What Is A 3-Year Fixed Annuity?

0:00
Hi there, Stan the Annuity Man, America's annuity agent, licensed in all 50 states and Puerto Rico,

0:04
the founder of Contractual Guarantees Only, the pioneer of that, which is

0:09
CGO. We only look at the contractual guarantees of the policy— what it will do, not what it might do.

0:16
The question of the day is: What is a three-year fixed annuity?

0:20
That's a little bit of a loaded question because it seems very simple on its face.

0:26
But in the annuity industry, you can't just say, “I hate all annuities,” or “I like all annuities,”

0:30
or “What's a three-year fixed annuity?” There's more to it than that. And only I

0:37
and the “No Moderation” T-shirt can do justice to that question after this.

0:49
So, what is a three-year fixed annuity? Let's take a look at multiple answers,

0:54
factual answers, to that question. A three-year fixed annuity could be what's

0:58
called a MYGA, a multi-year guarantee annuity, the annuity industry's version of a CD. Go to

1:03
the bank, the bank issues the CD. A MYGA, the life insurance company issues that fixed-rate annuity.

1:10
And yes, they do offer three-year durations, but they offer one-year,

1:13
two-year, three-year, four-year, five-year, six-year, seven-year, eight-year, nine-year,

1:16
ten-year, and beyond guarantees locked in. So, don't make it any more difficult than what

1:24
it is on its face. It's an annuity CD, in essence. The difference is, in a non-IRA account with CDs,

1:33
you have to pay taxes on the interest. With MYGAs, multi-year guarantee annuities,

1:38
the interest defers and compounds tax-deferred. Okay? So there's some good tax things for MYGAs.

1:47
Obviously, when you pull it out eventually, you're going to have to pay taxes on that

1:53
interest at ordinary income levels at the time of this taping, but you can choose in a non-IRA

1:59
account to have a MYGA that just rolls and rolls and rolls and rolls, and you're just

2:03
kicking the tax can down the road, okay? And it's your beneficiaries' issue down the road.

2:08
But you can take out interest. You can do all kinds of things with that.

2:11
And by the way, multi-year guarantee annuities can be used in non-IRA, traditional IRAs,

2:17
and Roth IRAs. So, they can be used in all account types. Obviously, the taxation of

2:23
the money coming out, if you choose to take it out, that's what's going to be different.

2:28
Alright? So what is a three-year fixed annuity? Well, a three-year fixed annuity could be

2:33
a single premium immediate annuity that only pays for three years or only pays for five years.

2:40
Typically, when we're doing what's called a period-certain immediate annuity, it means

2:45
it's going to pay for a specific period of time. That's a very small part of the immediate annuity

2:51
world. Most people buy immediate annuities for lifetime income, either single life or joint life.

2:56
But there are sometimes people who say, “Well, Stan, I just need to fill the gap

3:00
right here because after this time period, this is kicking in. I have other funds kicking in.”

3:05
That could also be a three-year fixed annuity. At the time of this taping,

3:09
we're probably not going to get a lot of takers on three-year period-certain immediate annuities,

3:15
okay? But we will get a lot of takers on the five-year period-certain immediate annuities.

3:20
Alright? So that's two answers to that question. Third answer. What is a three-year fixed annuity?

3:28
That could also mean that in three years you want lifetime income to start. In other words,

3:34
you want to defer for three years, and in three years you want a lifetime income for

3:37
either just solely you or your spouse with you, joint life, and we'll structure it,

3:43
unless you tell us otherwise, so that 100% of any money that goes unused by either one of you

3:48
will go to the beneficiaries and the evil annuity company doesn't keep a penny.

3:52
When you're talking about three-year deferral and a fixed annuity paying a lifetime income stream,

3:58
that comes down to three products. Okay? The first one is income riders. The

4:02
second one is deferred income annuities. And if you're using IRA assets, depending on your age, it

4:07
could be a qualified longevity annuity contract. So, when you're one year and in, it's immediate

4:12
annuities. After that, those other three products come in, and you can have us run those quotes for

4:18
you, customize it, or you can go to my site and run the quotes, see them for yourself 24/7/365.

4:23
We represent every single company out there. And that's a live feed in.

