Are Fixed Index Annuities for You?

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hi there Stan the annuity man America's

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annuity agent licensed in all 50 states

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so glad you joined me do me a favor and

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these videos um informative they're not

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stumbled ac across us welcome if you're

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one of our 10,000 plus subscribers at

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the time of this uh taping thank you so

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much and we really enjoy doing these for

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you and this is a topic

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today that's going to inform a lot of

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people it's going to save a lot of

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people from bad decisions it's hopefully

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going to help the industry because I

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like doing that because this product is

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causing some issues and the the topic is

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are fixed index annuities for you should

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you own one should you consider owning

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one now like all annuities they're

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contracts and we need to talk about what

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those contractual guarantees do with the

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policy but this is the fixed annuity

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type that gets over promoted oversold

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over promised

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overhyped for a myriad of reasons we're

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going to go through all that in a

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rational non- yelling non-emotional I

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know you're saying really St

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non-emotional way because it's very

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important right now for you to

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understand this so our fixed index and

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anties right and appropriate for you

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should you consider them let's get into

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that but not until I hear some tunes

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all right so let's do a little bit of a

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history lesson fixed index annuities

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were first put on the planet in 1995 as

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a

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solution um and a competitive product

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against CDs certificates of deposits so

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the back then in 1995 and yes I was

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around was we want to create something

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that might get a little bit better than

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CD returns but that not not a market

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return product now that's where the

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problem starts right there too many

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agents and advisers are promoting fixed

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indexed annuities as market products

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they are not they are life insurance

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products they're fixed annuities they're

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not market products they're not overseen

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by the SEC and finra but I'm going to

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tell you if if the sales pitches

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continue the way they are they will be

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because you have the bad chicken dinner

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and the Stak dinner bad good stake

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dinner seminar people talking about

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Market upside with no downside Market

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participation with principal protection

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all that sounds fantastic and my comment

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to that is if they were that good that's

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all Goldman Sachs and JP Morgan and in

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our government would buy if you get

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Market upside with no downside and some

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of the sales pitches are crazy well if

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You' owned it 10 years ago look at these

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juic numbers you to you to own in a lot

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of States you can't even show those

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numbers okay what you need to know about

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the index annuity world is it's not a

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bad product we're not against index

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annuities we primarily use them at this

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point in time for the for the income

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writers that you can attach to index

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annuities at the time of app application

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to solve for income in the future

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because the income riter is a

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contractually guaranteed lifetime income

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stream you could set up you know single

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life or joint life but it rides on top

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of income Rider rides on top of the

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index annuity we really don't look at

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the index annuity now index anties are

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very can be very complex the strategies

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they use are index

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options right there we're getting into

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the weeds okay and the the limitations

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on the upside are are surrounded by

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three things caps spreads and

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participation rates now I've done videos

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on caps and spreads and participation

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rates I've written a book on fixed index

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annuities a fixed index annuity owners

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manual you can read that for free on my

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site at the annuity man.com I've done a

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ton of videos on index annuities and the

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intricacies of them but what you need to

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understand about the index annuity space

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and when I say mo most index annuities

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not all

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most can change the way the gains the

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potential gains are calculated every

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single year at their discretion those

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caps and spreads of partici and

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participation rates and other words if

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you bought a 10-year surrender charge

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you're really buying a one-year

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guarantee with a 10year surrender charge

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because years 2 3 4 5 6 78 and

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nine uh and 10 can be changed at the

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discretion of the annuity company so

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those are called renewal

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rates which kind of brings me back to

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the my whole premise about annuities in

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general if you cannot explain the

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annuity to a 9-year-old or a group of

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second graders no offense to either one

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of those whether it's a group of second

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graders including their teacher and a

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nine-year-old then never buy it if you

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cannot explain it don't buy it if you

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don't understand it don't buy it who am

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I echoing right there Warren Buffett

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that's what Warren Buffett does he

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doesn't buy anything he doesn't

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understand he said was that true yeah he

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owns Coke he owns candy he owns afflac

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he he owns those type of companies I he

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might not own them now but he used to

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the point is he understands how they

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work most agents and advisors showing

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you index annuities could not explain

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the Caps the spreads and the

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participation rates all I'm going to

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tell you is this if it sounds too good

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to be true it is every single time okay

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the good news about index annuities if

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you do have a gain that's like that that

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you achiev during that contract

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anniversary that you have contract

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anniversary date to contract anniversary

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date and it's locked in it's locked in

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permanently great okay but here's the

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kind of the conundrum the rub is at the

