Variable Annuity vs Fixed Indexed Annuity

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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 of Puerto Rico. Today's topic

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is a

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interesting one because I think we're

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comparing two products that you're

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probably looking at them incorrectly,

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but we're going to talk about them

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anyway. It's a variable annuity versus a

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fixed index annuity. Um,

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you're probably going to be surprised by

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my answer unless you've watched a few of

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my videos. If not, if you haven't,

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surprise surprise. If you have, you kind

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of know where I'm getting ready to head

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after this.

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All right, little um history lesson.

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Variable annuities were put on the

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planet in 1954, 1955 by TIAA. Back then

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it was called TIAA CF. Unique product

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because a variable annuity was in

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essence mutual funds. For whatever

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reason, the industry calls it separate

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accounts, but me and you call them

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mutual funds. Mutual funds with an

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insurance wrapper, which means that the

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growth of the mutual funds in a nonirra

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account grew tax deferred. It's pretty

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cool. And there's some good products

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back in the day. Um, but like all things

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in the annuity business that that are

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products that have potential, they

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become bastardized and fee laden, etc.

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Currently, at the time of this taping,

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the average annual fee for a variable

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annuity is around 3%. Now, there were at

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times, I'd say about 10, 15 years ago,

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there were a couple of no load, no fee

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variable annuities. You go, Stan, that

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sounds good. It was good. It was a great

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product. Of course, product's not here

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anymore, but um it would allow you to

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manage your own mutual funds inside the

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variable annuity, gross tax deferred in

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a nonirra account, and there were no

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fees and full liquidity. It was

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fantastic. Of course, it's not here

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anymore.

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So, and I think there's a couple

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variations of them out there, but the

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choices are horrible, so not even worth

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going into. So, that's a that's the

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variable annuity. Just think mutual

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funds with an insurance rapper. Okay.

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Now, index annuities put on the planet

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in 1995

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um to compete with CD returns. Now,

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since that time, they've been sold as a

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growth product. Don't ask me how. I

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mean, put designed and developed and the

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returns are CD returns, but every single

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Yahoo out there trying to sell it will

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talk about market upside and no

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downside, market upside with no downside

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and all that stuff. They I mean, they

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overhype it like I've never seen a

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product overhyped in my life.

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It's a principal protection product.

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It's a CD product. But if you're going

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to buy a CD product in the annuity

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world, my opinion, you would buy a

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multi-year guarantee annuity which has a

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guaranteed interest rate for a specific

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period of time. Now, so when we compare

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variable annuities to index annuities,

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most people going, what's the growth

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comparison? Well, first of all, index

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annuities aren't a growth product.

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They're not a market product. So

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variable annuity wins, but it wins

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starting every year at minus3 because

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the fees are 3% for the life of the

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policy. So you start over here at

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minus3. If you went to any professional

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money manager and go, okay, I need you

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to manage the money, but you got to

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start at minus three every year. That

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means you got to get 10 to get seven.

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Hello.

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So in my opinion, neither should be

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purchased for growth. So if you're going

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to do it, should I get this one or that

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one? My goal is my my comment is what's

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the goal? Because if if the goal is

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market growth, don't buy either. Hello.

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If the goal is principal protection, buy

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the index annuity.

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It's a fixed product.

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Variable annuities is a security. It's

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it's regulated by FINRE and the SEC.

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Fixed index annuity. That's a that's a

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life insurance product regulated at the

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state level. It's not a security. Even

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though

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[sighs and gasps] agents and adviserss

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cross the line on how they sell it. They

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sell it as a security but it's not. So

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variable annuity versus fixed from a fee

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standpoint. Variable annuity has the

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highest fee. If you don't attach a

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writer to an index annuity has no fee.

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If you looked at variable annuities

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upside their mutual funds crappy mutual

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funds a lot of times index annuities CD

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product. Once again,

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you're I mean,

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you shouldn't buy either for what you're

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trying to buy them for, which is market

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growth of potential or hypotheticals or,

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you know, back tested numbers. Never buy

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either.

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My comment on the variable annuity side

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is if you're going to buy mutual funds,

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just got to buy mutual funds. Why do you

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have to pay 3% to do it? I mean, I don't

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have any skin in the game with Vanguard

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or Fidelity or any of those. Why not

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just buy mutual funds at Vanguard? Why

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do you need a variable annuity? Well,

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standing for the tax deferred growth.

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Well, the problem is the variable

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annuity structure doesn't give you those

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great mutual funds to choose from.

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Once again, just go buy the mutual

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funds. You don't need the product. Well,

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I want to protect the principal and get

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market returns with the index annuity.

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Well, you're dreaming. Doesn't happen.

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Doesn't work. has never h I mean it

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might happen if you might if you're in

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an index annuity for 10 years it might

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happen two or three of those years but

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the other seven it won't so the blended

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return is what yeah you're right CD

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returns if it sounds too good to be true

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it is every single time without

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exception with annuities if you're

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looking to buy growth don't buy

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annuities if you're looking for market

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returns don't buy annuities if you want

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to have your cake and eat it too don't

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buy annuities if you want to believe the

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sales pitch don't buy annuities

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If you want to own contractual

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guarantees, buy annuities. If you want

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to solve for the four things that

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annuities solve for, principal,

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protection, income for life, legacy, and

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long-term care, buy annuities. But don't

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buy the dream of either one of these

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because you're going to own the

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contractual realities.

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Don't make the mistake. This isn't a

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game. This isn't a movie. This your

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retirement. Okay?

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by the contractual guarantees of the

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policy only and you will be very happy

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with the annuity space. Once you start

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going into, well, it could get this, it

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might have get this, it got this in the

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past, it back tested numbers, upfront

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bonus, then you're you've lost your

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mind. You've lost your you left your IQ

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at the door. You're the rub at the

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table, as they say in Vegas. Just be

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careful out there.

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I mean, market growth is not annuities.

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I know that the industry is going to

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yell at me. They always do. They always

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send me hate mail. I'll get calls from

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the the grand poo boss and go, "Well,

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Stan, I I really don't think you

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understand the nuance of this product."

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No, I understand the damn nuance of the

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product. It's the reason I've written

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books on it that people get for free.

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The annuity industry has a monopoly on

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one thing, lifetime income. We have a

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monopoly on it. It's not another product

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on the planet that does it. But no, no,

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no. We're not going to talk about that.

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We're going to talk about growth.

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Non-g guaranteed growth. That's what

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we're going to talk about.

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Who are these people making these

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decisions at annuity companies?

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Unbelievable. Hey, do me a favor. Above

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my head, I did a video on how annuities

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can take care of your family. You need

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to look at that video. In addition to

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going to my site, running quotes, all

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that stuff. For all you A personality

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hitters out there, people that have run

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the the family for a long time,

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eventually you're not going to be

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running it. You need to watch that video

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because there's some ways to set things

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up like I have to make sure that things

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keep going and maybe you need to

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lovingly handcuff one of your

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beneficiaries. Thoughts? Maybe.

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Yeah, I'm doing that. I'm making sure

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that the lump sum's not going to ruin

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them and that the uh the lifetime income

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will be there. And that I think that's a

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gift. They'll cuss at us every time the

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money hits the account. Who cares,

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right? Hey, my name is Stan the Annuity

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Man. I hope that you you uh consider us

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for all your annuity needs. I'm here for

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you if you need me.