Does The Annuity Man Hate Indexed Annuities? Q&A With Stan

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Hi there, Q&A with Stan. I'm Stan the

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Annuity Man, America's annuity agent,

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licensed in all 50 states. Question of

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the day is, do you, the annuity man,

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hate index annuities? And the answer is

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no. I do not hate index annuities. I I

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was around back in the day in 1995 when

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they were first introduced. What I do

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hate is how they're sold. What I do hate

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is how they're promoted and how agents

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will literally, I don't want to say the

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word lie because but it's close, um,

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push the facts to get someone to sign

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the paperwork. Now, index annuities were

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put on the planet in 1995 to compete

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with CD returns, not market returns. It

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is not a market product. It is not a

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security. It's a fixed annuity issued by

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a life insurance company and approved at

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the state level. Okay? It takes a life

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insurance license to sell indexed

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annuities. Index annuities are not

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one-sizefits-all. The the sales pitches

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you're going to hear, and you've

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probably already heard if you've been to

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the expensive steak dinner seminar,

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market upside with no downside.

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principal um principal protection with

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market participation. Only one of those

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things in each of those statements is

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true is principal protection. Okay,

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you're not going to lose any money. It's

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a fixed annuity. But the what where

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they're pushing the envelope, they the

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agents is market participation, market

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upside with no downside. The no downside

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is is absolutely true. The market upside

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is is a push. You'll be shown, well, if

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you'd owned it 10 years ago, Mr. Jones,

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look what you would have made. Well,

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those are what's called back tested

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numbers. I wish those were illegal in

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the c in this country because they're

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misleading. Um, a lot of index annuities

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can the the carrier can change the rules

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on how the credit how the the the gains

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can be credited and those are, you know,

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the the caps, the spreads, the

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participation rates, all that nonsense,

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all those levers. Um, they can change

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the rules, but we don't we don't dislike

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them. We use them as an efficient

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delivery system for income writers at

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this time at the time of this taping. If

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you want income writers for income later

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and contractual guarantee, income

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writers ride on top of a policy. And the

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most efficient way to do that is with an

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in index annuity. We just ignore that

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side because it's going to get CD type

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returns. Now, um

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hopefully in the future there will be

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some index annuity products that I will

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personally sign off on um and say, "Hey,

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I like this. It's proconsumer. They

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can't pull the rug out from under you,

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etc." And I'm sure that will happen.

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going to get calls every day, but as we

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do a deep dive into most of them, it

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just doesn't fit our parameters. That

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doesn't mean they're right or wrong.

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It's just that we sell contractual

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guarantees. At the annuity man, you own

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an annuity for what it will do, not what

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it might do. And the indexed annuity

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side is all about might do, not will do.

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So, we're trying we're we're working

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with some carriers hopefully to design a

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product that that actually I would sign

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off on. The other thing I don't like

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about the index annuity space at this

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time is a lot of agents use these

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upfront bonuses to attract people.

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Listen, there's no philanthropist and

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annuity companies give money away. Okay?

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They're capitalist. So, if they're if

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they're doing the upfront bonus um and

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and you go, "Wait, that sounds great."

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Of course it sounds great. Um it's like,

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"Hey, take this pill and you get

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six-pack abdomen muscles in in one day."

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You'd like that, right, Zeke? Zeke's

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behind the camera. Zeke's like, "Where's

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that pill?" Don't have it. And the bonus

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isn't in essence real money. It's just

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part of the overall contractual

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guarantee. Doesn't make it right or

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wrong or good or bad. But you don't

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focus on it. You, you know, you shop,

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you always shop annuitities because

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they're commodity products for the

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highest contractual guarantee in my

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opinion. But I don't hate index

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annuities. We we sell a lot of them

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because they we're selling a lot of

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income writers when people need income

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later and we're quoting all carriers for

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those highest contractual guaranteed

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quotes. But what I really hate about the

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index annuity space right now is that

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agents overhype them and and they try to

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do a one-sizefits-all.

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Um or they'll say the income writer has

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long-term care attached to it. Well,

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that's impossible because long-term care

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is a health insurance product. There's

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confinement care, but that's a whole

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another story. um they just need to tell

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the truth, the brutal truth, because as

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I tell people with index annuities,

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don't buy the dream because two years

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later you're going to figure out you own

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the contractual realities. That's okay

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if you understand the contractual

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realities, but if you if you think

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you're getting a market product, um

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you're not. I always tell people if the

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sales pitch was as good as you heard

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with index annuities, don't you think

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that's all Goldman Sachs and JP Morgan

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and UP UBF, not UPS, but UBS and and

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Morgan Stanley and all those would

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that's all they'd buy, right? Market

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market principal protection with market

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participation. Come on now. That sounds

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pretty good. Yeah, it does. Because it's

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too good to be true. And with annuities,

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if it sounds too good to be true, it is

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every single time. Do I hate index

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annuities? Absolutely not. They're good

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CD products. Okay, they really are and

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we can discuss them if you want to

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discuss them. But what I really hate is

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how they are currently sold and promoted

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and overhyped.