Annuity Comparison: FIA vs. MYGA

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hello America stand the annuity man

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America's annuity agent licensed in all

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50 states I'm glad you joined me today

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this is a great topic we're doing

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annuity comparisons we're doing indexed

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annuities fixed index annuities versus

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multi-year guarantee annuities which is

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which are called migas that's fias

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versus migas the ultimate cage battle B

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you know B

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[Music]

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kick pow I mean that's it fiia versus

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migas which one do you want which one

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fits do they fit should they fit can I

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fit will they fit into my portfolio

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we're going to go through all of that

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and I think I just blew out my my

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shoulder throwing a punch but I you I'll

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do anything for you I'll lay it on the

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line for you I'll get injured For You

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Stand The annuity man I'll even write

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music for you like the song I wrote

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right

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[Music]

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now so let's talk about index annuity

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and multi-year guarantee annuities

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little background on both index

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annuities they're called fixed index

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annuities FIA were developed in 1995 to

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compete with CD returns you know when CD

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returns were kind of normal that 2 to 4%

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range that's where they were put on the

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planet for now the Returns on index

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annuities are based on a call option on

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an index typically it's the S&P 500 I've

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done a ton of videos on index annuities

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if you want to dig in further and I've

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also WR written Owner Manuals both on

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index annuities and multi-year guarantee

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annuities if you go to my site the

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annuity man.com and sign up for the

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books I'm going to send you six owner

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manuals for free and under no obligation

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two of those are on index one's on index

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annuities one's on multi-year Guarantee

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annuities no one's going to call you or

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show up at your doorstep it's part of

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the education process that I believe in

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that I believe that should be part of

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the process of buying an annuity which

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you know these videos that I do the

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books that I've written I do a podcast

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called fun with annuities where we talk

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talk about annuities as well and other

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things it's called fun with annuities

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but indexed annuities are really in my

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opinion the most msold and

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misrepresented product in the annuity

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World um the pitches are sometimes too

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you know they sound too good to be true

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because they are by the way if any

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annuity sales pitch sounds too good to

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be true it is every single time there's

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absolutely no exceptions to that indexed

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annuities for whatever reason agents you

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know it's it can be a High commission

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product depending on the the surrender

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charge time period but but index an

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newes have a pretty good couple of on

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liners that aren't really true here they

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are Market upside with no downside only

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part of that's true is the no downside

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part Market upside part is not true or

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Market participation with with principal

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protection the principal protection is

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is is true the market participation and

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it's kind of saying you're going to get

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Market return no you're not okay you can

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you get that maybe one year out of a

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10-year contract maybe but the Blended

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returns are kind of a 2 to 4% range with

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index annuities now we love indexed

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annuities when you fully understand what

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they do and and how they work and the

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realistic return expectations and we

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also use them as a cost-effective and

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efficient delivery system for income

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writers and income writers another one

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of the books is in the six that I send

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you is a future pension guarantee in

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other words you turn on an income stream

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at a future date that's that's done by

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attaching an income riter to an index

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annuity so that's index annuities

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there's not one index annuity that's

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better than the other regardless of what

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the bad chicken dinner seminar guy said

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regardless of what the Saturday morning

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local radio guy said regardless of what

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the banker that showed you one index

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annuity product said there's they're

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commodity products like all annuity

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products so indexed annuities are not

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market products they're life insurance

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products they're not Securities they're

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issued and regulated at the state level

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and they're not too good to be true but

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they're pretty darn good good when you

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understand them for what they do so

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let's talk about multi-year guarantee

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annuities migas my gas that's the

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annuity industry version of a CD so for

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a lot of you out there that a CD is a

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certificate of deposit if you don't know

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what that is a lot of you out there have

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purchased CDs you go in the bank and if

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you remember the Jimmy Carter days you

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could get a 12% CD meaning that you put

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money in they're going to pay you a a

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specific percentage every single year

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for a duration that you choose whether

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it's 6 months 9 months 12 months one

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year two year three year four year five

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year that's a Certificate of Deposits

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backed by the FDIC which is the best

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backing that you can get but multi-year

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guarantee annuities the annuity industry

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version of a CD those are issued by

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annuity companies the annuity carriers

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they're backed by the full faith and

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credit of those annuity carriers there

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are State guarantee funds that back them

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as well but never never use that as part

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of your decision always base it on the

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claims paying ability of the annuity

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company and by the way the state

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guarantee fund cannot be used in a sales

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pitch so no one can say oh buy this

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because there's a state guarantee fund

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no but multi-year guarantee annuities

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you know they are the CD product they're

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going to pay a specific percentage for

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the duration that you choose no annual

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fees no moving Parts no Market

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attachments it is direct it's

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straightforward you can explain it to a

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nine-year-old no offense to

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nine-year-olds love nine-year-olds but

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you can explain to Mig they'd be like

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uhhuh I get it yeah uh-huh uh-huh pass

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me the game boy or whatever they're

