012: Unique Annuity Man Strategies that contractually work

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welcome to

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fun with annuities with your host me

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stan

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the annuity man america's annuity agent

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can annuities be fun

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can contractual guarantees be fun

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absolutely they can find out the brutal

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facts about annuities

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with no sales pitches or high pressure

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nonsense

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just the brutal and factual annuity

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truth which is all you need to hear

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let's have some fun with annuities and

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let's have that fun start

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right now

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hey this is stan the annuity man and

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welcome to fun

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with annuities today's topic is

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a fun one it's called unique annuity

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strategies that contractually work

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and what we're going to do is you know

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there's some straightforward strategies

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for annuities that solve for you know

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principal protection income for life

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legacy and long-term care that acronym

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is pill

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that i always use and then always use

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two questions that what do you want the

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money to contractually do and when do

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you want those contractual guarantees to

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start

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but from those two foundations from

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the pill and then those two questions

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there are some strategies that

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i have developed and i have tweaked some

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of the older ones

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to my liking that are contractual but

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also

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solve for what you're trying to do

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because remember annuities are math i'm

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a math geek

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they're contracts and you own them for

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what they will do not what they might do

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we'll do is the contractual guarantees

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you might do is all of the other stuff

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you hear which is too good to be true

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hypothetical theoretical back tested

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projected hopeful scenarios never buy an

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annuity for that

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understand that annuities can be held

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inside of iras

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inside of roth iras and non-iras so

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with all of the strategies we're talking

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about

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you know we can design them for wherever

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the money is located and if we

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if it doesn't work in those i'll tell

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you so i'll be very straightforward and

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hopefully after you hear this it'll

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tweak your interest on hey i've got the

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situation and you'll contact me either

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shoot me an email you know my email is

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stan at the annuityman.com

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or you can go to my site the

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annuityman.com and

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schedule a call with me and we can

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discuss it and i can tell you if we can

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either do it i'll start running quotes

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and

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and you'll find i'll treat you as a

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professional and i won't bug you i'll

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just give you good information

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if you don't have my books i'll send you

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my book so let's talk about

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i think i've got six or seven i kind of

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want to talk to you about the first one

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i call the legacy income monster legacy

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meaning you're going to leave money to

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your kids or grandkids or friends or

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whoever

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and the best legacy product on the

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planet is life insurance i don't sell

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life insurance

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but it's still the best legacy product

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on the planet because

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it leaves a lump sum to the list of

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beneficiaries tax free probate free

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lump sum i always tell people life

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insurance is the best return on

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investment you will never see

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because you're dead but you know

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stan the annuity man has tons of life

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insurance

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on myself that will take care of my

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family in case something happens

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but with annuities everything is

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guaranteed issue so you don't have to go

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through any testing blood testing

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medical testing medical records

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everything's guaranteed issues so

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how to use legacy for annuities one way

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is there's what's called death benefit

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riders

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that you can attach to just a deferred

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annuity and it'll grow and leave money

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to your beneficiaries unfortunately it's

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not

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free like life insurance but if you

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can't qualify for it that's the way to

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do it

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but the legacy income monster thing that

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i've come up with strategy is

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is taking you know the father

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grandfather great grandfather and then

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running a joint life quote with their

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child grandchildren whatever so i just

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recently did one

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the person was in their their 80s and

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their their great-grandson was you know

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two or three years old so it's a joint

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lifetime income payment

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so obviously the the basis for the

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pricing of that lifetime income stream

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is based on the younger the

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the two-year-old right so that was

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pretty cool to see that payment and then

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he attached a cost of living adjustment

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writer

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to that which increase the income some

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carriers will allow you do some some

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won't but he

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he did that so what's the legacy of the

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legacy income monster when

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grandfather dies well the income stream

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continues uninterrupted and unchanged

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for the life of the grandchild monthly

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and you set it up monthly you can set up

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monthly quarterly semi-annually

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annually so it's going to continue for

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the life of that grandchild and increase

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annually the number we ran out just to

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show contractually what it would be

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if the child grandchild lived to their

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life expectancy was just

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ridiculous so as i always say

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your kids are going to show up to your

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funeral in a ferrari anyway

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so why not have them be making payments

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right so a lot of you are chuckling out

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there

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but it's true i mean sometimes you want

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to do what i call handcuffing the

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beneficiaries and handcuffing the

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beneficiaries is really

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a love strategy love them to death but

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you don't want them to make mistakes and

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you do want them to have

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an income stream so a legacy income

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monster and we can run it a couple ways