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time of this taping there's over

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750 probably more now indexed op option

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choices

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750 and they're all pretty much designed

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to create the same type of

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return that doesn't make the index

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annuity space bad if you go into an

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indexed annuity and say you know I'll be

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fine if I get a 2 to 5% return I'll be

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fine with that I'm happy with that then

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you're going to like them but if you go

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into an index annuity and the sales

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pitch is you're going to get seven to 9

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to 10% every year year after year after

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year you're not going to be happy okay

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because that's hedge fund type returns

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that's private Equity type returns

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that's family office type

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returns all right and there's no with

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those type of of of entities that are

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managing money I mean there's no

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principal protection they're taking risk

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to get those returns you have to be

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smart you can't be the rub of the table

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you can't be the sucker at the table so

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are index annuities right for you they

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might be if you need income later and we

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attach an income writer to it they might

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be if you want two to 5% return and

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you're okay with that if you get more

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great super but that's the average okay

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but don't go into these thinking you

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have one uped your um neighbor you found

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the perfect product that no one else

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know about no everyone knows about it

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they've been out since 1995 the other

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thing I'm going to warn you about is

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this if someone approaches you with an

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index annuity and leads with oh by the

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way if you sign the paperwork you're

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going to get an upfront

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bonus you can't be that stupid ple

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please tell me you're not that stupid

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there's no philanthropist of anity

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companies these are for-profit life

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insurance companies that issue the index

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annuity there's a 100 pennies in the

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dollar if they're giving you an upfront

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bonus there's a catch they're taking

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something away from the policy does make

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it bad and when we quote income writers

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remember the income writers that

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attached index news when we quote those

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we quote all carriers that includes

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bonuses not bonus it doesn't matter to

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us it's all part of the contractual

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guarantee but please don't put any any

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any weight on that upfront bonus I call

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upfront bonuses take this the right way

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candy for the stupid because if you are

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that stupid to believe that you're

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getting free money from a life insurance

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company then you're the rude that that

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agent or adviser is looking for please

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don't be that stupid please don't be

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that Gul

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buy an annuity for what it will do not

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what it might do and if we're looking at

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the contractual guarantees of the policy

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and that upfront bonus is just part of

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the overall contractual guarantees then

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fine but don't call us and say well I

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just I just got a 25% free money upfront

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bonus no you got taken you got lied to

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you got misinformed I'm not to say lied

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to misinformed you were semantics you

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you were believing that you're getting

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something that you're really really not

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I just need you to put on your realistic

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expectation Happ

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when it comes to all annuities there's

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many different types index annuities are

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fantastic if you understand that they're

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a CD product that you can use for that

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for principal protection and lock in

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again if you get it you might not get it

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but if you do it's locked in and you can

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attach an income writer to that index

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annuity for Lifetime income now once you

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say Stan I want an income down down the

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road then we're going to shop all income

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writers the index annuity is relevant

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and in fact if you say St what's the

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best index there is no best there really

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is no best I mean there's I know that

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there's agents advisor they'll argue

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against that but I think one of the

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problems that we're having in the

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industry right now is too many times

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commissions Drive the recommendation and

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commissions are built into all annuities

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whether it's an immediate annuity

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deferred income annuity qualified

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longevity annuity contract multi-year

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guarantee annuity um index annuity

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variable annuity uh it doesn't matter

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they're all built in you never see the

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commission it's built in as paid from

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the reserves but index have historically

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been one of the higher commission

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products doesn't make it a bad product

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doesn't make it a bad product but that's

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the reason that it seems like and I get

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these calls all the time why is every

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single person locally trying to sell me

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an index annuity stand why is that

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they're not listening to me that's

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unfortunately probably the reason maybe

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it is maybe it isn't um there's some

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other reasons as well that incentives to

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sales and things like that trips and all

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that stuff that I just really do not

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like I wish the industry would get rid

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of but just be careful out there

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you know if I can say one thing be

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careful when it comes to index annuities

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own an annuity for what it will do not

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what it might do do not believe the

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sales pitch do not believe the back

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tested numbers they show you do not fall

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for The Upfront bonus buy it for the

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principal protection buy it for a CD

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type return and buy it if you need

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lifetime income attaching an income

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writer going to my site at the man.com

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and running income writer calculator

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quotes index and noties we have no

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problem with them what we have a problem

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with is the way that too many of them

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are pitched and sold be careful out

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there go to my site at theanu man.com

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schedule call with us hit the Subscribe

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button and I'll see you on the next

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