What Is A Multi-Year Guaranteed Annuity? - YouTube

Hi, this is Stan, The Annuity Man. Today's topic is what is a multi-year guaranteed

annuity? Which is very important because you're not going to hear about this at

the bad chicken dinner seminar. Because they're very simplistic. The Commission's

are very, very low which means it's good for you. And also, I encourage you to go

to my video on QLACs which are qualified longevity annuity contracts relatively

new to the industry. And I go over the disadvantages and advantages of those as

well.

We're going to cover a lot today about multi-year guarantee annuities. So, hang

in there with me. What we're going to do is going to go over what is a multi-year

guarantee annuity? How does it work? What does it solve for? And also, like all

annuity types there's benefits and limitations, we're going to talk about

the benefits and limitations of multi-year guarantee annuities. Also

called MYGAs --M-Y-G-A-S. I'm going to tell you where to go to look for the best

quotes for your specific state. And then i'm going to tell you where it fits in

your portfolio if at all. But after this video, you'll understand that. And at the

end, I've got a surprise for you and a gift that you need to get. So, what is a

multi-year guarantee annuity? Here's what it is.

It's the annuity industry's version of a CD. So, if you understand a CD, you give

the bank money and then they hold on to it and for a specific period of time of

which you dictate, they're going to pay an annual interest rate. That's a multi-year

guarantee annuity. You choose the specific period of time and there's a

specific interest rate that's paid annually. Not attached to the market that

you get. Just like a CD. So, CDs and MYGAS are pretty much the same product. The

only difference between the 2 is in a non IRA account, the interest from CDs

you have to pay taxes on. in a non IRA account, interest on multi-year guarantee

annuities gross tax deferred. That doesn't make them better that just makes

them different. So, what do multi year guarantee annuities solve for? Principal

protection. And nobody solved with 4 things. And the acronym is PILL. P, stands

for principal protection. I, stands for income for life. L is for legacy. The

other L is for long-term care. The P part, principal protection. That's what multi

year guarantee annuity solve for. Now, also people use them to peel off the interest.

You're guaranteed annual interest for a specific period of time that you choose.

Some people like peeling off that interest and using that as income. But

not all multi year guarantee annuities allow you to take interest out. Some do,

some don't. And if you're looking at those multi year guarantee annuities for

you. And that's important. You need to let me know so we can find those specific

ones that allow you to peel off interest. So you can take advantage of that. So, what

are the benefits of multi year guarantee annuities? Pretty obvious. You never ever lose

any money. It's principal protection you have a guaranteed annual interest rate

return. That's contractual. You can use it inside

of an IRA, you can use it outside of an IRA. Inside of an IRA, it's just

guaranteed interest. Outside of an IRA, the interest grows and compounds tax

deferred. Which separates it a little bit from CDs. One of the benefits about

multi-year guarantee annuities is it you can ladder them. You know, I had a recent

client say, "I'm trying to time interest rates." Please all-time interest rate, you

can't way to combat that to ladder multi-year guarantee annuities. Npw, how

does that work? Let's say you have $300,000, okay? And if that's high, I'm

just using an example, okay? You have $300,000. You buy

100,000-dollar in a three year duration. You buy 100,000-dollar in

a 4 year duration. Then you buy a hundred thousand and a 5 year

duration. What have you done every year starting in year 3, money's coming

due and hopefully we can roll that to another annuity. That's got a higher rate.

Also to with multi year guarantee annuities, you can transfer from one

annuity to another outside of an IRA without it being a taxable event. So, you

can keep rolling them and having the tax the interest deferring. So, that's a

benefit as well. And we're talking about taxes on multi year guarantee annuities.

The benefit is that you're deferring taxes when you're using a non IRA

account when that interest grows. CDs you have to pay taxes on that interest every

year. But understand that eventually when you do take money out of that multi year

guarantee annuity, you will have to pay taxes on that. At last in first out, gains

first at ordinary income levels. Let's talk about the limitations of multi year

guarantee annuities. Of course, all annuities have limitations and benefits.

