Unpacking Deferred Annuities: SPDA, FPDA, MVA

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Hi there, Stan the Annuity Man,

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America's annuity agent, licensed in all

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50 states. So glad you join me. We're

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talking today about deferred annuities

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and some acronyms no one even knows what

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it is until you get your policy.

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SPDA, FPDA, MVA, what the A is that,

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right? I mean, who knows? I'm going to

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tell you because you need to know. And

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it's something in the annuity secret

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sauce that no one seems to ever address.

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But of course, yours truly, Stan the

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Annuity Man, America's annuity agent, is

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going to go over all of that after

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[Music]

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this. So, one of my team members gets a

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call the other day and uh the call was

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this. Hey, you know, we filled out the

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application. I got my uh my policy in

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the mail from Stan the Annuity Man. And

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I'm reading through the policy and it

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says at the up at the top SPDA. What

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does SPDA mean? I thought I bought

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bought a MYGA, a multi-year guarantee

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annuity. Well, let's talk about that.

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SPDA S stands for single premium

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deferred annuity. Break it down. You

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gave the annuity company a lump sum. in

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this case, the MIGA, which is the

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annuity industry version of a CD. And

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that annuity company's going to hold on

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to the money and then accredit an annual

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interest rate to you. But you get the

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policy, you go, SPDA. What the heck is

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an SPDA? And you could also have gotten

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a um a fixed index annuity. Same thing

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on the policy. Hey, Stan, I bought this

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fixed index annuity, but I see SPDA on

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there. Now, if we're going to kind of

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look philosophically at all this, like,

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why would the annuity industry and their

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team of lawyers put this on the policy

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and make it confusing? I don't know. I

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think it's an evil plot. So, you can

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call me and we can talk more. And that's

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a good thing. You can always call me,

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but SPDA means single premium deferred

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annuity. You gave the single amount, the

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lump sum to the uh annuity company, and

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it's a deferred annuity. in this case, a

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multi-year guarantee annuity or a in

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this a a fixed index annuity. So that's

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SPDA. What's FPDA? Flexible premium

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deferred annuity. You know, you get you

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get the policy in the mail and that it

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says on the top flexible premium

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deferred annuity. You're like, wait a

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minute, I thought I bought I bought an

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index annuity. Well, flexible premium

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deferred annuity means that you gave the

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lump sum to the annuity company for the

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contractual guarantees that we discussed

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and you decided and I recommended

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because it was suitable and appropriate

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because you only buy annuities for what

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they will do, not what they might do.

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And the will do is the contractual

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guarantees of the policy. But flexible

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deferred premium annuity means that the

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the annuity company will allow you to

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add money to the policy after it's

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issued. Now, not all do that. Some do,

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some don't. Now, hopefully when we're

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talking, you you can tell me, "Hey, I'm

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planning on putting more money in over

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time." And if that's the case, then I'm

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going to go shop all carriers that offer

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the flexible deferred premium annuities

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that allow that. Now, most, at the time

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of this taping, look at the date, most

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multi-year guarantee annuities are not

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flexible premium deferred annuities. You

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can't just keep adding to it. Okay? But

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there are some there are some like count

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them on my hand some that do allow that

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and and once again communicate that to

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me if that's what your goal is that you

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want to achieve you want to put money in

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over time or um there are some you know

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most I would say most at the time of

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this taping not all um nothing's uniform

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in the annuity business right nod your

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head um most indexed annuities fixed

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index annuities will allow you to add

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money to the policy

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after it has been issued. So that covers

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single premium I mean single premium

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deferred annuity and the and the

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flexible premium deferred annuity.

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That's what that means when you get your

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policy or I don't know if this I mean I

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even hate to bring this up or if you

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bought it from someone else like your

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brother-in-law, your sister-in-law, your

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cousin or or your wife or your husband

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if they're an agent. Even then you have

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to think to yourself, do you really want

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to do that? Why wouldn't you want to

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deal with Stan the Annuity Man? Now you

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know what that means. The last A a the

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last A that we're going to talk about is

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market value adjustment. Once

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again, the annuity industry has made it

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a little complicated when it become

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comes to market value adjustment. And

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most of the time, market value

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adjustments apply to single premium

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deferred annuities and flexible deferred

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premium annuities. um multi-year

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guarantee guarantee annuities, fixed

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index annuities in my case because I

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only sell fixed products because you

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only own annuity for what they will do,

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not what they might do. And that's the

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fixed side. That's what I believe in

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passionately. Um but market value

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adjustment, you might get your policy in

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the mail and you're flipping like page

