014: How To Determine If You Even Need An Annuity

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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

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america's annuity agent licensed in all

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50 states yes i do

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sell annuities a lot of people are

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saying stan you know you're so brutally

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honest and brutally truthful

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about these annuity products you do sell

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them right

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yeah i do when they're appropriate and

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suitable

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and that when people are buying them

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solely for their contractual guarantees

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so

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as i said before i am licensed in all 50

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states and if you

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want to quote or you want to talk to me

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you can go to the annuityman.com

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and you can connect with me or my group

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there

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and we can help you out today's topic is

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how to determine if you even need an

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annuity

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great story before i got on this

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recording to record this podcast my

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first two calls of the day and if you go

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to

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the annuityman.com you can schedule an

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appointment with me

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and these people both have scheduled a

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call

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and they both went through their stories

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and their background

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and on their financial history and their

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goals

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and at the end of both of those calls i

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told them both

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right now my determination based on the

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facts that you gave me you do not need

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an annuity

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they were stunned of course they ask

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again do

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i sell annuities yes i sell annuities

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but i only sell annuities

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for their contractual guarantees and

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only if they're appropriate and suitable

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for your specific situation so that

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means i'm listening

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and i'm not going to fit a square peg

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into a round hole

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which kind of leads to another story now

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that i'm thinking about it

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one of the places i live is in florida i

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also live in nevada but one of the

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places i live is in florida my mom lives

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in florida and she's 80 years old and

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she gets these bad chicken dinner

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seminar invitations all the time i do

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too but i just throw them away now she

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goes because she loves to eat free food

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and

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heck she'd listen to anything she went

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to one the other day which was

2:33
actually what an annuity it was for

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cremation services

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they gave a food seminar on cremation

2:40
services and of course

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my question was did they serve burnt

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ends like the barbecue the burnt ends

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because if i was doing a cremation

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service

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seminar for food i would serve burnt

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ends everything i would be either

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blackened fish or blackened

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because it's part of the joke right i

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digress

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long story short i laugh at these bad

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chicken dinner seminar agents

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i know they're nice people and i'm sure

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their their wives are nice and their

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kids are nice but

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you have 100 people in a room and you're

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trying to sell one product and typically

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the bad chicken dinner seminar circuit

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now

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is turning into expensive steak dinner

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seminars which kind of leads into

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the high commissions involved which is

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true they're selling indexed annuities

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they're saying

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hey i don't care who you are i don't

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care if you have a sprained ankle a sore

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throat or if you need income or no

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income or

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you're going to buy an index annuities

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one one-size-fits-all it's not

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and so i laugh because every one of

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these things my mom

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goes to you know of course she saves

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everything and when i go down there to

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see her and check on her

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she's like look at all this look at this

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stand

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tell me what i'm like oh my god and all

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of its indexed annuity stuff

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and trying to explain indexed annuities

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to

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the public is like trying to show

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paintings to blind people in essence

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those index call options are really

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really really complicated

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but long story short the point i'm

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trying to make is you cannot

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just have 100 people in the room and say

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all of you need an index annuity or all

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of you need an immediate annuity or all

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of you need a deferred income annuity or

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all of you need a variable annuity

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it doesn't work like that and so today's

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topic is

4:17
is relevant forever in the annuity

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industry is determined if you even need

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an

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annuity and a lot of people do not it

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has

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nothing to do with age it has nothing to

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do with

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gender now in saying the age part

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obviously i don't think

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youngsters need it they need pure market

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growth and annuities aren't market

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growth products we'll get to that later

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but you know that's that's in essence

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what drove this podcast is is people

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always calling me that they went to the

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seminar and this person showed one

4:48
product i'm like how do you show one

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product annuities are commodity products

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so

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the other thing that someone someone

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recently said well what's your

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background stan you seem so

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confident with all this you're like you

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know you're just arrogant about it all

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well i'm a little cocky about it because

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i do know what i'm talking about i've

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been doing this for a long time three