4:27
All I'm going to tell you for lifetime income is A+ or better. No exceptions. Period. End of story.

4:34
AI is going to change the game here pretty soon, hopefully not too soon, but pretty soon,

4:38
to where payments will be lower because your projected life expectancy will be longer,

4:43
which means the payments will be spread out more. Okay? So what is a three-year fixed annuity?

4:51
Loaded question. I would rather you answer my

4:54
two questions. I'm not saying your question was bad, but it got you here. That's good.

4:58
But here are the two questions you'd put in your head.

5:00
Number one: What do you want the money to contractually do?

5:03
Underline and bold “contractually” and highlight it.

5:07
Second question: When do you want those contractual guarantees to start?

5:12
Again, “contractual.” Make it pop. Contractual. Contractual. See that? See that correlation?

5:18
What do you want the money to contractually do? When do you

5:20
want those contractual guarantees to start? You own an annuity for what it will do, not

5:24
what it might do. Not what it might do. Not some hypothetical, theoretical, projected, back-tested,

5:30
unicorns-chasing-the-butterflies approach that most agents are selling

5:35
the dream because you're going to own the contractual realities of the policy.

5:39
So, there's many ways to look at, “What's a three-year

5:43
fixed annuity?” “What's a five-year fixed annuity?” “What's a seven-year fixed annuity?”

5:47
I would answer it all the same way, but I'd rather you look at the two questions

5:51
and then look at my PILL acronym that tells you what annuities solve for.

5:55
P stands for principal protection. I stands for income for life.

5:59
One L stands for legacy, leaving money to the kids.

6:03
And the other L stands for long-term care. Principal protection, income for life,

6:06
legacy, and long-term care. There's no S for stock

6:08
market. There's no G for growth. And I know all the gunslingers out there that

6:12
are selling those dreams and hopes and all that stuff never comes true. I'm still waiting for one

6:19
person to show me a back-tested number, a projected number that came true. I'm talking about

6:26
anybody. Please, just someone show me. And so, all of these sales are being

6:33
sold to people the dream, and none of the back-testings ever come true.

6:37
I'm not going to mention her name. One of the biggest proponents of these types

6:41
of products— and she knows her stuff, okay? She does have good arguments on it. She'll

6:46
be the first one to say, “You know what? I've never seen

6:49
a proposal or a back-tested or illustration or hypothetical come true or even be more than.”

6:58
How about that? Which leads me back to:

7:01
Buy it for what it will do, not what it might do or what it's pitched to do.

7:06
Own a contractual guarantee from the company that's giving you a contractual guarantee.

7:11
I've always— wait a minute— the life insurance companies issue a contract and a contractual

7:16
guarantee. Why wouldn't we just make our decision on the contractual guarantee? Duh.

7:21
I mean, I'm a dumb old Southerner from North Carolina. You know, I don't know nothing,

7:25
but I know enough to know when the pitch doesn't work.

7:30
So again, what's a three-year fixed annuity? It could be a MYGA. It could be

7:36
a period-certain immediate annuity. It could be deferring for three years for lifetime income.

7:40
But it all comes down to what contractual goal you're trying to solve for. Not some hypothetical,

7:46
not some reasonable rate of return. No, you're looking for something specific. And if you do

7:52
that, you're going to get it contractually if you go into the policy with that focus.

7:58
Okay? Do me one last favor.

8:00
Go to my site at theannuityman.com. You can also email me at [email protected].

8:09
But one last thing: spinning above me is a video that I just did on

8:13
how artificial intelligence, AI, is going to affect the annuity industry. I'm the only one

8:19
talking about it. You need to know about it. So, when that Johnny Appleseed agent— you bring

8:24
it up to him, he'll be like, “What? What are you talking about, son?

8:27
AI?" I'm telling you, it's going to happen. And you need to watch that video because I kind

8:32
of break it down, and I go into a lot more about what's happening in society from the standpoint of

8:37
just the changes that's going to affect annuities. It's something you need to put in the back of

8:42
your mind if you're already in chapter two, if you're headed toward chapter two of your life,

8:46
which is about you. Chapter two is about you.

8:50
My name is Stan the Annuity Man. I'll see you next time.