Can You Convert A Life Insurance Policy Into An Annuity?

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Hi there. Stan The Annuity Man, America's annuity agent,

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licensed in all 50 states and Puerto Rico. Today's topic's an interesting

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one. Can you convert a life insurance policy into an annuity? Can that work,

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Stan? How does it work, Stan? Please tell us, Stan. We want the facts, Stan. Okay, after this.

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So, can you convert a life insurance policy into an annuity? Not all life insurance policies can

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be converted into an annuity, but you can take some that have what's called cash value. Indexed

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universal life, whole life, those type of policies can accumulate cash value.

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Now, if you do not want that cash value and you're okay with the death benefit

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being reduced by that cash value being taken out, you can do what's called a

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1035 exchange from the life insurance policy directly to the annuity that you choose and

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that we tell you is right for you from a fiduciary standpoint, putting your

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interest ahead of ours, which is always what we do and is what everyone should do.

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So, 1035 refers to the IRS code, if you're so bored, that says you can transfer from one life

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insurance product to annuities or life insurance, whatever, without tax consequences. It doesn't

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trigger any taxes. So, you can do that. I mean, and we can help you, and we do it a lot.

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The question is why? You know, we're not just transactional to be transactional. We want to

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know what's the goal. What are you trying to solve for? Is it in your best interest?

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You know, because I'm not a life insurance guy, but cash value, you know, it's great,

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I guess. It's missold. A lot of people out there selling life insurance are selling the ones that

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can create cash value. They're selling it as tax-free income, which could be the biggest

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lie in the life insurance and annuity industry. I'm serious. I mean, I hear this all the time.

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"Well, I'm getting tax-free income from a life insurance, Stan."

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No, you're not. That's a loan. A loan is not income.

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"Well, yeah, it is."

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Okay, great. Let me give you an example. You take a loan out from the bank and you

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get money from the bank from that loan. Is that income? You're going to say, "Nope,

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that's not it." But the second I say, "You got cash value in a life insurance policy and you

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take money out. Is that tax-free income?" You're going to say, "Yep." Nope, it's not. It's a loan.

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Nothing wrong with that if you understand it's a loan. But for people out there, oh my God,

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some of the worst sales pitches I hear, you know, from my clients who call me, is saying, "You know,

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I'm getting tax-free income from a life insurance policy." No, you're not. That's a loan, player.

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Now, you're talking about hypothetical, theoretical juice numbers. Oh my gosh,

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crazy. It's nuts. So, be careful out there.

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But let's just say, you know, you have the cash value and you're wondering why it's

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there. What are you doing with it? We're going to ask you the two questions: What do you want

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the money to contractually do? When do you want those contractual guarantees to start?

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Let's say, hypothetically, you say, "You know what? We really need legitimate lifetime income

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for the rest of our lives." And you want it to start now. That's an immediate annuity. So,

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we would shop all A+ or better immediate annuity carriers. We structure it the way you want to

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structure it, put whatever backstop you want in there to protect all the money, and then the

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transfer goes from the life insurance company to the immediate annuity company. Non-taxable event.

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If you said, "You know what? We don't want the cash value anymore. We just want to protect

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the principal." Great. Then I think a MYGA, multi-year guarantee annuity, would be the

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choice. It's the annuity industry version of a CD. We choose the duration, we talk about it,

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and then we do the transfer from the cash value to the MYGA company. Non-taxable event.

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What we're not going to allow you to do is buy dreams. You're going to buy contractual

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realities. You're going to own an annuity for what it will do, not what it might do.

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So, the IRA money is qualified. Non-IRA money is going to have to go to a non-qualified, non-IRA

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source over here from the annuity standpoint.

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Can you do it? Yes. But the bigger question is should you,

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and why are you doing it? And what's the goal? And then it's our job at The Annuity

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Man to quote all carriers to show you the highest contractual guarantee for your specific situation.

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Give you all the information that you need. I've written six owner manuals on

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every product. You can go to my site and download them for free. You can email me,

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[email protected]. And if you want me to take a look at your

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life insurance policy with cash value, send an email, [email protected].

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You can also schedule a call. And if you want me, you can get me. For these types of cases,

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I probably get involved because I want to make sure you're doing the

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right thing. And I don't want you to leave something good. If it's good,

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I've been in the business long enough. I can look at it and go, "That's not bad. Stay there."

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I don't need the money. We manage billions of dollars. I mean, I'm doing this to do the right

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thing. I'm doing this to squash bad sales pitches. I'm doing this to change the industry. And I will.

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In three years, the industry will sound just like me. Just like me. Everyone, you'll be like, "Man,

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they all sound like Stan." Well, not as good, not as Southern, but they'll be saying the same thing.

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So, can you? Yeah, you can. You know, let's start the process by you sending me your

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recent life insurance statements showing the cash value. Then we get on the phone

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and we talk about the goals you are trying to solve, and then we solve them. Quote all

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carriers. Annuities are commodity products. We're going to find the highest contractual

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guarantee for your situation. It's real simple. Once we get to the goal side, it's real simple.

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So, go to my site. You can run quotes 24/7. Download the books.

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And do me one last favor. Above my head is a spinning clock. I did a pretty cool

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video on inflation and how it really works using annuities. Not the sales pitches,

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not the hypotheticals and the non-guaranteed illustrations that are complete garbage. I'm

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talking about contractually. How do you do it? How do you solve for inflation when it comes?

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Hyperinflation when it comes. How do we plan for it? What's the trigger point? How does it work?

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I go through all of that because you need to know so you won't fall for the

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sales pitch. There's not an annuity out there that magically floats to address

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inflation. I know the RILA people and the indexed people tell you they

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have it. They don't. They know that. They just want to sell you something.

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I want you to be a long-term client. I want you to be here, you know,

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when I'm, I was kidding the guys behind the camera, when I'm, like, 10 years from now,

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72 years old, and I've got the cane, but it's like gold-encrusted with the Annuity Man logo.

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You know, I'm still doing it. I'm still going to do one video a day until I fall down and die.

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So, if you stop seeing original videos, just say, "Oh my God, he died. Oh, that's too bad." Because

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that's the plan. That's the legacy plan. The princess and the queen and the two princesses,

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my daughters, they're going to be fine. They're good. My grandson's good. Everything's good.

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But I'm on a mission, and I'm competitive. So,

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guess what? It's game on. It's annuity game on. See you next time.