Carrier Ratings and State Guaranty Funds: Shootin Straight With Stan

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Welcome to Shooting It Straight with

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Stan. I'm your host, Stan the Annuity

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Man, America's annuity agent, licensed

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in all 50 states in Puerto Rico, founder

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of CGO, which is contractual guarantees

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only. We only look at the contractual

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guarantees of the policy. What it will

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do, not what it might do. Got a really

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angry, I think, social media post from

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somebody saying, "You're wrong about

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that." that and then like at the very

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end he's like well you're kind of right

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but you're no I mean I'm not going to

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argue with the fact that there's an

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anomaly sometimes with returns with

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annuities that provide potential. I'm

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just saying across the board if you

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looked at annuities for the contractual

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guarantees only it's a better approach

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than selling dreams because you're going

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to own the contractual realities. Okay.

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So today's topic is a really good one.

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It's about carrier ratings and the state

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guarantee fund. So, let's go backwards a

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little bit. State guarantee fund applies

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to fixed annuities. Each state has an

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insurance or financial division. Um,

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Google it if you want to see it or you

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can go to nic.com, National Association

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of Insurance Commissioners. Every state

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has a a state-run organization that

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oversees um the approval of products to

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be sold in that specific state. So, not

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all states offer the same thing. Like

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New York does not offer the same

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annuities that Texas or Oregon doesn't

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offer the same annuities that Florida

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does because it's regulated at the state

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level. Now, each state has what's called

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a state guarantee fund. Now, before you

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get all happy on me, it's not FDIC. F

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stands for federal. F stands we're going

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to freaking tax you to get the money. F

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stands for

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the best. I mean, that doesn't sound

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worth, Zeke. That didn't say that didn't

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have an F in it. But the point is FDIC

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is the gold standard. Don't go down some

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rabbit hole conspiratorial hole right

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there. But you cannot compare FDIC with

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state guarantee funds. Now, state

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guarantee funds backs up annuities and

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life insurance to specific amounts that

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are unique to each state. All right? So,

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if you want to find that out, go go to

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uh NOLHGA

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nolga.com.

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That's the National Association of Life

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and Health Guarantee Associations,

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whatever that is. But the point is you

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can put in your state and find out what

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the state guarantee fund is.

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But let's get I'm going to tell you

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something about state guarantee funds

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that you might not know. And that if

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someone's tried to pitch you anu annuity

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and mention proactively mention the

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state guarantee fund, well, you should

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buy this one because you know when you

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put it in, it's backed up by the state

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guarantee fund. That's illegal to do in

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the annuity business. You cannot

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proactively mention the state guarantee

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fund in conjunction with a

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recommendation.

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You cannot. Not many agents even know

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that. Of course, I know that. I'm

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America's annuity agent. Of course, I

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know that.

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But no one can bring up the state

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guarantee fund proactively and say,

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'Well, you should buy the state

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guarantee fund backs it up. Now, if you

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brought it up to me, Stan, explain the

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state guarantee funds to me. Then I'm

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going to do that because you've asked.

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I've not brought it up. That is legal,

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but you cannot use it to sell annuities.

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That should tell you all you really need

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to know. Now,

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have I seen companies be absorbed by the

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state and the state guarantee fund? The

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answer is yes. In my three decades plus

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out here, I've seen I've seen it. I've

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seen three. All right. I've seen three

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that I was familiar with. There's more

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than we weren't they weren't on my radar

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screen. Even though I guess everything's

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on my radar screen, but like tiny little

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companies like Sinking Sands of Texas,

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that's not a company, but I made that

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up. is um actually actually an

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ex-conultant of mine made that up. I

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mean we don't follow that but there's

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been three that's been absorbed. All

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three of those companies

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all three 100% of the client's money was

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returned to the client. All three.

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So I'm not saying the life insurance

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business is foolproof and the state

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guarantee fund is the greatest thing

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since sliced bread. It's not.

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In my world of truth and and brutal

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facts, annuities

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are confidence products. So in other

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words, you have to have confidence to

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give the money to the life insurance

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company that's issuing the annuities.

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Okay? Because you're transferring that

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risk to the life insurance company

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issuing that annuity contractual

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guarantee.

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If companies went out of business, then

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the confidence would be lost and the

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industry would be in trouble.

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All right? So, state guarantee funds, I

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glance at them. I'm glad they're there.

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I think it's nice. I've seen them three

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times in my 30 plus year career come

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into play and and and make the clients

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whole. I've seen that. Okay. I've seen

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it. So, that's good.

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But it really comes down to the claims

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paying ability of the carrier. Which

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leads me to the other part of this topic

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on shooting it straight with Stan, which

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is carrier ratings. Now there are four

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primary rating services that that I

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follow for the annuity man. Standard

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pores ambest Moody's and Fitch. We do

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not follow Weiss for a lot of reasons if

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you want to call me and not going to put

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them down. Great people I know I know

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them from the speaking circuits back in

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the day but we don't use them. Okay. So

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when those four rating services give a

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rating again am best standard pores

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Moody's and Fitch we go okay that's good

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but it's nothing more than opening the

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door for me and some people I have on

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retainer to look at the financials

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because it all has to do with the

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financials. So carrier ratings they are

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important but we go deeper than that

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from a risk mitigation standpoint and a

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recommendation standpoint. Not only are

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we looking at the ratings, not only we

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looking at the claims payability of the

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carrier, we're also looking at how they

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do business. Are they good to do

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business with administratively from our

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standpoint, the client standpoint? And

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there are some highly rated companies

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that we no longer use until they get

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their administrative side cleaned up

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because it makes no sense to work with

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them. We're not going to be on hold for

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four hours with these companies. They

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they have to staff up. But when we look

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at ratings, I always say A+ or better

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for lifetime income. A+ or better, you

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don't need a sweater is what I say. But

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with that, we're also looking under the

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hood. Not going to mention the company,

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but there is an A+ or better that we're

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not recommending right now due to the

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private credit situation that's going

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on. And yes, I am aware of that.

