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What Is the Best Annuity for Me?

Stan Haithcock
April 15, 2024
What Is the Best Annuity for Me?

Hey, Stan The Annuity man here. You ask a good question: What's the best annuity for me? You know what? The answer could be none. We're going to go through all annuity types and answer a bunch of questions, and at the end, you're going to make a good decision on whether an annuity fits you or not. There is no square peg into a round hole, everyone needs an annuity. You don't. So, let's go through it. And if you stick with me to the end of the blog, you hang in there; I will tell you how to download my books for free. So, hang in there.

‌What Is an Annuity?

‌What is an annuity? Everyone says, "Hey, I hate all annuities." It's like saying I hate all restaurants; that's crazy. There are good annuities, there are bad annuities. You might not need an annuity, as I said earlier. But what is an annuity? It's a contract. It's issued by a life insurance company. It's a transfer of risk. You're transferring the risk so that the annuity and life insurance companies solve for a specific thing. So, what's the history of annuities? In Roman times, way back then, the dutiful Roman soldiers were laying it on the line for the empire, and the leaders of the Roman Empire decided to create a lifetime income stream for the dutiful Roman soldiers and their families. That's what's called today a Single Premium Immediate Annuity, a pension. You don't hate pensions, do you? You don't hate Social Security, do you? You don't hate annuities. That's where it all started.

‌The PILL Acronym

‌To make this really simple for all you people out there, I've come up with an easy-to-understand acronym, PILL, P-I-L-L. P stands for principal protection. I stands for income for life. L stands for legacy, leaving money to your heirs when you die. And the other L stands for long-term care, confinement care. Let's do it again. Principal protection, income for life, legacy, long-term care. Now, why is that acronym important? If you don't need to contractually solve for one of those four items, you do not need an annuity. It's that simple. So, if you come to me and say, "Hey Stan The Annuity Man, I really want a lot of market growth and blah, blah, blah, blah, blah." Probably not an annuity. Now, people will argue with me and say, hey, you could buy Variable or Index Annuities. Index Annuities are CD products, number one.

‌But number two, Variable Annuities, they do have some limitations. My opinion, Stan The Annuity Man, is that if you want market growth, don't buy an annuity. Going back, PILL, principal protection, income for life, legacy, long-term care. Those are the four contractual solutions that you need to think about. Do you need those solved for?

‌The Two Questions

‌All right, now it's going to get even more simple. You've learned about the PILL, right? There are two questions that you need to ask and answer to determine if you need an annuity, and if you do need one, what type? Here are the questions. Number one, what do you want the money to contractually do? Contractually, underline it, bold it. Second question, when do you want those contractual guarantees to start? That's it. So, what do you want the money to contractually do? When do you want those contractual guarantees to start?

‌Client Example

‌A guy called me the other day; he said, "I think I need an annuity. My CPA said to look into annuities." I'm like, well that's okay, but you've got to give me more than that. Answer the two questions. So, I asked him, what do you want the money to contractually do? He said, "Well, my wife and I need a pension plan to start in about three to six months." Okay, great. He answered it all in one. He needed income; that's the first question. He needed it to start in three to six months. What's that product? That's an Immediate Annuity. That's how simple it is.

‌Will Do, Not Might Do

‌You can't see my shirt, but on the back of it is the saying, "Will do not, might do." Will do is contractual guarantees, and might do is hypothetical, theoretical, back tested, projected, hopeful agent return scenarios in which they give you the proposal and it looks better than sliced bread. And you go, "Well why wouldn't we buy that?" Because it's not guaranteed. You buy an annuity for what it will do, not what it might do. Will do is the contractual guarantees of the product.

‌Client Story

‌Another great story and I just told you one about someone asking the two questions. The interesting part about that is the person needed an Immediate Annuity. Well, someone tried to sell him another product. They didn't ask the two questions. Obviously, they were doing a one-size-fits-all, square peg into a round hole. He still needed income starting in three months for him and his wife, and someone tried to sell him an Income Rider, a future benefit guarantee for income. It just doesn't fit and isn't the highest contractual guarantee.

‌And if you go by the will do not might do strategy and that mantra, then you'll get your choice of the annuity right every single time because it'll be based on the contractual guarantees of the policy. So, where do annuities fit? I mean, they don't fit everybody. If you don't need principal protection, lifetime income, legacy, or long-term care type coverage, you don't need an annuity. And that's okay. There are no perfect answers to annuities. They're just really bad sales pitches, right? They're contracts. You're buying a contract. Don't believe me, buy one, you're going to get a contract, it's just that simple.

‌Now, I told you about the books at the beginning. You can download all 6 of my annuity owner's manuals for free. Click on this link, which will take you to the download page. All you have to do is do me a favor first. Hit the subscribe button on our YouTube Channel. I put out a new video every single day. Yes, obsessive compulsive. I'm putting them out there trying to educate the public on annuities, and that's what I'm trying to do. Thanks for joining me, and I will 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.

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