What Is The Downside Of Fixed Index Annuities?

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What is the downside of fixed indexed annuities? Boy, what a loaded question. Hi there, I'm Stan

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the Annuity Man, America's annuity agent, licensed in all 50 states and Puerto Rico,

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and we're based in Las Vegas, Nevada. Top agent in the country,

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but I am the pioneer of contractual guarantees only. This is a really interesting question,

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and you're going to be very fascinated and amused by how I factually answer it after this.

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Okay. So, what is the downside of fixed indexed annuities? Really comes down, I think there's two

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main answers. So, the first answer is from your principal standpoint, there is no downside. It's

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a fixed annuity. Index annuities were introduced in 1995 to compete with CD returns to compete with

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CD returns to compete with CD returns not market returns not what Johnny Apples Seed Agents is

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telling you. Okay. So it's principal protection. So there's no downside to your principle if you

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buy an indexed annuity. But the real downside to fixed index annuities is how they are pitched,

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how they are promoted, how they are sold, and how they are promised. Somehow our industry has

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taken a CD product and because it has the word index in it, they take that and promote it like

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it's the best thing ever. Well, market upside with no downside. Market participation with

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principal protection. So, what they're doing, and again, what's the downside?

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There's no downside to your principal because it's a fixed annuity, CD annuity. Okay? But

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the real downside is is the pitch. You're going to get market upside with principal protection.

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Sell all your stocks and mutual funds and all that stuff. Just put it in this index annuity,

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you're going to get the same types of returns. That's so much BS. I'm standing knee deep in it

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because that's crap. All right. Index annuities are not market products. They are not securities.

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The downside to the sales pitch is you're thinking and you're hearing at the bad chicken

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dinner expensive steak dinner seminar. By the way, swallow the food, not the pitch. You're

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you're seeing these charts. It looks too good to be true. You're seeing these back tested numbers.

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It looks too good to be true. You're nudging your spouse going, "That looks pretty good." Plus,

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they're going to give us an upfront bonus. Upfront bonus candy for the stupid. Okay, it's just part

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of the overall contractual guarantee. It's not free money. Please be smarter than that. Please.

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Buying an index annuity for an upront bonus is like going to the car dealership and buying a car,

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brand new car, just for the stereo system. No, don't tell me about the tires or the transmission.

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No, no, no. Don't tell me about the miles per gallon. Just tell me about the stereo system.

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That's you buying an index annuity for the bonus. That's Johnny Apple Seed agent saying, "Take

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surrender charges. Your surrender charges. We can make that up with this upfront bonus." By the way,

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he can lose his license for that. Okay? So be very careful. So the downside, the true downside of the

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index annuity right now is how it's sold, how it's pitched, how it's promoted. Somehow every

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agent leads with that. It's a one-sizefits-all. Wonder why? Wonder why. Can you probably what do

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you think it is? Why do you think that everybody you see, every agent you talk to, they're leading

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with that? They haven't heard a thing you said. They haven't asked a question. Well,

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I got a product for you because it's the highest commission product out there. Now, all annuity

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commissions and life insurance commissions and life insurance companies issue annuities, all

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of those commissions are built into the product. You don't see it. It's built in. It's not deducted

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from what you put in. It's paid from their water and heat and that that side of the ledger. So,

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you put $100,000 in, you see $100,000. But the built-in commission on index annuities typically

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are the highest out there. So, if somebody is standing up, again, what's the downside? This

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is the downside. Some guy is standing up at a at a seminar and [snorts] there's a hundred

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people in there and he's showing you one product. That's like a doctor having a seminar and showing

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one medication. All of you in this build, this a great it's a it's a one-sizefits-all medication.

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There are no one-sizefits-all medications. There's not oneizefits-all index annuities

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or annuities in general. You ask two questions. What do you want the money to contractually do?

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When do you want those contractual guarantees to start? Keyword contractual. And then from there,

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you focus in on the contractual guarantees. So, I guess a lot of you go, "Well, I guess you just

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hate index annuities, son. I just you just hate it." No, I don't. They're CD products. They're

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very efficient delivery systems for income riders when you need lifetime income to start at a future

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date. We sell more than anybody, I bet. We do not care about that fluffy stuffy duffy neuffy

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cluffy all that stuff. We could care less about that participation rates, caps, spreads, bonuses,

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all that nonsense. Who cares? It protects your principal. Thaw dart at it. But it delivers a

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lifetime income stream. That's how we use it. So, if you go to my site, you can download an owner's

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manual I wrote on index annuities. If you Let me tell you something. If you're close to buying one,

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download that book. If you buy one after reading that book, great. Knock yourself out. Okay? But it

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tells the truth about the product. We're not against the product. We're against how it's

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sold. So when give you an example, guy calls the other day. I'm on the call with one of my

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team members and he goes, "Well, so you guys don't even care about the index side? I mean,

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I know we're buying the lifetime income rider side. You don't even care about that?" "No,

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we just throw a dart at it. We don't care." Why? He goes, "Why is that?" I said, "Well,

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there's 800 or more index options currently to choose from within the industry." 800.

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Okay, spoiler alert, every single one of those are designed to pretty much give you CD returns if the

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planets align. That didn't mean they're going to give you that. my opinion, if you want growth like

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like from the standpoint of an interest rate growth, then buy a MYGA multi-year guarantee

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annuity that has um it's just like the industry version of a CD. But if you want lifetime income,

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you can't just buy an income rider. You have to attach it to an index annuity. And that's what

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we do. We just attach it to a A+ or better index annuity for the income rider because A+ or better

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for lifetime income. But that's how we currently use index annuities. We do not sell them as a

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standalone because MYGAs beat them consistently. So once again, what's the downside of a fixed

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index annuity? Well, if you look at it statically and just from a product standpoint, it's a fixed

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annuity. It's a CD product. It was put on the planet in 1995 to compete with CD returns. It

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protects your principal. Okay, great. No downside there. The downside is how people are going to

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try to sell you that index annuity. They're going to try to sell. This is the best thing ever. Sir,

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this is just like if I gave you a pill and you took that pill and immediately got six-pack

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abdomen muscles like Stan and it's just cut up. You believe that, right? But yet, you'll believe

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market market upside with no downside. You'll believe upfront bonus. You'll believe all of that,

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but you won't believe taking a pill and getting six-pack abs. I'm not talking about the stabbing

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thing they're doing now. I'm talking But you know what I'm saying? If it sounds too good to be true,

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it is every single time. And nothing against index annuities at all. We sell a ton,

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but we sell them properly as an efficient delivery system for an income rider for lifetime income. Do

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me a favor. Above my head, above the halo, see the halo? It's like it's like in there above the

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head is a video that talks about contractual guarantees only and it talks about why that's

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important. In addition to the video that you just watched, just be careful out there. You're buying

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a contract from a life insurance company. Buy the contractual guarantees. Own it for what it

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will do, not what it might do. My name is Stan the Annuity Man. See you next time.