Multi-year guarantee annuities have limitations. So, let's talk about them

number 1, the surrender charges are very, very high. Meaning that if you

bought a 5-year guaranteed multi-year guarantee annuity -MYGA.

If you got out in year 3 said, you know, it's staying on and do it anymore

send me the money, those surrender charges are high. If you

hold it to the duration, obviously, there's

No Surrender charges. But that's a limitation. The other limitation is it is

backed by the carrier, okay? FDIC backs CDs which is great. I mean that's the

best coverage of all time. But with multi-year guarantee annuities, it's the

claims-paying ability of the carrier. Now yes, there are state guarantee funds that

back each policy up to a certain point, but you really need to make your

decision on the claims paying ability of the carrier. The other limitation is that

not all carriers offer multi-year guarantee annuities. You might have a

carrier in mind that you'd really want to do business with. They might not even

offer that product type. But a lot of them do. Let's go over the differences

once again on multi-year guarantee annuities and CDs, certificate of

deposits that you get at the bank. They're the same product. And as

you're getting a guaranteed interest rate for a specific period of time, the

difference primarily is how that interest is taxed in a non IRA account.

Inside of an IRA, a traditional IRA CDs and MYGAs, multi-year guarantee

annuities work the same. You're getting a guaranteed interest rate for a specific

period of time. But outside of an IRA and a non-qualified type account, the

interest on multi-year guarantee annuities that's not taxed until you

take the money up so it's growing and compounding tax deferred. Whereas, with

the CD you have to pay taxes on that interest every year. The other main

difference is who backs. You know what's the insurance behind it, what's the

guarantee. With CDs, you have FDIC the federal government is behind it 100%.

Which i think is the safest backing and guarantees available. With multi year

guarantee annuities and office Newser are regulated at the state level. So,

there's a state guarantee fund that backs carries up to a certain point. But

if you said which one's better, the backing of the CD is better. When you buy

them all two-year guarantee annuity, you're buying it for the claims paying

ability of that carrier. So, how long can you lock in a rate with multi-year

guarantee annuities? It really kind of depends on the interest rate environment

that's out there. In the past, they were as short as one-year in duration. Right

now at the time of the filming of this topic, it's about 3 years. It's the

shortest. You can go as far out as 10 years. Some will allow you to go farther

than 10. But I don't think you need to lock in that long unless there's a

specific thing that you're trying to solve for. I say 5 years is probably a

good range. 5 to 7 years. So where do you find the best rates from multi

year guarantee annuities? Remember that fixed annuities are regulated at the

state level. So, each state has a different approval list of multi year

guarantee annuities for your state. Some are different. New York's different

from Florida what's different from Texas was different from California. Now, on my

site, you can go there Stantheannuityman.com. We have a list that you can shop at

your leisure without signing up that you can filter your state and the duration

that you're interested in. And it'll list the top multi-year guarantee annuities

for your state approved in your state. And list them from the highest yield all

the way to the lowest. It'll also show the carrier rating so you can base your

decision on the claims pain ability. So, that's how you find the best rates for

your state. Stantheannuityman.com. So, where do multi year guarantee annuities

fit in your portfolio? Principal protection. If you're buying CDs or

Treasuries or have some money market or triple-a triple-a municipal bonds,

principal protection. If that's what you're looking for with an interest rate,

then multi year guarantee annuities should fit well in your portfolio

whether it's an IRA or a non IRA account. You're looking for guarantees. You can

choose the duration and then the yield will be guaranteed contractually for

that duration. C`ouple other places it fits in your portfolio. Obviously it's a

safe money principle protected strategy. But with some multi year guarantee

annuities, you can peel off the interest so you can actually get a little bit of

income while still protecting that principle. So, multi year guarantee

annuities, they might be right for you. And to further your education on multi

year guarantee annuities which is important. You need to know everything

about them. I've written a multi year guarantee annuity owners may

they'll ship to you for free at the link below. And I'll send it to you in this

really nice gold foil package.