legacy, leaving money, and the other L stands for Long-term care, confinement care. So, principal protection, income for life, legacy, and long-term care. If you don't need to solve for that, you don't need an annuity. If you're thinking about an annuity for one of your family members, if they don't need to solve for one of those four things, they don't need an annuity. Also, understand that, depending on the annuity type, annuities can be issued into the 80s and 90s. Single Premium Immediate Annuities, those issue into the 90s if you want to do that. And people are living longer. Once again, we can structure it so that 100% of the money will go to someone in the family if that family member passes away early. Just put that in the back of your head.
I want to add one more thing about the death benefit. If you set up a lifetime income stream for a family member or friend, and they pass away, the lump sum goes to the remaining family trust. You don't have to have it as a lump sum. Let's say you're in my situation where you have two daughters. Love the princesses, they're 24 and 22, but they're not going to get the lump sum. No, I'm not bad...Well, maybe I'm a bad father because I spoil them, but they're going to get it in payment form. You can choose between a lump sum or say, "Okay, whatever's left in the account, I want it to be in the same payment level until the money's exhausted." That's what I chose for my two daughters because if they're coming to my funeral in a Lamborghini and flying in, in a helicopter, I want them to be making payments on it. I don't want them to own the helicopter. You know what I'm saying? I mean, there are customized ways to do the death benefit.
Remember, lump sum, or in payment form. Either way, 100% of the money is going to be going to the listed beneficiaries of the policy. And when you put a policy in place, and you list those beneficiaries, number one, you can change them. So, if your kid makes you mad, "Hey, you're gone. Put somebody else in there." Put in the back of your head, if you have a charity of choice, you can also list that charity as the beneficiary of the policy. Now, there are some details that we need to go through, but that's a detailed conversation that we can have so you can have that charity receive money. In this case, it should be a lump sum. But remember. Kids, payments. Charity, family members that are rational, lump sum. Again, with annuities, you must remember you can customize how it works. If you said, "Okay, I want the income to start three years from now, and then I want the death benefits to be in payment form," we can structure it that way. We're going to shop all carriers for the highest contractual guarantee available to solve for that specific situation.
Do You Need an Annuity?
I always ask two questions when talking to people about annuities, in general, to see if you need one. And if so, which type would provide the highest contractual guarantee. Those two questions are, what do you want the money to contractually do, and when do you want those contractual guarantees to start? Once again, what do you want the money to contractually do, and when do you want those contractual guarantees to start? From those two answers, I can determine A, if you don't need an annuity, and I'll be brutally factual and tell you that, or B, if you do need an annuity or if one fits, then I'll tell you the exact type and shop that type for the highest contractual guarantee.
Hey, as we know, this has been tough for the past few years for a lot of people. The COVID thing has been tough, and it made us all reevaluate what's important. It's put the fragility of life at the forefront for many of us. It made us reevaluate our lives. Hopefully, it's made us all maximize every day to live it to the fullest and appreciate the special people in our lives, appreciate what we have, and appreciate the life that we have. I hope these blogs have put a smile on your face. I hope you've laughed. I've hoped you've learned a lot, and I've hoped you now think annuities might fit or might not fit, or you've learned enough about them to know where they would fit in your portfolio.
And with that being said, I would love for you to tell your friends and non-friends about our annuity blogs and YouTube channel. It's informative, and it's edutainment. I have fun. I'm passionate about what I do, and I take what I do very seriously. I'm not too serious about myself, as you can tell, but I enjoy educating you. Lastly, I just want to reach out and say hey, thank you for reading. Thank you for wanting to learn more about annuities, and I hope to have you reading the next Stan The Annuity Man blog.
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.