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decades

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thousands of clients and i and i do

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understand

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how annuities work and how the contracts

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work i've written seven books and

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thousands of articles etc

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so my background just if you care is i

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was with firms you've probably

5:20
familiar with if you're older like i am

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out there they're no longer they've been

5:23
absorbed or whatever

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i start out with dean witter a long long

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time ago which

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was then purchased by a company called

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morgan stanley i like i like saying

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morgan stanley morgan stanley purchased

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dean witter and i worked for morgan for

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a long long time and then

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i decided to try to find a very small

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firm to go back to kind of like the dean

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water day as a smaller firm and i went

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to a friend called payne weber

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remember payne weber all of you not out

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there you oldsters

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and then payne weber was purchased by

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union bank of switzerland which

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is known in this country as ubs so ubs

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bought payne weber so

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dean witter morgan stanley payne weber

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ubs so i get

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markets i understand markets understand

6:03
bonds i understand all that stuff

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i don't do that anymore primarily

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because

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you know over 85 percent of all trades

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are non-human algorithmic black box high

6:13
velocity trade

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type things i'm out man i mean today's

6:18
market is like surfing beside a cruise

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ship

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you're either going to catch a really

6:22
good wave or you're going to get sucked

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under the boat

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and in my opinion individual investors

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in the stock market i know

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you know you can throw dart at these

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type of bull markets and and

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be good at it but i just think

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individual investors provide liquidity

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to the institutions it's an

6:37
institutional market so i drink my own

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kool-aid i

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invest solely in fixed annuities and i

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am a big life insurance

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proponent even though i don't sell life

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insurance it's the best

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return on investment you'll never see

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because you're dead

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so with that being said how to determine

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if you even need an annuity i've come up

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with

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two very easy to answer questions

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and the first one is what do i want the

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money

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to contractually do underline

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contractual bold it you know capitalize

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it so what i want the money to

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contractually do and when do i want

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those contractual

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guarantees to happen now the reason i'm

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pounding the table contractual is that

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in the indexed annuity variable annuity

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world and just disclaimer i don't sell

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variable annuities i don't sell

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variable anything i sell fixed i sell

7:30
contractual guarantees but

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never make an annuity buying decision on

7:33
hypothetical theoretical back tested

7:35
projected hopeful agent return scenarios

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or juiced proposal numbers or ratcheted

7:42
up numbers or step

7:44
up numbers anything that's

7:46
non-guaranteed

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don't buy it i mean you're buying a

7:50
contract don't buy the dream

7:52
you're gonna own the contractual reality

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for all you texans out there

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don't buy the sizzler because you're

7:58
going to own the stake

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so those are the two questions because

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annuities are transfer risk products

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they're contracts

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not investments in my opinion so they're

8:08
contracts buy them for the contractual

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guarantee so you have the two questions

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what do i want the money to

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contractually do

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and when do i want those contractual

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guarantees to start

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the second thing that you need to use

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which is an acronym that i've developed

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trademarked

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if i had a tattoo it would be tattooed

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on my arm but i don't have tattoos

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my daughter does maybe i can convince my

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21 year old daughter to get this

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i mean money right the acronym is pill p

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i

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l l p stands for principal protection

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i stands for income for life l stands

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for legacy

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and the other else stands for long-term

8:45
care so principal protection income for

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life

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legacy and long-term care so we all

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understand principal protection

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it's not losing any money peeling off

8:53
interest et cetera

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then there's income for life which by

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the way annuities were put on the planet

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for income for life annuities

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can be traced back to the roman times

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the latin word for payment is annua

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a-n-n-u-a

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and the dutiful roman soldiers were

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given payments

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annuals for them and their families for

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their dutiful service to the roman

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empire

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those were the original single premium

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immediate annuities and not much has

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changed since then

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that means to transfer risk based on

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your life expectancy

9:26
income with annuities is primarily based

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on life expectancy at the time you take

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the payment not interest rates

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rates play a secondary role but it's his

