Lifetime Income Backstops: Shootin’ It 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. The founder and

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pioneer of CGO contractual guarantees

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only. We only look at the contractual

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guarantees of the policy. We only own it

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for what it will do, not what it might

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do, not the hypotheticals, theoreticals,

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unicorns, chasing the butterflies,

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upfront bonuses, and all that stuff. We

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look at the contractual guarantees of

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the policy. Today's topic is a good one.

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It will take you back to your little

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league days when you were such a stud or

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t-ball, whatever you were the star of.

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It's lifetime income back stops. So,

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when you played little league, remember

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the back stop? Well, and if you didn't

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have one, someone's always chasing the

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ball because it's flying them down, you

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know. But remember the back stop, the

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chain link fence back stop that

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protected uh the ball from, you know, if

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someone fouled one off from getting hit

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in the face or whatever.

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Lifetime income has backs stops and

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they're customizable. One of the biggest

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misconceptions that drives me crazy and

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continues Zeke behind the camera from

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Hawaii continues to make my hair gray.

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Okay, Zeke's young. He's got not not got

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gray hair yet. But it is when people

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say, "Well, I've never bought an income

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annuity because, you know, when I die

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the annuity, come to keep the money."

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And I'm like, "Oh my gosh, please.

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Really? That's what people think?" Not

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only do people normal normal people

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think that, but financial journalists

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will say that. Financial advisors will

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say that. Really smart people you think

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they're smart will say that. Well, yeah,

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it's life only. If you die, money goes

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poof. There's 45

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or more ways to structure lifetime

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income with a backs stop. So, let's go

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through what those back stops are. So if

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you want to play little league baseball

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and you don't want any backs stop and

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the ball, you know, someone does a swing

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in the miss, the catcher doesn't catch

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it and it goes forever and someone's got

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to chase the ball. That's life only.

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Okay? Probably one or two% of my clients

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and I have a criillion clients do life

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only. And life only meaning that when

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the when you the bus hits you day two,

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money goes poof, which is what every

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financial genius would say, well that's

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an annuity. I wouldn't buy one. Not

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knowing there's eight to 10 different

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types of annuities. Okay? people that

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buy that either want the highest that

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does provide the highest lifetime income

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because you're shouldering some of the

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risk instead of transferring it. You

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also I had a guy the other day say, "I

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hate my family. I hate my beneficiaries.

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I hate I don't have any charities. I

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live alone. I hate pets. I want life

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only." Great. That makes sense. If

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you're like a sociopath, that makes

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sense. But most people want back stops.

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And back stops can come in different

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forms. So, let's talk about three of the

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four lifetime income products. Single

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premium immediate annuities, deferred

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income annuities, qualified longevity

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annuity contracts. They're all

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annuitization products, which means

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you're creating payments. They're all

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like ripping the knob off a water

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faucet. Water's coming in this case

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income. They all have no moving parts,

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no annual fees, no market attachments.

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They're all pretty much the same

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product. A spia, okay, is the granddaddy

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of all lifetime income products. That

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was first started in the Roman times.

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That's where the the word annuity comes

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from. Annual meaning payment. Been sold

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in this year for a couple hundred plus

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years.

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Single premium immediate annuities is

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when the income starts one year or in.

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Okay. As far as soon as 30 days from the

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policy being issued out to a year. Once

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you pass a year, that SPIA product, that

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same product magically turns into what's

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called a deferred income annuity. Same

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product. And then the QAC is a deferred

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income annuity that you can use in your

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IRA. And you say, "Well, I never bought

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never bought an annuity inside of an

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IRA. I heard that on TV." They're

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stupid. They should be off TV. If your

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adviser said that, they're stupider.

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They should know better. Okay? But

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qualified longevity annuity contracts

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are pensions for traditional IRA assets

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that the IRS and the Treasury developed

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and introduced in 2014. All three of

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those products, PSDs and QAX, those are

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acronyms, can have what's called back

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stops. I call them that because I'm from

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middle of nowhere in North Carolina,

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played little league baseball. Okay? And

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to me, that's the that's the a very

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simple explanation.

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So, if you want the full backs stop,

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Stan, I I want to make sure that it's if

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it's life only or joint life only, and

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joint life only means when you die, your

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spouse gets the money uninterrupted and

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unchanged for as long as they're

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breathing. Okay? But the the most

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efficient backs stop is called cash

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refund.

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And what that means is every single

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penny that you put into that lifetime

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income annuity speed of DQ lag if it has

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a cash refund back stop to it. That

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means that when you die, if it's joint,

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second person dies, 100% of any unused

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money goes to the listed beneficiaries

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of the policy and the evil annuity

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company doesn't keep a penny.

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The second pretty good backs stop is

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what's called installment refund.

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Installment refund means that and this

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is what I also call lovingly handcuffing

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your beneficiaries like your children

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that are wandering around wandering

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ambiguities and you don't want them get

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want them to get the lump sum is when

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you die in joint life if the second

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person dies whatever's left in the

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account goes in the same payment form to

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the listed beneficiaries until the

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money's gone again. Once again, cash

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refund and installment refund. The evil

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annuity company doesn't keep a penny,

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but they're on the hook to pay as long

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as you're breathing. Or if it's joint

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life, as long as one of you is

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breathing. Hey, Stan, how about if we're

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on a respirator and coma? Yeah, still

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going to pay as long as you're

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breathing.

