The Planned “Stickiness” of Annuity Riders: Fun With Annuities

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Welcome to Fun with Annuities. I'm your

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host, Stan, the Annuity Man, America's

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annuity agent, licensed in all 50 states

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and Puerto Rico, and the founder of CGO

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contractual guarantees only. What that

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means to us is is you own an annuity for

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what it will do, not what it might do,

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not the hypothetical, theoretical,

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projected, backtested, unicorns, and

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butterfly crap you're going to hear from

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most agents. Well, if you don't

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understand, it's you might get this. How

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about you're going to get this with will

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do the contractual guarantees. Today's

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topic is a good one. It's called the

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planned stickiness.

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The planned stickiness of annuity

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writers like income writers.

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Let me explain. So with annuity income

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writers, there's in annuities there's

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four places to guarantee lifetime

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income. single premium immediate

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annuities, deferred income annuities,

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qualified longevity annuity contracts,

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and income writers that ride on top of a

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policy. And [clears throat]

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historically, the highest contractual

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guarantees are when you attach them,

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unfortunately, to in to indexed

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annuities. We're not a big fan of

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indexed annuities because they're just

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sold improperly, but they are an

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efficient and cost-effective delivery

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system for the income writer guarantee.

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So, do me a favor. Draw line down a

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blank sheet of paper. This say this side

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over here is the index side. That's

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where agents have the hopes and dreams.

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We ignore that. Over here, same policy,

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different ledger. The income writer

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benefit, that's the contractual

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guarantee. Not guaranteed, no guaranteed

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returns, contractual guaranteed returns.

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So, we're focusing over there.

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Now, when we ask you what do you want

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the money to contractually do and when

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you want those contractual guarantees to

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start, those are the two questions that

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determine if you need an annuity. But if

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you say, I need lifetime income. I need

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to start a year from now, two years from

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now, seven years from now, five years

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from now, it doesn't matter. One of the

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products we're going to quote is an

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income writer. Now, we look at A+ or

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better, no exceptions, A+ or better for

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lifetime income, but we're looking only

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at the income writer guarantee. So,

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we're looking at all A+ carriers, A+ or

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better for that lifetime income

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guarantee, and we're choosing the

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highest contractual guarantee. Now,

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let's get to the stickiness part of

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this. Duty companies have the big

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buildings for a reason. Number one, they

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know when we're going to die because

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they're issued by life insurance

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companies. They know when we're going to

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die. So, all annuities are issued by

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life insurance companies. But the other

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reason is there's some pretty smart cats

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designing these products. So, going back

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to the draw the line down a blank sheet

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of paper. This side, the index side,

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hopes and dreams,

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upfront bonuses. This side over here is

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the income benefit side. Without

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exception,

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this side, the income writer side, will

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have a higher valuation than the indexed

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annuity side. Without exception,

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I don't care what the agent says. I

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don't care what somebody's video says. I

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don't care. It it it just will not

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happen. So, let's look at it just in a a

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basic math. Let's just say that your

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index annuity side is worth $200,000

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after four or five years. Your income

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writer side will be worth three or

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$400,000 after four or five years. In

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other words, there'll be a disparity on

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the on the monetary aspect of what's in

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each side of the ledger.

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Same policy, two ledgers, index annuity

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side, income writer side. The income

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writer side is monopoly money. The

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income writer side, you can't cash in.

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The income writer side, you can't peel

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off that growth rate that the income is

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income benefit side is growing by

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while you're deferring and waiting to

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turn turn on the income. The income

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writer side is not covered by the state

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guarantee fund. It's not covered by the

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state guarantee fund. The index side is

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covered by the state guarantee fund. So,

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let's go back to the example. Two, this

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one's worth 250. The index side, the

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income writer side's worth 400. Hey

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Stan, this guy down the road won't

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transfer me into what he called a better

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annuity. This side doesn't transfer

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player. Okay, that's where the

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stickiness comes in. And annuity

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companies do this for a reason. To get

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the value of that policy, to get the

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benefit out of that policy, you're going

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to have to turn the income stream on

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because the 250 is never going to reach

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400.

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Okay. Now, the sales pitch is, well, Mr.

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Jones, we're going to get this index

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annuity and it's going to pretty much

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match that growth component on that

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income writer side. Bull crap. Never has

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happened, never will happen. It's not

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designed to happen.