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primary life expectancy

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so that's income for life l is legacy

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for those of you who cannot qualify for

9:40
life insurance which still is the best

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legacy product

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on the planet then you know i always say

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for the guy out there or the gal out

9:48
there you know smoking lucky strikes

9:50
with no filters and drinking a bottle of

9:51
jack daniels every day

9:52
first of all god bless you you goal

9:54
setter but secondly

9:56
you're not going to get underwritten for

9:58
life insurance in most cases so what do

10:00
you do

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there are guaranteed issue fixed

10:03
annuities that have

10:04
attached writers writers or tax benefits

10:07
in english what a writer is in a tax

10:09
benefit

10:10
that will provide a death benefit to

10:12
your heirs there's not many of them out

10:14
there there's some but you don't have to

10:15
go through any testing blood work

10:17
etcetera is just guaranteed issue

10:19
that that rider attached benefit grows

10:21
by a specific

10:22
percentage and then you know when you

10:25
pass away when your learjet hits the

10:27
mountain

10:28
going full steam ahead and you're dead

10:31
then that money pays to your

10:32
beneficiaries it's taxable whereas life

10:34
insurance is not taxable to your

10:36
beneficiaries

10:37
death benefits attached to annuities are

10:40
and then the last l is long-term care

10:42
confinement care

10:43
now long-term care is a health insurance

10:45
product and the best coverage for

10:46
long-term care is traditional long-term

10:48
care i don't sell it

10:50
but there are some annuity type products

10:53
that in a perfect world when the

10:54
unicorns chase the butterflies and

10:56
everything's

10:56
wonderful and the planets align

10:58
themselves and we all get along and

10:59
there's no

11:00
partisanship out there and all the cable

11:02
channels are telling the truth

11:05
then you know annuities with long-term

11:08
care confinement care writers should be

11:09
used for secondary coverage so what i'm

11:11
trying to say in a perfect world

11:12
it's a secondary coverage product not a

11:14
primary coverage product never ever ever

11:16
ever

11:18
have some yahoo agent convince you to

11:20
cash in your long-term care and replace

11:22
it

11:23
with a long-term care annuity just

11:25
please don't do that this just

11:27
doesn't make sense whatsoever my mom

11:29
always calls me every year my dad passed

11:32
and she's mad because when they applied

11:35
for their long-term care which they had

11:36
paid for

11:38
my dad died you know before you know

11:40
they got to use a lot of the benefits so

11:42
obviously a southerner like her is mad

11:44
she goes should i keep mine yes you

11:46
should keep yours mom

11:48
and those type of products are transfer

11:49
of risk products

11:51
you're transferring the risk to the

11:52
carrier to solve for a specific

11:54
situation under the pill

11:55
scenario you're solving for the pill

11:58
you're transferring the risk

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to the annuity company to solve for

