What Is Annuitization? - YouTube

Hi, Stan The Annuity Man, America's Annuity Agent. Welcome to Stan The

Annuity Man YouTube channel. You clicked on "What is annuitization?" I mean, what

the heck is that? It's hard to spell, it's hard to pronounce. But annuitization is

really a way of getting income from an annuity. Whether it be for lifetime

income or a specific period of time. We're going to go through all of that. I

hold in my hand the trusty marker which means I'm going to be walking to the

whiteboard after this musical interlude.

Alright. So, let's talk about annuitization

a little bit more from a standpoint of how it works. If you're from the south or

you grew up in kind of a rural area where you had a house without door

or faucets, spigots. We call them spigots and the south. Whoever grow up in North

Carolina. Annuitization comes down to if you rip the knob off of a spigot, what is

just going to flow? You can't do anything about it until you call the plumber.

So, annuitization is ripping the knob off and income stream is going to flow. It's

going to hit your bank account really until you die or if with the lifetime

income stream. Or for a period certain, it's going to flow for that period

certain. So, we're going to talk about that. And there are 3 primary types

of annuities that use annuitization for their income streams. Single premium

immediate annuities, deferred income annuities and qualified longevity

annuity contracts. Now, you can get quotes on all of those at theannuityman.com.

We have the best annuity calculators on the planet that will shop all carriers for

your specific situation. So, with the annuitization and all lifetime income

streams, we need to know specifics from you to run the quotes and for you to get

the best quotes from all carriers. We need dates of birth or date of birth if

it's just you. Dates of birth of its joint. We need your state of residence, we

need when the income stream is going to start. We need what type of account and

then we need the amount of money that you're going to put into the annuity. Or

how much money you want to create on a monthly or quarterly semiannual, annual

basis. Most people have a monthly income stream. So, we can reverse engineer the

quote. So in essence, you can say, "Okay, how much does $200,000 pay me and my wife

for life?" Or you can say, "Me and my wife need $2,500 a month for the rest of our

life. How much money will it take to create that contractual guarantee?" Both

of those we can run for you those quotes. But annuitization is just a

combination of return of principal plus interest. In fact, all annuity income

regardless of the type is a combination or return of principal plus interest. And

you guys say, "Wait a minute. You're telling me they're going to give me my

money back with interest. Is that a good deal?" Yeah, it is if you live forever. I

mean, you're transferring the risk to the

annuity company to pay you for the rest of your life. And only annuities can

provide that. Only annuities can provide that guaranteed income stream that

solves for longevity risk which is the fear about living your money. So, what's

the return on investment on a lifetime income stream? I really don't know that

until you die. But let's go to the whiteboard. I'm going to walk to the

whiteboard. By the way, I don't know the return on investment till you die. Up

until that point, it's a pure transfer of risk. So, you either find benefit in that

or you don't. But if you love your Social Security, you're going to love a lifetime

income stream annuity because they're the same thing. If you love your pension,

you're going to love a lifetime income stream annuity because it's the same

thing. So, one more thing before we start, you can... Listen, with the annuitization,

let's just put the big A, right? That's for annuitization.

You can do it 2 ways. You can do life or joint life. Or you can do a period

certain. Now, let's talk about the period certain for a second. A period

certain is obviously not for your life. It's for a specific period of time. And

you guys say, "Well, why would I do that?" Let's just say you need a gap of income

field. Let's just say you need 10 years of income until something else kicks in

where there's the pension or Social Security or something like that. I got a

call the other day and the guy said, "Hey, I need 11 years of income.

After those 11 years, I've got a pension kicking in. My Social Security is going to

kick in. But we me and the wife need income for those 11 years. So, period

certain can be any year. It could be 3 years or 5 years or 7 years

or 11 years. And again, it's a combination or return of principal plus

interest. The primary pricing mechanism is not your life expectancy. Its interest

rate. So, interest rates drive the pricing train. So, when we send you the quotes,

you're going to see you know 2 columns. You're going to see the

income what the income is. And then you're going to see what's called the

exclusion ratio which is the part that you do not pay taxes on in an

unqualified accountant, on IRA account. And that's the return of principal.

You'll pay taxes on the interest. Okay? So, that's period certain. That's one way to

do it. Life is the other way to do it. You could do single life or joint life. So,

single or joint. That's your choice. Single life is going to pay higher

because why? They're backing up the income stream for one life

instead 2. But you can set it up joint life so that when you die, when your

Learjet hits the mountain, your spouse or partner is going to receive the income

stream uninterrupted and unchanged for the rest of their life. Now, with this,

most people say, "Hey, I don't want to do that because the evil annuity company

keeps the money when we die." Well, that's only if you want that to happen. That's

called life only, alright? But you don't have to do that. You can say, "I won't

single or joint life with installment refund or with cash refund." Installment

refund means that when the second spouse dies in a joint-life scenario,

whatever's left in the account is paid in payment form until the money is

exhausted. Cash refund is when the second spouse dies, then whatever money is left

in the account goes lump sum to the beneficiary. So, that's kind of how

annuitization works. It's a combination return of principal plus interest. You do

not have to do a life only. In fact, you could also do with in summary for

cash refund. You could do a life with take a period certain with a 15-year

certain. So, let's explain that. So, it's on your life. It's going to pay for the rest of

your life regardless of how long you live. You can live forever, they're on the

hook to pay. That's the annuity benefit proposition that only annuities can

offer, lifetime income. But let's just say you died in year 5. If you died in

year 5 with a life with 15-year period certain, then there's 10 more

years of payments for your listed beneficiaries. If you died in year 12,

then there's 3 more years of payments for your list of beneficiaries.

If you look if you dive in your 16, no payments to the beneficiaries. But you

can customize how you want the annuitization structure to work. In fact,

you can get as detailed as you want. But let's just say there's between 30 and 40

different ways to structure and annuitization payment. So, remember,

annuitization is ripping the knob off a faucet, okay?

The income faucet, income is coming for life. But it's customizable the way you

can set it up to where it's going to work exactly how you want it to work. And the

conversations that me and you are going to have... And yes, it will be me 99% of the time.

I'm going to ask you a question so that we can drill down to exactly how you want

the contract to work. Keyword, contract. And then I'm going to go shop all carriers

to find that highest contractual guarantee. Okay,

back. I've done another video called annuity income, how to set up your

payments which is coincides with what we're talking about here. But remember

this: With the annuitization, that's the big A, right? It's return a principal plus

interest. For example, if you put $100,00 into an

immediate annuity and you're getting return of principal plus interest but

you outlive your life expectancy which means that the accounts at zero, the

annuity company still on the hook to pay. That's the reason I always tell people

there's no return on investment until you die. There's no ROI until you die

because the annuity company is on the hook to pay regardless. So, with that, I

encourage you go to my site theannuityman.com. You can use the calculators we have

there yourself or you can have us work with you to develop a customized plan. In

fact, it will be me 99% of the time. So, I look forward to that

conversation. And also, we'll send you my books. I've written six owner's manuals

on all things annuity. I will send you those for free and other no obligation.

They're hard copies but no cost for you. We'll just send them. I need you educated.

I need you to understand what you're buying. I need you informed. And I need you

to make a decision on your terms and on your timeframe. So, with that, I will see

you on the next stantheannuityman video.