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we could run it with income starting now

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or income starting at a future date

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income starting now would be an

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immediate annuity a single premium

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immediate annuity

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income starting later would be a

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deferred income annuity so put that in

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the back your head that might be

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something you want to look at and have

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me quote

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second thing i want to talk about is

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what i call annuity arbitrage an annuity

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arbitrage

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sounds really cool i know you're saying

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man that sounds cool

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it's really pretty basic in essence what

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you're doing

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is you are buying a single premium

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immediate annuity

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that pays you for life it's a life only

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meaning that when your lear jet hits the

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mountain and you die

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money goes poof and you say well stan

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why would i want to do that well

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the part of the arbitrage is the annuity

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income stream coming from that immediate

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annuity

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is paying the premium on a life

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insurance policy so at the time you buy

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the way the process would work and i

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would put you in touch with someone who

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i trust to sell you life insurance in

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the right kind of like

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level term not some not some highly

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expensive stuff just a very good

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the highest death benefit for least

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amount of money level term type product

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let's just say all right i want to leave

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my family

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three million dollars so we'll find out

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what a three million dollar death

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benefit would be

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okay for you you would qualify for that

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find out what the annual premium would

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be and then we would run an immediate

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annuity quote

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reverse engineer it to solve for the

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amount of money to pay that annual

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premium of the life insurance policy so

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the way the annuity arbitrage

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works is that the immediate annuity

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income stream funds the life insurance

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policy premium

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so that when you die the immediate

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annuity goes poof

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right because it's life only but your

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beneficiaries

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get tax free lump sum the life insurance

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so annuity arbitrage is another one you

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kind of want to put in the back your

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head would love to quote that for you

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that's one of my favorites because i

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think it's it's a leveraged way to

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contractually

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do legacy and you could also do it to

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where hey

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i need income too so half of the income

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stream goes to you and the other half

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goes to fund the life insurance policy

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or you could do it joint with your

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spouse and you could do it the same way

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there's there's myriads of ways to do it

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just understand that the immediate

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annuity

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income from that either all or apart

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funds a life insurance policy

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so annuity arbitrage the other one that

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yeah

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that kind of leads into the next one

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which is what i call leverage legacy

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doubler

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and the leveraged legacy doubler is kind

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of what i was talking about in the

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annuity arbitrage which is

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you're married or you have a significant

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other partner

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you run a joint lifetime income stream

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for

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you know both you and your you and your

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partner spouse

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wife whatever and you can run it to

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where all of the immediate annuity

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income funds life insurance policy or

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like

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i said before that a portion does and

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you keep some for income and the other

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you know funds of the life insurance but

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this happens a lot like i just did one

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recently

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husband and wife and you know they

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needed like a thousand dollars worth of

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income a month

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for both of them but he also wanted to

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set something up so when he died which

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males

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typically pass away before females

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he wanted to make sure that she also got

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a lump sum so

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you know it was like a a 3 000 a month

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income stream a thousand dollars they

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were using as

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joint right and then the other

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2000 was funding the life insurance

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policy so what would happen is under the

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leverage legacy doubler

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when he passes the life insurance policy

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because it's on him and him only gets

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paid out lump sum

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tax-free probate free to his wife

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but the income stream from the immediate

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annuity continues for her life

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so she's somewhat double dipping so

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instead of

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you know just keeping a thousand dollars

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a month

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because they were taking the other two

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and fun in the life insurance policy

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she continues to get three thousand

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dollars a month and gets the lump sum

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from the life insurance so

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i'm hoping i'm going to continue to give

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you some more but i'm hoping what i'm

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doing is

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is planting seeds in the back of your

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head that there's more to this

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that people like me that are kind of

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math geeks out here that are always

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thinking about okay

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if we're going to do contractual

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guarantees only how can we leverage

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contractual guarantees with contractual

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guarantees

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there's ways to do it so that's

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leveraged legacy strategy for

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typically you know you and your wife you

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and your spouse you and your partner

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so the other one that's kind of an old

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school one is called a split annuity

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strategy

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and low interest rate environments is

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not used as much

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but the way it really works is that you

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would come to me and say

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i need x amount of income

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starting immediately but i only have a

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certain amount of money total

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that i can apply to annuities how do we

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maximize it and typically what we do

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and if you look at split annuity what

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split annuity means we're buying

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multiple annuities

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at the same time to solve for for

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different things so in essence

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a basic split annuity strategy would be

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to buy

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an immediate annuity that pays say for

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five to seven years

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okay and after the five to seven years

