The 2 Questions That Make Annuities Simple: Shootin' It Straight With Stan

Welcome to Shooting It Straight With Stan. I'm your host Stan The Annuity Man, America's annuity agent. Yes, I am licensed in all 50 states, as you know. We are based in Las Vegas, Nevada, but I'm actually filming this from my Florida location. Happy 2024, everyone.

‌The P.I.L.L

‌Today's topic is what are the two questions that make annuities simple? See, I am Mr. Simplistic out here. Don't ask my wife. She'll probably agree with you on other terms, on other reasons for that, but annuities are simple. They should be simple. They're transfer of risk contracts that primarily solve for four things. I have an acronym I've come up with and trademarked. It's PILL. P stands for principal protection. I stands for income for life. L stands for legacy, and the other L stands for long-term care, confinement care. Principal protection, income for life, legacy, and long-term care. If you do not need to contractually solve for one of those four items in that PILL acronym, guess what? You don't need an annuity.

‌Social Security

‌Every single one of you who is a US citizen reading this with a Social Security number is already an annuity owner. You own the best inflation annuity on the planet. It's called Social Security. If you're so fortunate to have a pension from your employer, then you own another annuity because that pension is an annuity. One type for lifetime income.

‌Annuity Types

‌But with all of the sales pitch nonsense, with all of the stuff on the internet trying to pitch a specific product, for all of the bad chicken dinner seminars, where I always tell you to swallow the food, not the sales pitch, for all of the nonsense, for all of the reasons the annuity industry has earned its bad sales reputation in a lot of cases, these are simple products. They're contracts, period. There are many types of annuities. Single Premium Immediate Annuities, Deferred Income Annuities, Qualified Longevity Annuity Contracts, Multi-Year Guarantee Annuities, Fixed Index Annuities, Variable Annuities, RILAs, I could keep going, traditional Fixed Annuities. There are all kinds. No load Variable Annuities. I mean, charitable gift annuities. I could keep going. I love it when people say, "I hate all annuities." Which one? Do you just hate them all? I hate all restaurants. I hate all cars. I hate all trucks, all socks, all shoes. It's that crazy.

‌The 2 Questions

‌But what are the two questions that can simplify this whole process? Let me give them to you quickly. Number one, what do you want the money to contractually do? And number two, when do you want those contractual guarantees to start? That's it. Every single conversation at The Annuity Man, and you can book a call, and you might get me. That'd be strange. I always tell people there's a three or 4% chance you get me on the call when I'm not traveling. I kind of get in the game a little bit. I always tell people, they're like, "Is this really Stan The Annuity Man?" I'm like, "Uh-huh." And I always tell them, "Well, you either won the lottery or you lost it. Not sure which." Well, I guess we'll find out after the call, but I use my mouth and ears in proportion two to one, and I'm listening to you.

But every single person at my organization, The Annuity Man, will ask you those two questions. What do you want the money to contractually do? And when do you want those contractual guarantees to start? They won't say, "Are you looking for market returns?" And you better not say, "I want a reasonable rate of return. I won't market upside with no downside." If we hear that, then we're going to know that you've been pitched the wrong thing, you've been pitched the dream, and we're going to bring you back down to the contractual realities. So, again, what do you want the money to contractually do? Now, if you answer income, which there are four to five, however you want to slice and dice that, annuity types that provide income.

‌Then the second question is the determining factor of which ones we will quote. And the second question is, when do you want those contractual guarantees to start? In this case, when do you want the lifetime income to start? And from there, I need it to start immediately, within 30 days of the contract being issued. It's as soon as we can do it. Or, I need it to start a year from now, two years from now, five years from now, seven years from now, 10 years from now, whatever. And then from those answers, we can then quote those products that provide that contractual guarantee. We'll never, ever, ever show you a hypothetical theoretical backtesting, unicorns chasing the butterflies approach that many agents and advisors do. Sell in the dream. We don't sell the dream. We sell the contractual realities of the policy, because why? That's what you're going to get when you get something in the mail. It's a policy after you buy it from us; it's also called a contract. So, we're only going to be focused on the contractual guarantees.

