Comparing MYGA Interest Rates to SPIA Rates

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Welcome to Shooting it Straight with

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Stan. I am your host Stan the Annuity

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Man, America's annuity agent, licensed

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in all 50 states. Recently had one of my

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team members had a call where a

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gentleman was trying to compare MGA

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multi-year guarantee annuities. Those

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are the CD versions of ANU. That's

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that's that's the CD annuity is really

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what it is. It's a guaranteed interest

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rate on a on for a specific period of

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time on a principal protected product.

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no market attachments, no annual fees,

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no moving parts. If you purchase a CD,

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then you're going to be very happy with

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the MIA. Okay? But also, he wanted to

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compare it to a single premium immediate

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annuity, which is an an income product.

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So, we're looking at a principal

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protected product and an income product.

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Now, right there, you should say, I'm

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not sure we can compare those two stand

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because two different categories.

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Remember the pill, principal protection,

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income for life, legacy, and long-term

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care. That's the acronym I use to see if

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you even need an annuity to determine if

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you need an annuity. Let's do it slower.

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Principal for principal protection,

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income for life, legacy, long-term care,

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pill. If you do not need to solve

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contractually for one or more of those

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items in the pill, then you do not need

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an annuity. And we also break it down

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even simpler. Two questions. What do you

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want the money to contractually do? and

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when do you want those contractual

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guarantees to start? So, let's go back

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to the question of this gentleman that

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talked to the team member. All right, we

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get X percentage and just just for

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conversation's sake, let's just say the

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the multi-year guarantee annuity

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guarantees 5% for five years. Just as an

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example, okay, if you go to my site at

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theanuityman.com, you can pull up the

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live MGA feed for your specific state

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and you can see what the real rates are.

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For this purpose and example, the MIGA

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is 5%. But this gentleman said, "But

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wait a minute,

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Johnny Apple Seed agent, local agent

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trying to sell me an immediate annuity

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and tell me I'm getting a 7.2%

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interest rate on the immediate annuity."

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What's the What's the truth on that,

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Stan? The annuity, man? Well, here's the

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truth. The multi-year guarantee annuity

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interest rate is a true interest rate.

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And when I when I say that meaning that

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the the principle is not disrupted even

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if you pull off that interest if you let

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it grow it'll grow and compound tax

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deferred. So that 5% in this example

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that's real yield. Say it again. Real

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yield. That's what that is. Now Johnny

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Apple Seed agent talked to this

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gentleman about a 7.2% SPIA single

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premium immediate annuity which is a

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lifetime income product. What's that 7.2

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2% mean? Well, it's very disingenuous

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for that agent or any agent or advisor

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to talk about yield

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on a single premium immediate annuity.

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That 7.2% is really a numerical

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reflection of that gentleman's life

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expectancy. So with immediate annuity

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with the payments that you get there for

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life, that's a combination of return of

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principal plus interest. So over here

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with the MA, if you wanted income, you

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just peel off the interest, never touch

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the principal. That's yield. With the

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immediate annuity, that's 7.2. That's

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not yield. You're turning on a lifetime

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income stream. It's going to pay you for

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life of the [snorts] policy, but that's

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7.2 in this case represents his

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numerical life expectancy. It's not

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yield because you're getting your your

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principal back with interest. And the

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value proposition here is you're you're

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telling the annuity company, I think I'm

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going to live longer than you think I'm

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going to live annuity company. And if I

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do, you the annuity company, you're on

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the hook to pay for as long as I'm

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breathing. That's the value proposition

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of immediate annuity. People say,

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"What's the ROI on that stand? What's

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the return on investment?" I don't know

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that until you die with an immediate

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annuity. So 5% MA yield, 7.2%

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on a SPIA, apples and oranges. We are

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not comparing the same thing and you

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can't compare the same thing. All right?

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So, be careful out there. There's some

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sites that somehow have the audacity to

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compete with the annuity. Man, I know

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what you're saying. You're saying,

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"Well, I don't I don't even know if

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that's possible." It's not possible, but

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one of the kind of bait and switch

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things that they'll do is you'll run a

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SPIA quote on their site, which would be

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crazy because you should run them on our

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site. But let's just say you went over

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there, your brother-in-law works over

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there, and you ran the thing, and beside

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the pay, beside that dollar amount per

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month, they had this percentage. Ignore

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that. Call them up and say, "Don't do

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that." Because people think, "Well, I'm

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getting a 7.2% spar." No, you're not.

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You're getting a lifetime income stream,

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and that percentage that you see is a

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numerical reflection of your life

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expectancy. Now, wasn't that fun?

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Simple, easy to understand in plain

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English. Standing nud man, bringing it,

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bringing the brutal facts. If you want

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to talk to one of my team members that

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actually answered that question very

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well, but it became a video because most

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good things in life become video in my

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world. That's the world that I live in.

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But, you know, go to my site at

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theanuityman.com. You can check live

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mega rates. No one's going to call you.

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You can quote SPAS and DAS and QAX and

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income writers and all that stuff for

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the contractual guarantees. Why? Because

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you own an annuity for what it will do,

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not what it might do. My name is Stan

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the annuity man.

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See you next time.