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of you know money goes poof

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but the second annuity you bought would

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be like a like a multi-year guarantee

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annuity a fixed rate annuity for a seven

10:24
year time period

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after that seven years you annuitize it

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to pay for another specific period of

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time

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and then after that specific period of

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time it's gone the third annuity that

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you buy with the other two at the same

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time

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is a deferred income annuity or an

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income rider that has income starting

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at that final date so you know annuity

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number one the immediate annuity goes

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for let's just say seven years as an

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example

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the mica that you buy defers for seven

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years after the seven year time period

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you annuitize it create a lifetime

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income stream

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and let's just say that goes for five

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years

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and then the annuity you bought for the

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deferred

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part the income rider or the deferred

11:02
income annuity defers for 12 years so

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after the first two

11:05
are gone you turn on the third one

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that's been deferring for 12 years

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and continue that income stream we can

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design it so that

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to hit a number contractually so if you

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say we need x amount per month

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you know starting now and here's the

11:18
amount of money we can show you what it

11:20
will take to do it

11:21
with a split annuity strategy but what

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it does it just

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solves for income now with a specific

11:29
consistent income contractual strategy

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that is used long term it's really cool

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if we have the numbers

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exactly contractually right to what

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you're going to do there's no

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hypotheticals or theoreticals it's

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going to happen but you know split

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annuity strategy been around a long time

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people kind of put names on it but

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that's what it is

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the other way the other things i do kind

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of unique laddering for principal

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protection a lot of people don't need

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income they just want to protect the

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principal

11:55
and just get a yield you know multi-year

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guarantee annuities

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are fixed-rate annuities it's the

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annuity industry's

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version of a cd so

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if you go to my site the annuityman.com

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annuity standingannuityman.com either or

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get you there you can pull up

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a live feed of the best migrates in the

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country

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based upon your state so when you see

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when you pull it up

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you'll see two questions of state of

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residence you click that and then

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duration

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so a typical fixed rate ladder would be

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you buy a three year duration a four

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year duration a five year duration

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a seven year duration let's just say

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that so what happens you have money

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coming due

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in year three and then after that four

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and then after that five and then after

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that seven then you just keep rolling it

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because

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whether it's an ira that you have these

12:44
in or a

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non-ira asset you can transfer tax

12:48
deferred you know if let's just say it's

12:51
a non-ira

12:52
asset and you have this ladder in there

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when one of these migas mature obviously

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you can get your money back

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and we'll send you a check that's what

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you want but you also have the choice of

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rolling that to

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another myga another fixed rate annuity

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under irs approved 1035 rule 1035 is the

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section of the irs code that says you

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can transfer an annuity to another

13:12
annuity without any tax consequences

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so if you have that ladder as soon as

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one's coming due

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then we'll roll it to another to

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continue the ladder and you continue

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deferring

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interest the difference between a mic

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and a cd is with a cd and a non-ira

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account you have to pay taxes on the

13:28
interest every year with a with a myga

13:30
multi-year guarantee annuity fixed rate

13:32
annuity

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that interest compounds tax deferred now

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once you take it out you have to pay

13:36
taxes on it but

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if you just want to protect the

13:39
principal not pay taxes and defer the

13:41
taxes and

13:42
it's a good it's a good strategy the

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other way to do principal protection

13:45
with the contractual yield is what i

13:47
call a mixed fix

13:48
ladder there's two products that that

13:51
solve for principal protection ones have

13:53
miga

13:53
multi-year guarantee annuity fixed rate

13:55
annuity like a cd

13:56
the other is an indexed annuity a fixed

13:58
index annuity

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not without any writers with any i mean

14:02
if you buy a fixed

14:03
indexed annuity without writers there's

14:06
no annual fees

14:07
it's a very efficient product the

14:09
difference is

14:10
there's no guarantees other than you're

14:11
not going to lose money there's

14:13
there's a limitation on an index call

14:16
option typically the s p 500

14:18
but indexed annuities fixed index

14:20
annuities whatever you want to call them

14:22
were designed in 1995 to to compete with

14:26
cd returns in essence they're enhanced

14:28
cd products so the

14:30
hope is you're going to get maybe

14:34
50 basis points up to 100 basis points

14:36
more in

14:37
in yield if the markets go in your favor

14:41
with the understanding you're not going

14:42
to lose a penny so a mixed

14:44
fixed ladder might be a three year my ga

14:47
a four year my ga a five year myga and

14:50
then a seven year

14:52
fixed indexed annuity or or you could do

14:56
you know a might a four-year miga a

14:58
five-year

14:59
fixed index annuity and a seven-year

15:01
indexed annuity

15:03
we can split it up a myriad of ways but

15:05
that way you would have the migas you

15:06
know

15:07
what the percent is going to be and then

15:09
the fixed index you know that you're not

15:11
going to lose a penny but you also know

15:12
there is a possibility you're going to

15:13
get

15:14
a little bit better than a cd return

15:16
because that's what they were designed

15:17
for in 1995.