‌Contractual Guarantees

‌And the reason that that's important is when you focus on just the contractual guarantees; it commoditizes the annuity type that we have that landed on based upon the answers to your two questions. Then, we can shop all carriers for the highest contractual guarantee for your specific situation. And yes, at The Annuity Man, we are licensed in all 50 states and pretty much represent every single carrier out there that's worth representing if you know what I mean. And we're going to find the highest contractual guarantee for you. And you're going to base your decision on that. You're not going to base your decision on a non-guaranteed return scenario, a hypothetical or a backtested number. "Well, if you'd have owned it 10 years ago, sir, you'd have gotten these great returns." That's insanity. And if I do one thing before I leave the annuity world, when the Learjet hits the mountain that I've rented or leased because my wife would never let me buy one, I'm going to try to get rid of these backtested numbers.

‌Annuity Example

‌This is nonsense, absolute nonsense. Going back to the two questions, what do you want the money to contractually do? "I'd like to just protect the principal, Stan. I don't really need income. I just don't want to lose any more money. I don't want to put it at risk." Okay, great. When do you want that to start? "I'd like to start it now." Well, we're down to two products. We're down to a Multi-Year Guarantee Annuity, the annuity industry's version of a CD. And then after that, we're going to say how long you want to lock in the guarantees? Because it's a CD, you could lock it in for one year up to 10 years. The other fixed product is an Indexed Annuity. But the problem there is the guarantee is not a guarantee. There is a very, very small guarantee within an Indexed Annuity, but people unfortunately purchase those for the pie-in-the-sky number.

‌We typically use Indexed Annuities as an efficient and cost-effective delivery system for Income Riders, which are lifetime income guarantees attached to the pile. Let me give you an example of how that would work. Here are the two questions. What do you want the money to contractually do? Lifetime income. When do you want those contractual guarantees to start? Seven years from now. Okay, great. There are two product types. Deferred Income Annuities, which is an Immediate Annuity that you defer. We'll defer it for seven years to run the quote. Then, Income Riders are attached to Indexed Annuities or Variable Annuities. We don't sell Variable Annuities just because the Income Rider attachment and guarantee are typically and historically higher contractually with the Indexed Annuity. So, we're only looking at the lifetime income benefit, not the caps, spreads, participation rates, and upfront bonus. All that's garbage.

‌We don't look at that. We only look at the contractual guarantees of the policy. Obviously, we'd love for you to be a client of ours. And if you want to shop and run specific quotes used in our proprietary calculators, go to The Annuity Man and run them 24/7, 365, as many as you want. There are no limitations. This is for consumers only, please. So, if you're out there shopping for lifetime income or principal protection, go to my site, pull up the calculators, and go for it. I mean, you'll see, we actually line it out and line it up where you see different types of quotes: life only, life with 20, or life with cash refund, etc. Or, if you want to set up a joint life with your spouse or significant other, we can do that as well.

‌Just a heads up, single life payments will pay more than joint life payments because the annuity company, the life insurance company issuing the annuities, is backing up one life instead of two. Just one life is going to pay higher than a joint life. But for all you married people out there like Stan The Annuity Man with the lovely Christine of 25 years, every single thing we do is joint life, even though it's a lower payment. Why? Because she's paid her dues with my eccentricities and she should get a continuation of that lifetime income stream, period. I'm just a firm believer in that. Don't try to thread the needle. Don't try to be a Svengali. Don't try to be Gordon Annuity Gekko out there. There is no such person including me. You look at the contractual guarantees and that's where you make your decision. So, going back to the simplistic nature of annuities, they are simple products. The only complex thing about annuities is the people who sell them and how they try to sell them.

‌I've seen some of the pitches, and I'm like, whoa, that's crazy. You need an advanced math degree even to follow it; it's nuts. Strip it down to the contractual guarantees and ask what? Ask those two questions. One more time. What do you want the money to contractually do? And when do you want those contractual guarantees to start? The answers to those two questions determine the product that will provide the highest contractual guarantee for your specific situation. It's that simple, isn't it? Yep, I have, I don't want to say dumbed it down. People will say, "Oh yeah, you dumbed it down, Stan. You're the perfect one for that." No, I just make it simple. That's one of the things that I do. I look at these products and strip them down so everyone can understand them. And those are the two questions that make annuities simple. And that's Shooting It Straight With Stan. I am Stan The Annuity Man, America's annuity agent. See you next time.

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.