Fixed Indexed Annuities Explained (Encore Presentation)

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Fixed indexed annuities explained. No,

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this isn't going to be a two-hour long

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video, but it could be if I was going to

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explain every nuance of fixed indexed

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annuities, index annuities, hybrid

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annuities, whatever you're being

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pitched. Here's the good news. I've

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written a book on it, the indexed

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annuity owners manual that I'll send you

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for free and under no obligation. Just

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go to my site at theanuityman.com

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and I'll ship it to you. But let's get

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down to the topic. Let's get down into

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the meat of the matter of index

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annuities, but not until I hear music.

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So, what is a fixed index annuity? It's

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very simple. It's a fixed annuity. It's

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not a security. It's regulated at the

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state level. But in ence, a fixed index

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annuity, a FIA, FIA is the acronym, was

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introduced in 1995 to compete with CD

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returns. It is a CD product. So I know

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that people out there in the hinterlands

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of the annuity world, the internet, the

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bad chicken dinner, seminars, whatever.

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They're pitching index annuities as

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market return products. They are not.

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They're CD return products. They're also

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a very efficient and cost-effective way

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to deliver an income writer guarantee

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for future income needs. Indexed

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annuities can be very complicated.

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Currently, at the time of this taping,

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there's over 700 index option choices

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available to you. indexed annuities. I

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certainly am not going to go through

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every single one, but in the book that I

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showed you at the intro that I want you

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to get for free and under no obligation.

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I go through a lot of the ones that are

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out there and also clearly and simply

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explain the caps and the spreads and all

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of that participation rates, all of that

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mumbo jumbo jargon that you hear when

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people pitch you index annuities. But at

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the end of the day, a fixed index

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annuity is a CD product. So what is the

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downside of fixed index annuities?

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First, let's start with the upside. The

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upside with a fixed index annuity is

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that is fully principal protected.

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You're not going to lose any money from

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stock market girrations, etc. That's a

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positive. Another positive is any gains

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that you earn with an index annuity is

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locked in permanently at that contract

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anniversary date. So, those are some

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great things. In addition, another

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positive, as I mentioned previously,

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it's a very efficient and cost-effective

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delivery system for an income writer

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guarantee. That's primarily how Stan,

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the annuity man, America's annuity

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agent, uses index annuities, but is a

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good product when people fully

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understand how it works. Not the sales

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pitch and the pie in the sky and the

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unicorns changing the butterflies

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presentation that everyone's giving out

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there, which is market upside with no

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downside and principal protection with

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potential market upside. All that yummy,

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you know, catchphrase nonsense. Just

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remember if it sounds too good to be

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true is I think the disadvantages of

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indexed annuities are that you are not

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going to get market returns. It's not a

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market return product. It's not a

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security. It's a fixed annuity regulated

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at the state level. The other thing that

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I think is a negative is that for

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instance, when you buy a 10-year

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surrender charge fixed index annuity

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that has one-year call options on the

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index part, you're in essence buying a

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10-year surrender charge with a one-year

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guarantee because the annuity companies

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can change the way the caps and spreads

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and participation rates, they can change

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the way those are calculated at their

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discretion. So, one of the things that

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you need to be aware of is what's called

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renewal rates. And some companies are

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very fair to the customer with that.

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Some companies just seem historically

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not to be. We can walk you through all

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of that. But as long as you have in your

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mind that it's a CD type product, you're

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going to be fine. When people get in

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trouble with index annuities, one of the

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disadvantages is obviously how it's sold

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and pitched and presented. I do not

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blame the annuity companies. They can't

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regulate how people are, you know,

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trying to sell their product. I mean,

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there's just no way. That's like if you

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went to a car dealership and the guy

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saying, you know, this little uh Ford

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Pinto can climb mountains. No, it can't.

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I mean, but you know, Ford can't say

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that. Car salesman, you can't say that.

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Same thing in the annuity industry. You

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know, to sell indexed annuities, you do

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not need a securities license. You only

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need a state life insurance license. So,

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a lot of people out there that are

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selling them have never been in managing

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real market assets, etc. So, you really

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have to be careful. Don't believe the

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sales pitch. I would encourage you to

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get my book, schedule a time with me. If

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you want to see a quote, we can go over

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the quote and I can fully explain it to

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you in very easy to understand terms.

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There's advantages to index annuities

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and there are disadvantage to index

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annuities just like with every single

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annuity product, but you have to know

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both before you make a good decision.

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So, what is the difference between a

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fixed annuity and a fixed index annuity?

