Simplest Way To Explain Pros And Cons Of Annuities

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Hey Stan, what's the simplest way to explain the pros and cons of annuities?

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Boy, did you ask the right person.

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Hi there. Stan The Annuity Man, America's annuity agent, licensed in all 50 states and Puerto Rico.

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This is a good question because annuities, in the category, very,

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very simple products. The people who make them complicated and difficult are two people:

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financial journalists that don't know anything and, primarily, agents and advisors that make

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them difficult because they're not focusing on the contractual guarantees of the policy.

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So, we're going to go through all of it after this.

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Alright, so, let's go through some pros and cons of annuities.

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First of all, there are many types of annuities.

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There's annuities for lifetime income. There's annuities for

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principal protection. There's annuities for long-term care. There's annuities for legacy.

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That's an easy acronym that I've come up with. It's called PILL: Principal Protection,

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Income for Life, Legacy, and Long-Term Care. That's what annuities contractually solve for.

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Understand the pros of an annuity type is that it's issued by a life insurance company. It's

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a contract, and it's a transfer-of-risk strategy. You're transferring the risk to

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protect the principal, lifetime income, legacy, and long-term care. They're not growth products.

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The cons of annuities? Con's tough. Let's just put "negative" because "con" has a

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connotation that someone's trying to rip you off, and that's not the case.

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The negative side of annuities would be too many agents and advisors try to sell them for potential

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non-guaranteed returns, hypothetical returns, back-tested returns, theoretical returns, charted

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returns based on what happened in the past. That back-tested stuff, that's absolute nonsense.

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If you need market growth, then don't buy annuities of any type.

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If you need contractually guaranteed transfer-of-risk strategies, buy annuities.

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So, the negatives about annuities most of the time revolve around the

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sales pitch or the overhyping of a specific type of product,

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or the overpromising of a non-guaranteed return. Notice guaranteed and non-guaranteed.

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The pros of annuities? Guaranteed. It's contractual.

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For instance, lifetime income streams with SPIAs, DIAs, QLACs, and Income Riders.

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Those are the four products that you can lock in a lifetime income stream for as

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long as you're breathing. If it's joint, for as long as one of you is breathing.

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And we also build in backstops for you so that the annuity company doesn't keep a

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penny when you die. I mean, that's a pro. I mean, that's phenomenal.

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It's the only product, only product, that will provide a lifetime income

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stream. And at the time of this taping, before artificial intelligence changes

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the life expectancy tables against you, it's a bargain. Right here, it is a bargain. Because

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when AI changes medical breakthroughs and then lengthens your life expectancy,

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that means there'll be more payments, and that means those payments will be lower.

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So, locking in lifetime income right now is a good thing.

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But annuities are the only product type that provides lifetime income

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for as long as you're breathing. There's no ROI until you die.

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You already love the other inflation annuity you already own called Social Security.

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If you have a pension, that's an annuity as well.

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But that's the pros: the contractual guarantees.

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If you just want to protect the principal, there's a CD-equivalent,

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CD-type annuity called a multi-year guarantee annuity that, in a non-qualified, Non-IRA account,

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savings-type account, interest grows and compounds tax-deferred. These are all pros.

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When people say to me, "I hate all annuities," you're an idiot. You're a complete moron. Because

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you're saying, "I hate Social Security, and I hate CDs." You don't. So don't say that.

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You can say, "I hate how most annuities are sold." Me too. But you can't say, "I hate all annuities."

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Don't say it in public.

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I mean, people that watch my videos will eventually come up and go,

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"Shut up. You have no idea what you're talking about."

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"I hate all annuities."

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If that's the case and you're going to put your foot in the ground,

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then call Social Security and cancel your payments. Or if you have a pension,

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cancel your payments. Or if you have a CD, cash it in.

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Don't hit me with, "I hate all annuities." Come on.

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That's like saying, "I hate all restaurants. I hate all

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trucks. I hate all shoes. I hate all stocks. I hate all mutual funds."

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If I said to you, "I hate all mutual funds and ETFs," you'd be like,

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"That's the dumbest thing I've ever heard."

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Of course. It's like saying, "I hate all annuities."

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Pros and cons of annuities.

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The pros are, if you buy it for the contractual guarantees, what it will do,

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not what it might do, you're going to be happy. If you buy it for the

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transfer-of-risk nature of the strategy and the contract, you're going to be happy.

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If you buy the dream of non-guaranteed return scenarios,

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you will not be happy because it never comes true.

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So, if you take away one thing from this wonderful video, market returns are non-annuity,

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and the non-guaranteed sales pitch of market growth has limitations.

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Why would you want limitations on market growth?

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The annuity industry is in front of a demographic tidal wave of 15,000 people or more turning 65

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every single day that want guarantees, that want lifetime income, that want to enhance

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what I call the income floor, that have won the game and don't want to play anymore.

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They want lifestyle. They don't want risk. They don't want to track things.

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Or they want to put the income floor in place to be a better investor.

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So, if you remember one thing coming out of this,

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I just wanted to tie it up to where you go, "Got it."

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Pros of annuities: contractual guarantees.

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Cons of annuities: non-contractual guarantees.

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It's really that basic.

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The negatives of annuities are the promises that never come true or

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rarely come true. I'll give you some grace out there, annuity industry.

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But the pros are the contractual guarantees that always come true.

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So, if they always come true, why wouldn't you just focus on the contractual guarantees?

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With us, that's all you will do. That's how I set it up. That's

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what I believe. That's what's right. And that's why we're the top people out here.

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I mean, I don't have a bevy of agents across the country. It's a direct-to-consumer

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model where you call Las Vegas, Nevada, which is where our offices are located.

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Every single person in the building is licensed in all 50 states. Every single person in the

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building is not on commission. They're not looking at you like a hammer looking

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for a nail. They're looking to help, and their bonus is tied to your satisfaction.

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And the way that we do business, we look at the contractual guarantees.

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We're going to ask you two questions:

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What do you want the money to contractually do?

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When do you want those contractual guarantees to start?

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We're going to quote all carriers A+ or better for lifetime income,

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and then I make the recommendation. That's the trifecta. That's it.

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Okay? Go to my site, run quotes at your leisure.

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You can email me at [email protected].

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You can schedule a call if you want to. Most likely,

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you're going to get me. If you want me, you can get me.

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And do me one last favor.

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Above my head is a spinning clock that's going to present a video that I would

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encourage you to go ahead and watch. It's about the commoditization of annuities.

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Annuities are commodities. There's not one company better than the other.

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People always forward me, please don't, all these sales pitches they get,

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and it's about one company. It doesn't matter. It's commoditized.

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Who's giving you the highest contractual guarantee?

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Not hypotheticals, not theoreticals, not projections,

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not back-tested, not unicorns chasing butterflies.

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So, watch that, and I'll see you next time.