How Do Bonus Annuities Work?

0:00
Hi there, Stan the Annuity Man,

0:01
America's annuity agent, licensed in all

0:03
50 states in Puerto Rico, founder of

0:05
Contractual Guarantees Only, which means

0:07
that you own an annuity for what it will

0:10
do, not what it might do. Today's topic

0:14
is a good one. It's one that needs to be

0:17
addressed properly, answered factually,

0:19
and truthfully,

0:22
and I'm the only person that's qualified

0:24
to do it without agendas. Topic is how

0:28
does a bonus annuity work? Boy, this is

0:31
a controversial one and the top of my

0:32
head might pop off, but I'm going to try

0:34
to save my voice and be cool, but you're

0:37
going to feel the intensity of the

0:38
coolness coming through after this.

0:48
So, how Stan, how do bonus annuities

0:51
work? I keep hearing about bonus. Boy

0:52
down the road said you get a 35% upfront

0:54
bonus. First of all, here's where I'm

0:57
going to be calm. I'm going to breathe.

0:59
I'm going use

1:00
breathe from the core. Stand. Breathe

1:02
from the core.

1:05
Upfront bonuses. I call it candy for the

1:08
stupid. Okay. A bonus annuity means that

1:13
the annuity company, if you sign the

1:15
piece of paper, they're going to add

1:18
money to your account. Stop. Sit down.

1:21
Calm down. That doesn't mean it's a good

1:24
thing. also doesn't mean it's a bad

1:25
thing. It just means it's a contractual

1:28
thing.

1:30
When an there's no philanthropist at an

1:33
annuity company that wakes up in the

1:34
morning goes, you know what? I want to

1:35
give away money today. That's what I

1:37
want to do. And I'm sure my board would

1:40
love that. No, they won't love that. The

1:42
stock people won't love that. The

1:44
analysts won't love that.

1:46
They're not giving money away. There's a

1:48
hundred pennies in the dollar. There's a

1:50
hundred pennies in the dollar.

1:54
How's a bonus annuity work? Typically,

1:56
it's with an equity index annuity or

1:58
also called a fixed index annuity. Draw

2:00
a line down a blank sheet of paper.

2:02
Here's the index side. Cat, spreads,

2:04
participation rate. Who cares? Bad CD.

2:07
Over here's the income writer. If you if

2:10
you attach an income writer at the time

2:11
of application, that's going to provide

2:13
a lifetime income stream when you turn

2:15
it on. when they the annuity companies

2:18
provide an upfront bonus, it it

2:21
typically pretty much all the time goes

2:24
to the income side,

2:27
not the index side. Why is that

2:29
important? Good question.

2:32
The index side is the walk away amount.

2:34
The index side is where if you said,

2:36
"Stan, I don't want to do this anymore.

2:37
Send me the money." Okay, that's that's

2:41
the important but but the bonus is going

2:43
to the income writer side. Not the index

2:46
side. Index side walkway amount. Bad CD

2:51
income writer. You can't buy it alone.

2:52
You have to ride on top of a policy. The

2:55
highest income writer guarantees

2:57
are attached to index annuities. So if

2:59
you answer the two questions, what do

3:00
you want the money to contractual do?

3:01
Lifetime income. When do you want those

3:03
contractual guarantees to start? Five

3:05
years, seven years, 10 years, three

3:06
years down the road. We're going to

3:08
quote income writers. We're only going

3:10
to look at the income writers,

3:13
not the index side, just the income

3:15
writer. And if there is a bonus, great.

3:17
Who cares? We're going to quote all

3:19
carriers with and without bonuses. We

3:20
don't care. Sometimes the bonus enhances

3:24
the lifetime income stream. Most of the

3:26
time it does not. You're saying, Stan,

3:29
they're going to give an upfront bonus,

3:30
but yet some products without upfront

3:32
bonuses have higher guarantees. Yes.

3:34
Yes. So why is what's the hub of about

3:36
the upfront bonuses? I don't know.

3:39
I don't know. I mean, it's it's it's the

3:42
car dealership. You go into the car

3:43
dealership and say, "Just show me your

3:45
best car car stereo system. It's all I

3:47
care about. Don't care about the model.

3:48
Don't care about just want the stereo

3:50
system." That's what you're doing when

3:52
you're saying, "What's the best bonus?"

3:55
I had a guy call me the other day, we

3:56
bought income writers. He goes, "Stan,

3:58
there was a bonus on those income

3:59
writers." I went, "Yeah, whatever. Who

4:01
cares? It's part of the overall

4:03
contractual guarantee. An upfront bonus

4:06
is nothing special." An upfront bonus

4:09
should not be considered at all about

4:10
for anything. It's part of the overall

4:13
contractual guarantee of the policy.

4:16
Yet, I had someone the other day in the

4:19
industry go, "Yeah, you know, we're

4:20
getting ready to introduce our first

4:22
bonus annuity." I said, "Who gives a

4:23
shit?" Excuse my French. And I told him

4:26
that. Who cares? I said, "Does it match

4:30
up contractually if I shop it with all

4:32
carriers, yours with the bonus, and

4:34
against all carriers with bonuses and

4:36
without bonuses?" Well, he goes, "I

4:38
don't know." Well, you might need to

4:39
know because that's how we look at it.

4:44
What is a bonus annuity and how does it

4:45
work? I don't think I think if it's

4:47
explained like this, it's irrelevant.