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Remember, I used to work with Dean Wood,

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Payne Weber, Morgan, Stanley, UBS,

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worked on Wall Street, World Trade

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Center 2 before it fell. Been there,

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done that. that side of the ledger. So,

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there are some companies that are we're

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watching, okay, we're watching companies

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that

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[snorts]

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um are a little bit exposed to this

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private credit. Only Wall Street could

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come up with private credit after the

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housing debacle to mess it up again. I

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hope that's not the case. Okay, so we're

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watching that. We're also watching

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companies that my good friend at the

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retirement income journal, his name is

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Carrie Pector, very smart person, very

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honorable person, has been looking into

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what he calls the Bermuda Triangle,

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which is companies that do some um

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offshore accounting through through

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other comp countries like Bermuda,

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Bahamas, whatever. He's he's got a close

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eye on that. We have a close eye on

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that. So, what we do at the company at

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the annuity man being the being the

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leader out here is we list all carriers.

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We show you all contractual guarantees

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with with all companies. Now, there are

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a couple that I've removed that just

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don't pass the sniff test from the

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standpoint of size. I always say, Stan,

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why isn't this company on there? I said,

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because I can buy them. If I could buy

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the company, I'm not going to recommend

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them. Okay? They have to be of size.

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There's a lot of small companies out

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there that are popping up that they have

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to get a lot lot bigger before I will

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recommend them to my clients. I take

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this serious, okay? We have a

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quadrillion clients and manage multiple

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billions. But I I look at every case.

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I'm involved. I'm I'm down in it. I like

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what I'm doing. But the ratings we are

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that is a door for us to look at. Now,

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let's talk about the state guarantee

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fund and the ratings. I got a call the

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other day and and there was an immediate

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annuity recommendation. It was with an

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A++ carrier and there's not many of

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those. There's a handful of those. A++ a

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lot of them are mutual companies. And

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the person said to me, should I should I

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be worried about A++?

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And my comment was, and this is true,

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listen in. Listen,

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if an A++ carrier goes out of business,

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hug hug your loved ones. Love the one

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you're with. As Crosby steals, Nasty and

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Young said that in the song, it's a wrap

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player. If an A++ carrier goes out of

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business, we're screwed as a country.

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We're screwed. And if you don't believe

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that, believe it. Well, it could happen.

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Well, if it does, we're screwed. How

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about that? So, A+ or better, you don't

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need a sweater for lifetime income. And

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the reason we say that for lifetime

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income is that with AI that short that's

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shortening the medical breakthroughs and

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which means that life expectancy tables

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are going to lengthen out which means

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the payments are going to be lower. You

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better get with a good company because

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you might live to 129. So A+ are better.

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Now with MAS or fixed rate annuities

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we're dating the rate. We're not

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marrying the rate. We're dating the

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rate. It could be a little bit less than

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A+ or A++. Could be A minus. In some

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cases, it could be even B+ with a

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specific MIGA that I sign off on. Okay.

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But the A++ carriers, the big boys are

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really the state guarantee fund. Who do

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you think puts money in the state

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guarantee fund? Guy said, "Well, there I

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want to get two A++ carriers. Should I

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put both of those under the state

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guarantee fund?" Only if you want to

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wear belt and suspenders to the family

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reunion. Yeah, I guess you can do that

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if you're if you're if you have a

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pacifier at night to sleep, but you

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don't have to do that. All right, the

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state guarantee fund is there because

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they're confidence products and for

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certain situations like the three

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companies I talked about that have been

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absorbed by the state guarantee fund

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that gave 100% of the money back to the

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every single person, every single

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client.

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You just don't you you can't get that

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granular. Okay, just but the fact that

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that you can't mention state guarantee

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fund in a sales presentation or a

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recommendation should tell you all you

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really need to know and the big boys are

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going to make sure that some idiot

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running a small company is not going to

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ruin the confidence golden goose. Okay,

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so just understand that. So when it

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comes to carrier ratings and it comes to

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and it comes to state guarantee funds,

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state guarantee funds, we will talk

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about it if you ask us about it on a

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video like this that I'm proactively

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telling you about it, but I'm not

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recommending it. I'm telling you how to

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use it. But guarant state but but for

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the carrier ratings, that's an entry for

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us to go look even further at what

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they're doing.

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And if you see a quote on on our on our

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site and you schedule a free

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consultation,

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there could be a time where I'm saying

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to my team, do not recommend that

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company. I need more information on that

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company. Or do not recommend that

11:34
company because I found something I

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don't like. So you said, why'd you show

11:37
it? Because we show everything.

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Annuities are commodity products. The

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reason you come to us is because a

11:44
experience is going to be a positive

11:45
one. the client experience from the

11:47
application standpoint. We take care of

11:49
everything from start to finish. But

11:51
primarily is you want to make sure that

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Stan the annuity man himself is actually

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looking at this stuff and not just

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selling anything or recommending

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anything. And I'm not. I'm looking at

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it. So with that being said, all of

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that, please go to my site at

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theanuityman.com, run quotes to your

12:09
heart's content, download my free owners

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manuals, watch more videos. the the

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search bar uh on the site if you type in

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anything spas whatever it's going to pop

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up all the videos and articles I've

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written I've written over 400 articles

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as well but you can email me and get to

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me not AI stand real Stan st stand

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stantheanuityman.com

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shooting it straight with Stan and I

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shot it pretty darn straight right Zeke

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Zeke behind the camera he's nodding his

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beard's in the way but he's nodding see

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you next