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That's the reason we only focus on the

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income writer. So, if if you have a

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either a variable annuity with an income

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writer or an index annuity with an

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income writer,

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I'm going to bet almost everything that

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in essence you're upside down. the the

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cash value, the accumulation value is

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lower than the income benefit value. Nod

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your head if you have an annuity like

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that. Not it. Okay. Yeah, that happens.

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Now, what what do annuity agents try to

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do? They'll say, "Well, let's get out of

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this one and move over to that one." And

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this big old huge chunky upfront bonus

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is going to make up for all those

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surrender charges and the fact that

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we're only transferring the 250 and not

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the 400. That dog doesn't hunt. That

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math doesn't work. There's no way that

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can happen unless they fictitiously

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they, the annuity agent, fictitiously

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fill out the application. And if they do

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that, that's a problem and they'll lose

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their license and lots more will happen.

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So, if you have this situation where

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your income writer has made your policy

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sticky, hey Stan, I hate this company. I

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got this income writer. It's at this

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high amount and the accumulation low

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amount. I don't care if you hate them or

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not, you're going to have to turn on

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that income stream

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to get the benefit of that policy. Okay?

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Most of the time there's no death

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benefit attached to that income writer.

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It's just for income.

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It's not a real money amount. But the

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annuity companies, they know that

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this side, this income writer benefit

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side is always, repeat, always going to

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be higher in value than the cash value,

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the accumulation side, which makes it

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sticky, which means you have to stay,

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which means you have to stay with that

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annuity company, which means they get to

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keep the money, which means that when

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you turn on the income stream, they they

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pay you the income stream, but they

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still have your money. That's the

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stickiness of income writers.

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So, if you have one of those, we'll take

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a look at it. [snorts] We'll see if

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there's any possible mathematical and

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contractual way to get a be better

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guarantee than what your income writer

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attached to your either variable or

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index annuity is offering. We'll look at

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that and we will tell you the truth.

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Most of the time, you're going to have

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to stay where you are and turn on the

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income stream to access that higher

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value even though it's monopoly money.

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meaning you can't cash it in, you can't

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transfer it, you can't peel off

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interest, you can't do anything except

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turn on the income stream from this

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side. That's okay if you've been

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explaining the income writer correctly.

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And also understand this, annuity

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companies do this for a reason as well.

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So the income writer is always going to

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be there's going to be a disparity in

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the valuation.

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The fee from the income writer comes out

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of that side, comes out of the real

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money side.

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And it's for the life of the policy.

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So they want it, they the annuity

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companies want it to be sticky. They

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want you to have to stay. They want the

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income writer to be a so much higher

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value than the accumulation value so

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that there's no way to morally and

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ethically transfer it so that they can

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keep the money and charge the fee on

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that money for the life of the policy.

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It is what it is. It's the truth. It's

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the brutal truth. And I'm the walking

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middle finger of annuity truth.

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So that's the stickiness factor of

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annuity income writers that are attached

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to index annuities or variable

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annuities. The companies plan on those

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income writers always being higher. So

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it makes the policy sticky, which means

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you have to stay, which means you have

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to turn on the income stream, which

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means they can continue to charge the

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fee for the life of the policy.

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And that's the reason that annuity

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companies have the big buildings, right?

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Life insurance companies and which issue

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annuities, they have the big buildings

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for a reason. Number one, they know when

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we're going to die, okay? Unlike

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[clears throat] property and casualty

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companies, they'll know when the

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hurricane's going to hit. But number

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two, these types of products that keep

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you there. It's not a bad thing. We we

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will be more than happy to take a look

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at what you have and give an analysis.

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You can email me a statement

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stantheanuityman.com.

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Stantheanuityman.com,

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go to my site 247365,

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run quotes, download books. I've done a

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few videos, by the way. Um, that you can

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go to my Stan theannuity Man YouTube

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channel. This is also another channel,

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the Fund with Annuities channel. I think

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going into uh 2027 at the time of this

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taping is 26. Um, we're going to start

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doing some more guest. You know, I've

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kind of um it's not been about guests

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for a while, but I the guests are

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calling and I think I'm going to put

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them back on. But I appreciate you

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joining me. My name is Stan the annuity

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man and that was fun with annuities.