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17 of the policy and and you see this,

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it probably knocked the scab off because

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you're like, "Wait a minute, that looks

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like calculus 2." There's this formula

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in there like XV Y the square of the

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thing over the thing and you're like oh

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my god that's that math class I hate it

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I just hated it or one of your you're

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like a math dude you're like oh I love

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that I I don't know what that is what is

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market value adjustment and why is that

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even important to the policy well it

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isn't important at all if you hold the

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policy through the surrender charge time

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period give you an example let's just

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say you have a fiveyear multi-year

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guarantee annuity that's going to pay a

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specific speific interest rate for the

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every year for that five years. If you

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don't cash that baby in, then market

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value adjustment doesn't apply. But

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let's say in that same example, you

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bought the five-year, it was suitable

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and appropriate. About year three, your

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life changes and you want to pivot.

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You're like, you know what, Stan, the

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annuity man, my life has changed. I'm

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doing something else. I'm touring with

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the rock band. I need this money. I want

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to cash it out. That's when the market

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value adjustment comes into play. Now,

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we can get in the weeds with this, but

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as you know, Stan the Annuity Man,

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America's annuity agent, I make things

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simple. I'm the annuity whisperer. I can

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explain things to you. So, in two

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seconds, I'm going to tell you about

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market value adjustments. All right, I'm

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back. So, we're going to talk about

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market value adjustment, MVA. That's the

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other A. But this is a funny story. So,

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you know, I had to get a a drink because

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I was I was a little thirsty. And one of

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my team members stepped out and she

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goes, "This reminds me of PDA, like

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public display of affection." No, no,

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no. There's no public display of

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affection with annuities. There's no

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emotion. Shouldn't be anyway. It's all

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math. So, let's talk about mult uh

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market value adjustments. And by the

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way, and I'm looking down at my notes

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and I'm thinking, you know, um FPDA,

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flexible premium deferred annuity. And I

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know and I was like mixing up the F and

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the P and the D and the A. You know what

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I'm talking about. Keyword is flexible.

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My apologies for kind of mixing up that

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word soup, but I'm standing the annuity

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man. I'm rolling. You know, you know

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what I mean? You I mean, you understand

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what I'm saying, but let's get back to

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market value adjustment. Here's the

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bottom line. When you buy the annuity,

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whether let's just say in this case a

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multi-year guarantee annuity, and

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interest rates go up after you buy it,

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then your market value adjustment is

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going to make the surrender charges

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higher. Does that make sense? Of course

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it does. The reverse is true. If you buy

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the the multi-year guarantee annuity and

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interest rates go down after you buy it,

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then the surrender charges go down as

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well. And in some cases, your market

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value adjustment, um, you can like buy a

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buy a five-year multi-year guarantee

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annuity and interest rates go way down

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after you purchase it. You could get out

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of it in two years. I mean, that could

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happen. Why would you do that? I don't

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know. Because interest rates have gone

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down. But really, that's all you need to

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know about market value adjustment.

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MVA. MVA. That's all it means. But it

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doesn't. People get caught up in it.

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They'll see market value adjustment and

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they'll go, "But but does that apply?"

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No, it does not apply if you hold the

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policy to the surrender charge time

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period, whether it's three years or five

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years or seven years. It doesn't apply

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at all. It only applies if you do a I'm

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doing like wait. No, I was I was doing

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like a car

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thing pivot and you change your mind

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middle of the policy inside that

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surrender charge time period and you

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decide to cash it out. You can do that.

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It's your money. You can do that.

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There's surrender charge uh surrender

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charges if that happens. But market

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value adjustment can either make those

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surrender charges higher or lower and in

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some cases eliminate them all together.

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Hopefully I was crystal clear on SPDA,

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FPDA, MVA, all of those things. And if

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not, you can always go to my site at

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theanuityman.com, top lefthand corner,

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book a call, and you can get me

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oneon-one unless I'm sick or in the

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bathroom or something like that. But

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98.7% of the time, you're going to get

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mwah. That's French for me. And we're

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going to talk for 30 minutes one-on-one

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non- salesy, brutally factual, it'll be

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the best uh investment advice or or

9:34
advice in general you're going to get. I

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love talking to people about what

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they're trying to achieve. And I'll be

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brutally honest, if you don't need an

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annuity, I'll tell you. I will. Don't

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believe me? Try me. Do me a favor. Also,

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go to my site, you know, look around. We

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have videos. We have uh podcast

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recordings. You We have the best

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calculators on the planet. You can run

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calculators for immediate annuities,

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[Music]