4:50
Problem is, most agents when they try to

4:53
look at a product to sell across the

4:56
country, they're looking for the highest

4:58
bonus and the highest commission,

4:59
neither of those have anything to do

5:01
with you. It has to do with them.

5:03
Problem with that is currently, and this

5:06
is going to getting ready to change in

5:07
the next year or so, 80% of all annuity

5:10
sold is within a 35 mile radius radius

5:12
of where the agent lives. That's getting

5:15
ready to change drastically. Trust me,

5:18
I'll be the I'll be the pioneer of that.

5:21
People are figuring out that these too

5:23
good to be true stories are just that,

5:25
too good to be true. If it sounds too

5:27
good to be true with annuities, it is

5:28
every single time. How does a bonus

5:30
annuity work? It's just part of the

5:33
overall contractual guarantee. Who

5:34
cares? You have to be asking better

5:37
questions than that. What do you want

5:38
the money to contractually do? When do

5:40
you want those contractual guarantees to

5:42
start? Understand the pill acronym for

5:44
what annuity contractually solve for. P

5:47
stands for principal protection. I

5:48
stands for income for life. L stands for

5:50
legacy. Other L stands for long-term

5:51
care. There's no G for growth. There's

5:53
no N for market. There's no B for

5:55
Bitcoin. There's no E for ETFs. There's

5:58
no N for Nvidia.

6:01
There's none of that. Never buy an

6:03
annuity for a bonus. Never buy an

6:05
annuity for un non-g guaranteed returns.

6:08
Buy for contractual guarantees. Shop all

6:10
carriers. Period. End of the story. And

6:12
the world will be a better place. We're

6:14
changing that. We've changed that.

6:17
There's a lot of agents that are buying

6:19
into the contractual guarantees only

6:20
format. Why? Because it's good for the

6:22
client. Why? Because there's nothing to

6:25
explain. Guy called me the other day.

6:28
Stan, how's that annuity we bought two

6:29
years ago doing? contractually the same.

6:33
That's all.

6:35
There's no moving parts. Even if you buy

6:38
an income writer attached to an index

6:40
annuity, and we've only focused on the

6:42
income writer contractual guarantee

6:43
guarantees,

6:46
we're never ever going to have a

6:48
conversation with you about

6:50
the index side. It's irrelevant. It

6:53
doesn't affect the income writers at

6:56
all. Well, some people say, "Well, if

6:58
the index goes up, then the income

7:01
writer goes up." That's what this little

7:02
boy told me about here. Nobody companies

7:04
don't give that away. Okay. If there's

7:07
anybody that says an income amount will

7:10
increase, that means they're starting

7:12
the income amount lower as opposed to

7:15
the same type of annuity without the

7:17
income increase.

7:20
There's a lot of sales pitch nonsense

7:22
out there and a lot of it revolves

7:23
around this bonus annuity question that

7:26
people are asking. If there's any person

7:29
or site that's promoting bonus annuities

7:32
or list bonus annuities, fraud,

7:33
fraudulent, it's crazy. My opinion, it's

7:36
my opinion. But that's like saying

7:39
that's like me being a Ford dealership.

7:42
You know, that' be great commercial.

7:44
Hey, there stand a Ford deal. Got the

7:46
Ford, I got the trust, got the thing,

7:47
got this. And then all I list on my

7:50
inventory lot has to do with the stereo

7:52
systems. Well, this one's got a Bose and

7:54
this got a Carman Gia. This got this got

7:57
this and that. This. That's insane.

8:01
But yet agents make their selling

8:03
decision on what product they're going

8:05
to show you based upon how big's the

8:07
upfront bonus and how big's the

8:09
commission that's built in for the

8:11
agent. That's crazy. And that's what's

8:14
wrong with the industry.

8:18
amongst other things.

8:20
Just when you hear the word bonus, just

8:22
who cares? Bonus contractual guarant

8:25
bonus part part of the overall

8:26
contractual guarantee.

8:28
All right, do me a favor. Go to my site,

8:30
theanuityman.com. You can download books

8:33
on six types of annuities I've written.

8:36
You can download those for free. You can

8:38
sign up for my monthly live event. I put

8:40
out one video every single day. Written

8:43
400 articles and rewriting my annuity

8:45
manifesto. that was published initially

8:48
in 2014.

8:50
We also put out a newsletter every

8:52
single week. But the biggest thing I

8:53
want you to do is go run quotes. You can

8:55
do that anonymously. See what the

8:57
highest contractual guarantees are,

8:59
including bonuses. But we don't we don't

9:02
care. By the way, there's a video above

9:04
me spinning clock. You'll see that and

9:06
it I go more in depth about how our

9:09
calculators work and then how you can

9:12
run quotes anonymously. There's no games

9:14
being played. You don't have to create

9:15
an account or anything like that. You

9:17
just can run quotes. Run quotes. I don't

9:21
know what the numbers are, but

9:22
[laughter] of the quotes. But it's huge

9:25
since we made that change to not try to

9:28
capture your information. I didn't want

9:30
your information anyway. I only want

9:32
your information when you become a

9:35
client. That's it. We don't sell it. We

9:37
We don't It's encrypted. We just need

9:40
the information to get the policy done

9:42
for you. We're not a data house. We're

9:44
the largest fixed annuity distributor

9:48
and seller in the country. And we're

9:49
proud of that because we do it the right

9:51
way on your terms and on your time

9:53
frame. My name is Stan the Annuity Man.

9:56
See you next time.