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The third back stop with these three

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products is what's called period

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certain. Now, this is a joke. A lot of

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people go, "Well, you know, my advisor

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said the best thing on the planet is

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laugh at 20 years certain." First of

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all, your advisor is not smart. they

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need to go back in their lane with

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whatever dart throwing they're doing in

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the stock in the stock market. But a

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period certain means that that's the

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least amount of money that the uh

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company's going to pay. You're like, you

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do a scuba doo. Let me explain that.

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Let's just say it's life with a 20 years

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period certain. You die year seven,

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there's 13 more years of payments to the

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beneficiaries. You die year 12, there's

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eight more years of of payments to the

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beneficiaries. You die in year 21,

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there's no more payments for the

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beneficiaries, right? So there's if you

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live forever, it's going to pay forever.

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But if you die early, that period

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certain amount that you can choose, you

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could choose five year certain, 10 year

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certain, 15ear certain, 20 year certain,

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25 year certain, 30-year certain,

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the the lower the certain amount, like a

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joint, a life with a fiveyear certain is

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going to be higher payment than a life

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with a 30-year certain. Okay? Remember,

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annuity companies are forprofit

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businesses.

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Those are the backs stops on those three

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annuization products, SPSDs, and QAX.

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And we can run those quotes to your

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heart's content. Email me,

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stantheanuityman.com.

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stantheanuityman.com. Or go to my site

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and run them yourself at

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theanuityman.com. We have the best

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proconsumer site on the planet. We

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represent all carriers. You'll love it.

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No one's going to call you and chase you

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down. Just, you know, that's just is

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what it is. I don't like going to car

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lots and the guy, you know, you want to

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buy, you want to buy, you want to see,

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you want to drive? No, leave me alone. I

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mean, you just leave me alone. So, the

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fourth way to do lifetime income is

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what's called income writers. They can

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be attached to index annuities, variable

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annuities, and Ryers, registered index

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linked annuities, which is a fancy index

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annuity that brokers firms sell. Okay?

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But an income writer, you cannot buy on

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its own. Stan, I just want the income

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writer. I don't want all that crap.

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Okay? You can't do that. income writer.

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It rides on top of the policy. It's the

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contractual guarantee. Here's the

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visual. Draw a line down a blank sheet

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of paper. Here's the index annuity that

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we don't care at all about. There's no

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market upside with no down market upside

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with no down flat. There's none of that

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upfront bonus. None of that. Who cares?

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We're looking at the income writer. So,

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index annuity side on this side,

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variable annuity on this side. Who

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cares? Income writer, contractual

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guarantee. That's where we're looking.

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That's where we care. And the back stop

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on an income writer is this side, the

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index or variable annuity or RES side.

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That's your that's your death benefit.

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So you're not going to ever lose a

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penny. We do not know what that death

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benefit amount is going to be because we

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don't know what it's going to grow to.

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We just do we do know that index

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annuities or CD type product etc. But

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there's not any annuities out there that

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can guarantee to offset that amount.

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You're looking at the contractual

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guarantees of that income writer. Okay.

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But the backs stop is the underlying

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annuity that's delivering the rider.

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Now, what we found is the index annuity,

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even though we're not a huge fan of that

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product, the income writers that are

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attached to index annuities historically

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have provided the highest contractual

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guarantee.

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Now, you can't do a life only income

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writers. There there's always a death

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benefit built bit built in. But with the

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SPSDs and QAX, you have to figure out

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the back stop. What what customized

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backs stop do you want back there? Um,

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but you might, and I'm going to ask you,

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you want to make sure that if you die,

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100% of the initial premium goes to

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somebody but the annuity company. If you

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say yes, then that's going to be either

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cash refund or installment refund or

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period certain that you choose. But just

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remember, you know, lifetime income, I'm

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going to I'm going to just squash once

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and for all that, well, when when you

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die, money goes poof. No, you can put

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back stops in contractually attached and

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customized to your specific solution to

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that lifetime income stream so you don't

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have to worry about getting hit by the

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bus or that I watched the movie the

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other day where the where the tree log

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falls off the truck and then you know

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decapitates the girl right like that.

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No, that's not going to happen. And if

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it did happen, there's a back stop in

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there to where the money's going to go

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to the family to the list of

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beneficiaries of the policy. So, just

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remember with lifetime income, there are

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backs stops, okay? And you can put them

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in so that 100% of that money that you

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put in is guaranteed to go to somebody

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in your family, not the evil annuity

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company, even though the evil annuity

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company is on the hook to pay as far for

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as long as you're breathing. And if AI

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figures it out and can take you to 125,

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it's going to pay for 125, which is why

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we do A+ or better.

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Wow. [sighs] So, I took you back to

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those little league days, you know, put

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me in coach, I'm ready to play. All that

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stuff. You thought you were going to go

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to the major leagues, you couldn't, you

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shouldn't, you didn't. That's okay. But

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the backs stop analogy, it's going to

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stick in your head. Hey, that's what I

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do. I'm Stan the Annuity Man, America's

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annuity agent. That was shooting it

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straight was Stan.

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I'll see you next time.