15:18
so that's laddering for principal

15:20
protection you know fixed rate ladder

15:21
and mix fix ladder

15:23
now staying in the laddering category

15:26
you can also ladder for income what i

15:28
call a lifetime ladder which is

15:30
a lifetime ladder is purchasing

15:32
immediate annuities over time

15:35
giving an example if someone says you

15:36
know i have five hundred thousand

15:37
dollars that i want to put in immediate

15:38
annuities but i don't need all the

15:40
income right now

15:41
then we would buy you know a hundred

15:44
thousand this year

15:45
and then for the following four years so

15:46
a hundred thousand for five consecutive

15:48
years

15:49
going out and quoting for the best

15:50
immediate annuity guarantees over that

15:53
five year time period

15:54
that's that's what i call a lifetime

15:55
ladder and you could do you know you

15:57
could also

15:58
do what's called a target date stair

16:00
step ladder which is what i

16:02
what i call something where we're we're

16:04
buying annuities at the same time

16:06
but each one of those has a different

16:09
start date

16:10
income start date so that could be a

16:12
combination of deferred income annuities

16:14
which are called dias

16:16
or income riders which are typically

16:18
attached

16:19
to indexed annuities and once we attach

16:20
an income rider to an index annuity

16:23
we're not looking at the accumulation

16:24
value we're only looking at the

16:25
guarantee of the income rider it's a

16:27
delivery system for that income

16:28
guarantee

16:29
so target date stair step you might say

16:30
okay i want income starting in 5

16:33
7 10 12 and 15 years

16:36
okay what we'll do is we'll quote every

16:39
single one of those parameters

16:41
and whatever has the highest contractual

16:43
guarantee

16:44
that's probably what we're going to go

16:46
with but it's hopefully going to be a

16:48
combination

16:49
of both deferred income annuities diaz

16:51
and income riders that's that's a target

16:52
date stair step ladder people say

16:54
how do you how do you combat inflation

16:56
how do you go about

16:57
combating that there's only one way is

16:59
to have

17:00
income starting at different time

17:02
intervals agents and advisors will tell

17:04
you they have the annuity that will

17:06
address inflation they do not

17:08
okay there's just no way to price that

17:10
contractually

17:11
so the best way to rationally go about

17:13
it with an iq

17:15
right we do everything for will do

17:17
standpoint is to have income starting

17:20
at different intervals so that's a

17:21
target date stair step ladder

17:23
last one i kind of want to cover and

17:26
once again

17:27
if you have an idea we can go do it you

17:29
know i've i've

17:30
pretty much done all everything out here

17:32
top agent out here

17:33
licensed in 50 states cola inflation

17:36
ladder

17:36
which is kind of the same

17:40
thought as the target date but what we

17:43
do

17:43
is we're buying immediate annuities and

17:46
deferred income annuities which are in

17:47
essence the same product it just comes

17:48
down to when you're deferring

17:50
and we're attaching cost of living

17:53
increases to each one

17:55
or every other one now cost of living

17:58
adjustment creases or cpi

18:00
increases just to let you know and to

18:01
repeat myself a little bit

18:03
annuity companies don't give anything

18:04
away when you attach

18:06
any type of increase to an income stream

18:08
the annuity company's going to lower

18:10
that initial payment when compared to

18:11
the same exact annuity quote that does

18:14
not have that increase

18:15
but a lot of people say hey stan i want

18:17
to increase fine

18:18
we'll do you know we'll do an immediate

18:20
annuity with the two percent cola

18:22
then we'll defer by deferred income

18:24
annuity that starts in three years with

18:26
the three percent cola

18:28
and then we'll do another deferred

18:29
income annuity that starts in five years

18:31
with a four percent cola just giving an

18:34
example

18:35
and all of those contractually will

18:38
increase and all this

18:39
all of this stuff can be set up single

18:40
or joint we can set it up so

18:43
you know 100 of any unused money goes to

18:45
the beneficiaries remember

18:46
all of this is customizable you just

18:48
have to say stan

18:50
this is how i want the money to work

18:51
contractually

18:53
this is what i want the money to do when

18:55
i die

18:56
i will design it contractually to

18:58
achieve

18:59
exactly what you want so we talked about

19:02