12:02
either principal protection income for

12:03
life legacy or long-term care by the way

12:06
if you do not need to solve for one of

12:08
those four things principal protection

12:10
income for life legacy or long-term care

12:12
if you don't need to solve for those

12:13
contractually one or more

12:15
or all four but at least one you

12:18
do not need an

12:22
annuity can i be more clear

12:26
there's no g do not buy annuities for

12:29
market growth i know everyone out there

12:30
is trying to sell you that do not do

12:32
that

12:33
index annuities are good products but

12:34
they're fixed annuities

12:36
they're life insurance products not

12:37
securities that were designed to compete

12:39
with cd returns that's exactly what they

12:41
do

12:42
and i use index annuities for income for

12:44
life i use them with attached benefit

12:46
income riders

12:47
for future income that's how that works

12:50
and there's a lot of people pitching

12:51
variable annuities because i used to

12:53
work with dean witter and morgan stanley

12:55
and payne webber and ubs i understand

12:56
markets okay

12:58
i understand what real market growth is

13:00
and when i came out to the annuity world

13:03
i i was just flabbergasted that people

13:05
are out here trying to sell these as

13:06
market growth products i was like what

13:07
what are you talking about

13:08
even variable annuities even no load

13:10
variable annuities which are put on the

13:11
planet in 50 1955

13:14
for tax deferred growth even variable

13:17
annuities have limitations on the upside

13:19
because they have limited

13:20
choices of the separate accounts which

13:22
what me and you call

13:23
mutual funds inside the variable annuity

13:25
so there's limitations anytime there's

13:27
limitations that's not true

13:29
market growth so don't buy an annuity

13:32
for true market growth regardless

13:34
of the type and regardless of the sales

13:35
pitch i mean just don't buy that dream

13:38
that back-tested dream in fact there are

13:40
a couple states that are trying to

13:42
ban back-tested proposals in other words

13:44
where the

13:45
person says well if you owned it 10

13:47
years ago you would have made this

13:49
unless this garbage that's like saying

13:51
if you would have exercised every day

13:52
for

13:53
the last 10 years you'd be skinny of

13:55
course hindsight's 20 20 right

13:57
hindsight's definitely 20 20 in the

13:58
annuity world so

14:00
you know when you don't need an annuity

14:02
is when you're looking for market growth

14:04
or when you don't need an annuity is

14:06
when you don't need to

14:08
transfer risk you know and i have 80

14:10
year old people call me and they don't

14:11
need to transfer risk that's fine you

14:13
don't need an annuity

14:14
i have 50 year old people that need to

14:16
transfer risk fine

14:17
you need an annuity transfer risk

14:19
strategy but most of the time when

14:21
people do need annuities so that you

14:22
know the question is how to determine if

14:24
you need an annuity so

14:25
the question is what do you want the

14:26
money to contractually do and when you

14:28
want those contractual guarantees to

14:29
start

14:31
most people with ten thousand baby

14:32
boomers retiring every single day

14:35
they're looking for guarantees and most

14:37
are looking for guaranteed lifetime

14:39
income

14:39
you know the income floor as as i call

14:42
it

14:42
which is you know the guaranteed income

14:45
that's hitting your bank account every

14:46
month that

14:46
covers expenses social security a

14:49
pension if you are so fortunate or work

14:51
for the government

14:52
whatever our company that has not

14:55
changed their

14:56
their retirement plan there's just i

14:57
think there's less than 10 of the

14:58
companies out there i don't know if

14:59
that's

15:00
i think that's the number that offer

15:02
pensions

15:03
so most of the retirement plans out

15:05
there are what's called defined

15:06
contribution plans which are growth

15:08
you're trying to grow your money

15:10
and then at retirement you've got to

15:11
figure out how to turn that growth into

15:13
income

15:14
so you know most of the people you know

15:17
are looking for annuities

15:18
for income now that might be you and

15:21
one of the things i need to point out is

15:23
when you look at annuities for income

15:26
annuities are commodity products and you

15:27
should quote all carriers and that's

15:29
what we do at the annuityman.com

15:31
we quote all carriers for your specific

15:34
situation

15:35
but understand that because they're

15:36
commodity products annuity quotes are

15:38
like a gallon of milk

15:40
meaning that no you don't drink it but

15:42
it expires every seven to ten days you

15:44
have to

15:45
quote all carriers and if you want to

15:46
lock that in you lock it in during the

15:48
application

15:49
process but you know one week it could

15:52
be xyz company at the top and the next

