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The Reality of Life With 20 Year Certain Annuities

Stan Haithcock
May 12, 2024
The Reality of Life With 20 Year Certain Annuities

Hi there. Stan The Annuity Man, America's annuity agent, licensed in all 50 states. Today's topic is one that I've wanted to do for a long time, and I got a call the other day that triggered it. The topic is the realities of life with a 20-year certain or joint life with a 20-year period certain, Immediate Annuity, or Deferred Income Annuity.

It triggered me because it seems like every non-annuity expert, let's just put it like that, whether it's a journalist or an advisor that doesn't know that much, they're like, "Yeah, just do life in 20. Life in 20 year certain. Just do that. Just do that one."

There are over 40 ways to structure lifetime income when it comes to Immediate Annuities, Single Premiums Immediate Annuities, Deferred Income Annuities, etc. But for whatever reason, I don't know if there's a joint life in 20 or single life in 20 lobby on K Street in DC going, "We're just going to promote life in 20." I don't know what's going on, but I got to squash this one, factually, because people need to know, there's more to life than life in 20. Boy, that's a T-shirt.


Let's talk about life in 20 from a structuring standpoint and what that means. Let's say it's your life within a certain 20-year period. That means it will pay, the lifetime income stream will pay, when you tell the company to start the income, it will pay for life, as long as you're breathing. That's what life means. I had a guy the other day say, "Well, I know it's life, but what does that mean?" It means, Chester, it means as long as you're breathing. If you live to 180, it's going to pay. "How about if I live to 185?" Yep, they're going to pay. You have transferred the risk to the company to pay.

The 20 is like a backstop. For all of you out there who played Little League, remember the backstop for the wild pitcher who never threw a strike? He threw balls everywhere. It's a backstop. Life in 20 means that if you lived five years, took five years of payment, and died, there are 15 more years of payment for your beneficiary. Or if you lived 12 years and died, there's eight more years of payments for your beneficiary. If you live 21 years and died, there's nothing left for your beneficiaries.

But you can also do the same thing with joint life and 20 year period, certain. Joint life means if you die, your spouse is going to get the lifetime income stream uninterrupted and unchanged, and when the second spouse dies, if they die within those 20 years, and the second spouse died in year 17, then somebody that's listed as the beneficiary of the policy is going to get three more years of payments. If your spouse lives 35 more years, no one will get anything from a beneficiary standpoint.

That's life with 20, joint life with 20. That doesn't make it better than life with 10, life with five, life with 35, life with 22, life with 17, life with cash refund, or life with installment refund. I could keep going. Here's the point; here's what you need to remember. The bigger the backstop, the lower the payment. So, life with five years certain would be a higher payment than life with 10 years certain, which would be a higher payment than life with 20 years certain, which would be a higher payment than life with 30 years certain.

Now people say, well, "I don't want life. I just want the period certain; I just want it to pay for 20 years." I can talk like that because I'm from North Carolina, and that's how my uncles speak, okay? So, no emails, please. I can twang with the best of them. If you want me to twang the whole thing, I can do this entire thing in this southern accent and talk in the back of my mouth like this. And you'll think you're in North Carolina, like on the country road, and get a barbecue sandwich. You know what I'm saying?

But the point is you can get just the 20 year certain. You say, I don't care about life. There's no way I will live 10 years, but I want some money to go to the beneficiaries. Then we can get a 20 year period certain, and it just pays for the 20 years. My personal opinion as Stan The Annuity Man, America's annuity agent, licensed in all 50 states, is that the transfer of risk nature of life is worth having, in most cases, because there could be a medical miracle. You could decide to start exercising and eating, right? Think about it. And you could live a lot longer than your projected life expectancy.

Lifetime Income

The key to this whole retirement thing, in my opinion, is lifetime income that combines with the other lifetime income annuity you already own. Yes, you already own one. Yes, you do. Stop arguing with me. It's called Social Security, and it's the best inflation annuity on the planet. And if your employer, if you're a government worker, you're one of the 9% out there that has a private company that gives pensions to their retired employees, you already have another annuity for lifetime income. Okay.

But if your advisor or you read somewhere, "Just do joint life in 20, just do life in 20," that's nonsense. I'm here to squash that, factually, and say there are over 40 different ways to structure lifetime income. Why not, "Let's customize it?" Why not, "Let's run quotes at The Annuity Man," and show life with cash refund, life with installment refund, life with 10 years certain life with 20 year certain 20 year period, certain 10 year period certain.

The Two Questions

When you schedule a call with us, we will ask two questions. What do you want the money to contractually do, and when do you want those contractual guarantees to start? From there, if an annuity is appropriate to solve, contractually, for the goals you want to achieve, then we will start asking other questions, like the backstop you wish to put in place.

Remember the backstop? The guarantees you want to put in place. Do you want to ensure it pays for life, or do you just want a period certain? Do you want to make sure that a hundred percent of the money goes to somebody in your family, not the evil annuity company?

There's a myriad of ways to structure lifetime income. With primarily Single Premium Immediate Annuities and Deferred Income Annuities, which are, in essence, Single Premium Immediate Annuities that you defer past a year, same structure, there's a myriad of ways, a bunch of choices on how to do it. Don't land on joint life in 20 or life in 20 if your advisor or something you read from a journalist who knows nothing about annuities says, "Just do life in 20." It's financial malpractice for someone to just say that. It's garbage. Period.

That's the reason you need to go to experts in the business. Moi, moi and team, want moi and offices, because they all think like me. They talk like me. Think like me. Contractual guarantees only, my staff is fantastic, and we can do everything for you, start to finish.

But the first thing is to talk to us. Go to The Annuity Man, run the quotes, read the books, watch the videos, and watch my podcast, Fun With Annuities. Keep checking out my videos because I think we're approaching a thousand at the time of this blog, which is crazy, like, "Stan, there's no way. How did anybody do a thousand videos on annuities?" I don't know. I just talk. I talk the truth. My grandfather said a long time ago, he said, "Stanley." My name's not Stanley. He goes, "Stanley, if you just tell the truth, you don't have to remember anything." By the way, that's our business motto. People say, "What's your mission statement, Stan? That's the mission statement. If you tell the truth, you don't have to remember anything. And when you're selling contractual guarantees only, you own an annuity for what it will do, not what it might do; the will-do is the contractual guarantees. That's the truth, right? You can't fluff it; you can't polish it.

So, with that being said, thank you so much for joining me, and I will see you on 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.

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