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point I mean seriously they would

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understand it so the question is which

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one's better let's compare them index

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annuities versus multi-year guarantee

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annuities let's let's look at the

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similarities they both are CD products

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that are going to create CD returns they

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both have no annual fees um if you just

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buy them as a standalone if you buy the

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index new without the income riter no

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annual fees I mean they're both pretty

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straightforward from that standpoint

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you're not going to lose any money if

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the markets go down if the market just

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goes crazy and and and you know the

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your L jet hits the mountain or the

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president's L jet hits the mountain and

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there's chaos in the markets you're not

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going to lose any money with either

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either of them that's a good thing okay

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but indexed annuity salese typically

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don't show people multi-year guarantee

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annuities because index annuities

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typically have a higher commission than

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multi-year guarantee annuities now all

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commissions with annuity types are built

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into the product as my CEO points out

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it's like having the you know light bill

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water bill and commission is just all

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part of the administrative cost it's

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built in so when you put in $100,000 or

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whatever you're going to see that

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$100,000 go to work for you and yes the

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annuity agent got paid a one-time

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payment stay in the annuity man that's

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how we make a living but the indexed

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annuity side typically what you're being

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shown out there are longer term

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surrender charge products now index

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annuities do have short-term surrender

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charge products like like a five year or

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I've even seen four-year indexed

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annuities but the potential index

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returns aren't as good as when you buy

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the seven-year or 10year Surrender

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charge product now with a multi-year

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guarantee annuity you can buy at the

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time of this taping a shorter term as

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two years and sometimes in the past when

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interest rates are a little better you

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could buy a one year but two year three

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year four year five year so I think if

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your time duration and where you want to

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lock in is less less than 5 years then

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multi-year guarantee annuities are going

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to be the better choice for you because

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the the return the the yield is

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guaranteed contractually with an indexed

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annuity that return is not contractually

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guaranteed we don't know what what the

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return is going to be because it's based

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on a call option and typically it's a

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one-year call option and of course in

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the index annuity world there's there's

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two and three and four year call options

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fiveyear call options but the majority

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are oneyear call options we just don't

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know what that return is going to be be

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if the market goes down you're not going

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to lose any money if the market goes up

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you're going to be get a limited return

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um and those limitations in the industry

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are based upon what's called um

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participation rates caps and spreads

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which I've done a I've actually done a

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video just on that topic and you can go

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to the playlist down here and click

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index anties you can see that but the

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point is if duration is if if the

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short-term duration is the goal then

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migas are your choice if long-term

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durations and possibly a future income

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stream using an income Rider is your

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choice then index annuities kind of work

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can you use indexed annuities and

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multi-year guarantee annuities together

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the answer is yes let me give you an

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example I got a call the other day and

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the guy said I want to put together a a

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fixed ladder I said well do you want

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multi-year guarantee annuities do you

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want index annuity because index annu

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said let's look at both and I explained

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the fact that the multi-year guarantee

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annuity yield is contractual and the

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index annuity returns are nothing

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contractual other than you're not going

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to lose any money so what we what we

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came up with was we did a threeyear Miga

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a four-year Miga and a five-year Miga

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and then we did a seven-year indexed

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annuity so we had a ladder of three four

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five and seven no no writers attached to

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the seveny year and hopefully that

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seveny year gets a little bit more

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return than the migas do um but he

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understood that it might not but that

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was kind of the risk of of what he was

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trying to do but really there's no risk

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to the principal because the principal's

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protected but he knew that three out of

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the four of those tranches he knew the

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exact contractual guaranteed yield he

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was going to get okay but with the

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fourth one which was the index annuity

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at the seven year he didn't know he just

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knew he wasn't going to pay any fees he

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not going to lose any money he not I

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mean and he might get a little bit

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better return than the multi-year

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guarantee annuity because that's what

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it's designed to do CD type multi-year

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guarantee uh annuity type return so in

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index annuity versus multi-year

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guarantee annuities I think it really

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comes down to the duration that you want

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to lock in at the time of this taping

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and just looking at basic yield curve

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analysis five years is kind of The Sweet

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Spot they the companies are really not

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they're not rewarding you for locking in

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longer than that but they're both great

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products they both fit from a principal

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protection remember I I look at the pill

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analogy I came up with principal

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protection income for Life Legacy and

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long-term care they're both fall under

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the P for principal protection

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um neither are going to get Market type

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returns okay but I think in the in the

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part of your portfolio for principal

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protection that you just want a yield

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they fit and remember with index

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annuities if you want a guaranteed in

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income in the future you can attach an

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income writer so migas index annuities

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I've written books on both I'll send

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them to you for free you can get quotes

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on both at my site you can go to the

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live Maga feed you can request an index

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annuity quote Standalone or an index

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with an income writer quote as well um

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and we will send that to you under no

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obligation no cost you can run it 247

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hey I appreciate you joining me hit the

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Subscribe button see that right down

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that hit the Subscribe button I'll see

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