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You know, I was talking to my team

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before we went in to shoot this and

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they're giving me all these examples and

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of course I can't remember anything. You

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know, I'm on the fly, man. I'm just

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riffing here. But what you have to

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understand is a fixed index annuity is a

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fixed annuity. The fixed annuity

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category is fixed index annuities,

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multi-year guarantee annuities,

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immediate annuities, deferred income

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annuities, qualified longevity annuity

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contracts. Those are all fixed

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annuities. So, a fixed index annuity is

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a fixed annuity. Let me see if I can

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remember how that my team explained it.

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And my CEO, she's so smart, but I can't

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remember what she said. But hold on, let

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me see if I can pull it. All thumbs are

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fingers, but not all fingers are thumbs.

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That's the way she says, which means

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that English all fixed indexed annuities

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are fixed annuities, but all fixed

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annuities aren't fixed index annuities.

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We clear yet? Of course, we are. So, the

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question is, I guess, are fixed index

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annuities a good investment. Number one,

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I don't consider them an investment.

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Annuities are contracts. So, a fixed

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index annuity is a contract issued by a

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life insurance company. It's a CD

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product. That doesn't make it good or

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bad, but it's not a security. It's not a

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market product. It's not a market growth

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product. It's not a principal. It's a

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principal protection product, but it's

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not a too good to be true, pie in the

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sky, unicorns chasing the butterflies

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type product that you hear. One of the

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things about index annuities on the

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sales pitch, and this will sound so good

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to be true that when I say it, you'll

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lean into the screen and go, "Oh, that

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sounds good." Here's the pitch. You get

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a 10% upfront bonus for signing the

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paperwork. You get market upside with no

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downside. You get free long-term care,

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and you get an income writer for

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lifetime income. And you go, "Wait a

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minute, that sounds really good." Okay,

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let's go through that. the bonus. Never

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buy an annuity for an upfront bonus. You

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never transfer an annuity for an upfront

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bonus. I call upfront bonuses candy for

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the stupid because if you believe that

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someone's giving you free money, then

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you're the room at the table in Las

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Vegas. It's just part of the overall

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contractual guarantee. Upfront bonuses

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are fine. Like for instance, when we

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quote fixed index annuities with income

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writers, you know, some of the products

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have bonuses, some don't. Funny thing is

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a lot of the times the contractual

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guarantees the highest do not include

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the upfront bonuses. Let's go through

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the rest of the pitch. Market upside

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with no downside. We covered that. These

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are CD type products. That just really

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sounds good as a 30,000 foot pitch. The

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next thing that they'll talk about is

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free long-term care. That is not true.

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Long-term care is a health insurance

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product. That is a great product. You

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should never cash in your true long-term

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care coverage for an indexed annuity

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with a confinement care provider. You

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can get confinement care, nursing home

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care coverage, and I have done videos on

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that and on the I will send you my

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income writer owners manual as well that

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explains that. But these are guaranteed

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issue products. If you're smoking 12

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packs of Lucky Strikes with no filter

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and you're drinking a bottle of Jack

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Daniels every day, number one,

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congratulations. You are killing it out

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there and killing yourself. But you do

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qualify for these confinement care

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nursing home care writers. That doesn't

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make them great because there's no bar

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for entry. I mean, with traditional

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long-term care, you have to go through

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the underwriting procedure, etc. So,

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when someone pitches you all those

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things and they all kind of sound too

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good to be true, upfront bonus, market

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upside with no downside, free long-term

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care, etc., you know, don't nudge, you

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know, Mard or Fred to say, uh, that

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sounds too good to be true. And if it

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sounds too good to be true, it is every

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single time with annuities without

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exception. So, are fixed index annuities

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a good investment? Getting back to the

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original question, maybe again I don't

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call them investments, I call them

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contracts. So if you want that type of

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contractual guarantee, it could fit in

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your portfolio appropriately and

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suitably. If you're looking for

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principal protection, if you're looking

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for CD type growth and if there's a

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possibility that you want future income,

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we can attach an income writer and quote

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all income writers for the highest

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contractual guarantee. So under those

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scenarios, it might fit your specific

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situation. Just don't buy it for market

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growth. Hey, do me a favor and share,

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like, subscribe, all that stuff to make

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me and my wife happy and make my wife

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happy. That's good. But if you're really

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serious about index annuities, you need

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to book a call with me. Go to

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theanuityman.com. Top lefthand part of

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the homepage. You can book a call and

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then me and you can talk oneonone. I can

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fully explain it. So, I'll see you on

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the next Stan the Annuity Man