15:54
week that xyz company that was out the

15:56
top the previous week would be

15:58
finished seventh so do not allow anyone

16:00
to just show you one or two carriers

16:02
because they're steering you to the

16:04
carrier that they want you to choose

16:06
because i guess they get to go on a trip

16:08
to italy with their girlfriend or wife

16:11
if they sell enough of it so you know

16:14
just look for the highest contractual

16:15
guarantee and then from that number

16:17
base your decision then on claims

16:18
paintability and the strength of the

16:20
care

16:20
etc so you always own an annuity for

16:23
what it will do not

16:24
what it might do the will do or the

16:25
contractual guarantees only

16:29
so that's the bottom line now i did have

16:32
a client call in the other day and say

16:33
you know i'm looking at these annuities

16:35
i'm not sure i

16:36
i need it right now so well tell me your

16:38
situation well

16:39
the bottom line is he really didn't need

16:41
it because he was kind of a stock trader

16:43
but

16:43
my question was tell me about your

16:45
spouse does she care at all about the

16:46
stock market because

16:48
you know some of the best traders in the

16:49
world are female by the way because

16:51
they're probably better decision makers

16:52
than us but in this

16:53
situation his wife could care less all

16:56
she cared about was go and see the kids

16:57
and grandkids

16:58
my wife is kind of like that she could

16:59
care less about anything financial

17:01
and i said well why don't you start

17:03
putting in place future lifetime income

17:05
streams

17:06
for her when you pass and that's what we

17:09
did

17:09
so in a lot of cases it you know

17:11
lifetime income can be also a legacy

17:14
strategy as well so bottom line with

17:17
this i'll kind of close with this is

17:19
annuities are not for everybody bottom

17:21
line and

17:22
don't buy products that sound too good

17:24
to be true because they are every single

17:25
time you're buying contracts

17:27
these are contractual guarantees and you

17:29
need to quote all carriers

17:31
for your specific situation we obviously

17:33
would love to take care of that for you

17:34
at the annuityman.com

17:37
but i also would like to offer my books

17:38
i've written seven books on the subject

17:40
all published at amazon but i will send

17:43
them to you for free if you go to the

17:44
annuityman.com there's a place to sign

17:46
up and we'll ship those to you

17:48
in addition to this podcast that i do

17:51
every week

17:52
i also release a youtube video stan the

17:55
annuity man youtube

17:56
channel every monday through friday a

17:58
brand new

18:00
youtube video comes out that's

18:02
informative you know eight to ten

18:03
minutes long that talks about

18:05
everything annuities just all the

18:07
questions that you might have

18:08
and i'm also currently writing for a lot

18:10
of major platforms

18:12
one of them is thestreet.com i'm

18:14
releasing a ton of articles and stuff on

18:15
the street.com i've written for

18:16
marketwatch and everywhere else

18:18
what i'm trying to do is educate i'm an

18:20
edutainer

18:21
i'm an educator i'm the top agent in the

18:23
country i do sell annuities

18:25
but only if they're appropriate i really

18:27
believe that you should be able to make

18:28
your decision on your terms in your time

18:30
frame

18:31
with the most information humanly

18:33
possible that includes if you need to

18:35
see a specimen policy or the top of the

18:36
application or whatever

18:38
in addition to my book so you know my

18:41
name is stan the annuity man dude been

18:42
doing this a long long time

18:45
and the topic of the day was how to

18:46
determine even if you need an

18:48
annuity and i think we covered that just

18:51
remember the two questions

18:52
and the acronym pill go to the annuity

18:55
man to get the quote

18:56
and feel free to contact us anytime with

18:59
that

18:59
thanks for listening to fun with annuity

19:02
see you next time

19:04
thanks for listening to fun with

19:06
annuities please hit the subscribe

19:07
button and make sure to go to my site

19:10
at the annuityman.com where you can run

19:13
your own spea dia

19:14
and culat quotes and see a live feed of

19:17
the best mega fix rates

19:18
in the country and even get indexed and

19:21
income writer quotes as well

19:23
you can also sign up for my six annuity

19:26
owners manual books and i'll ship them

19:28
for free and under no

19:29
obligation i also encourage you to

19:32
schedule a one-on-one call with me

19:34
stan the annuity man so we can have a

19:36
full discussion

19:37
of your specific situation it will be

19:40
the best

19:40
brutally factual and truthful advice you

19:44
will ever get and that's one guarantee

19:46
you should definitely take advantage of

19:48
so join me next time for the number one

19:50
annuity podcast on

19:52
the planet fun with annuities