legacy income monster we talked about

19:04
annuity arbitrage leverage legacy

19:06
strategy with the wife we talked about

19:07
split annuity

19:09
strategy some people call them buckets

19:11
the bucket strategy

19:12
we've talked about laddering for

19:14
principal protection the mix fixed and

19:16
the mix

19:16
and the fixed rate ladder and then

19:18
laddering for income last thing is

19:20
what i call kind of the ira mirror

19:22
strategy

19:23
which is a little quirky just because

19:25
you need the same amount of money

19:27
in an ira and in a non-ira

19:30
account to make it work a lot of people

19:33
don't have that most people have just a

19:34
lot of money in the ra so let's

19:36
give you an example if you have

19:39
five hundred thousand dollars and and

19:41
then i mean this is probably a large

19:43
amount but let's just do it anyway

19:44
five hundred thousand dollars your ira

19:45
and five hundred thousand dollars in

19:47
non-ira account

19:48
you can put death benefit writers on

19:51
both of them

19:53
okay and you know take out the r d's

19:56
from the ira

19:57
whatever that is and then take out the

19:59
exact same amount

20:01
from your non-qualified that doesn't

20:03
need rmds

20:04
and you're taking that amount and you're

20:06
that's income right

20:08
what happens when you do that is the

20:10
death benefit continues to grow

20:11
even though you're taking it out it's

20:12
kind of being offset but it continues to

20:15
grow so it's a way to

20:18
solve the r ds for that specific amount

20:20
of dollars asset in your ira

20:22
get an income from both annuities and

20:24
when you die

20:26
be guaranteed that you know the money

20:29
has been growing you're going to leave

20:30
more money to the beneficiaries than

20:32
when you started

20:33
now there's a lot of carriers i used to

20:36
do this a lot and a lot of them have

20:37
stopped offering a lot of the death

20:38
benefit writers but there's a few out

20:40
there that we could do but but the

20:41
reason i even throw that in there

20:43
is that i want to push you to think

20:45
about

20:47
what you really want the money to do and

20:49
this drives the point home

20:51
of annuities or contracts so in essence

20:54
what you're asking me is

20:55
hey stan here's what i want to happen to

20:57
the money while i'm living

20:59
and while i'm dead this is how i want to

21:01
structure it either on me

21:03
or me and me and a spouse and partner or

21:05
me and a kid whatever

21:06
this is what i want to do am i dreaming

21:09
is there something out there or can you

21:11
custom design something

21:13
that works and and achieves all of my

21:15
goals

21:16
well you should know by now i'm going to

21:18
shoot it straight and i'm going to tell

21:19
you if we can or we can't and if we can

21:22
i'm going to run those quotes for you

21:23
and as always i'm going to treat you as

21:24
a professional provide all the

21:26
information needed

21:27
give you the best quotes out there send

21:30
you my books

21:31
and then leave you alone to make a

21:33
decision on your own terms you obviously

21:35
can contact me anytime

21:37
but that's the way the process works so

21:39
hopefully this

21:40
podcast has kind of opened your eyes to

21:42
the possibilities not just

21:44
the package product that you're hearing

21:46
at the bad chicken in the seminar

21:47
but maybe it's something that's very

21:49
unique to your situation

21:52
that i've either designed in the past or

21:54
that we can design for you

21:56
based solely on contractual guarantees

21:59
and with that

22:00
i appreciate you listening to fun with

22:02
annuities see you next time

22:06
thanks for listening to fun with

22:08
annuities please hit the subscribe

22:09
button and make sure to go to my site

22:12
at the annuityman.com where you can run

22:15
your own

22:15
spea dia and q lat quotes and see a live

22:18
feed of the best

22:19
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22:22
get

22:22
indexed and income rider quotes as well

22:25
you can also

22:26
sign up for my six annuity owner's

22:28
manual books and i'll ship them for free

22:30
and under no

22:31
obligation i also encourage you to

22:34
schedule a one-on-one call with me

22:36
stan the annuity man so we can have a

22:38
full discussion

22:39
of your specific situation it will be

22:42
the best

22:42
brutally factual and truthful advice you

22:46
will ever get and that's one guarantee

22:48
you should definitely take advantage of

22:50
so join me next time for the number one

22:52
annuity podcast

22:53
on the planet fun with annuities