Fixed Indexed Annuities Explained - YouTube

Fixed indexed annuities explained. No. This isn't  going to be a 2-hour long video but it could be  

if i was going to explain every nuance of  fixed indexed annuities, index annuities,  

hybrid annuities, whatever you're being pitched.  Here's the good news: I've written a book on it.  

The Indexed Annuity Owner's Manual that I'll  send you for free and under no obligation.  

Just go to my site at theannuityman.com and I'll  ship it to you. But let's get down to the topic.  

Let's get down into the meat of the matter of  indexed annuities. But not until I hear music.  

So, what is a fixed index annuity? It's very  simple. It's a fixed annuity. It's not a security.  

It's regulated at the state level. But in  essence, a fixed indexed annuity, a fia,  

F-I-A is the acronym was introduced in 1995 to  compete with CD returns. It is a cd product. So,  

I know that people out there in the hinterlands of  the annuity world, the internet, the bad chicken  

dinner seminars, whatever, they're pitching index  annuities as market return products. They are  

not. They're cd return products. They're also  a very efficient and cost-effective way to  

deliver an income rider guarantee for future  income needs. Indexed annuities can be very  

complicated. Currently, at the time of this  taping, there's over 700 index option choices  

available to you. Indexed annuities, certainly  I'm not going to go through every single one. But  

in the book that I showed you at the intro that I  want you to get for free and under no obligation,  

I go through a lot of the ones that are out there.  And also clearly and simply explain the caps and  

the spreads and all of that participation rates,  all of that mumbo-jumbo jargon that you hear when  

people pitch you indexed annuities. But at the end  of the day, a fixed index annuity is a cd product.  

So, what is the downside of fixed indexed  annuities? First, let's start with the upside.  

The upside with the fixed index annuity is that  is fully principal protected. You're not going to  

lose any money from stock market gyrations, etc.  That's a positive. Another positive is any gains  

that you earn with an indexed annuity is locked in  permanently at that contract anniversary date. So,  

those are some great things. In addition, another  positive as I mentioned previously, it's a very  

efficient and cost delivery system for an income  rider guarantee. That's primarily how Stan The  

Annuity Man, America's Annuity aAent uses indexed  annuities. But is a good product when people fully  

understand how it works not the sales pitch and  the pie-in-the-sky and the unicorns chasing the  

butterflies presentation that everyone's giving  out there which is market upside with no downside.  

And principal protection with potential market  upside. All that yummy catchphrase nonsense. Just  

remember, if it sounds too good to be true, it is.  I think the disadvantages of indexed annuities are  

that you are not going to get market returns. it's  not a market return product it's not a security  

it's a fixed annuity regulated at the state  level. The other thing that I think is a negative  

is that for instance when you buy a 10-year  surrender charge fixed index annuity that has  

one-year call options on the index part, you're in  essence buying a 10-year surrender charge with a  

one-year guarantee. Because the annuity companies  can change the way the caps and spreads and  

participation rates. They can change the way,  those are calculated at their discretion. So,  

one of the things that you need to be aware of is  what's called renewal rates. And some companies  

are very fair to the customer with that. And some  companies just seem historically not to be. We can  

walk you through all of that. But as long as you  have in your mind that it's a cd type product,  

you're going to be fine. When people  get in trouble with index annuities,  

one of the disadvantages is obviously how it's  sold and pitched and presented. Do not blame  

the annuity companies. They can't regulate how  people are trying to sell their product. I mean,  

there's just no way. That's like if you went to  a car dealership and the guy saying, "This little  

Ford Pinto can you climb mountains." No, it  can't. I mean... But you know, Ford can't  

say that. Car salesman, you can't say that.  Same thing in the annuity industry. You know,  

to sell indexed annuities, you do not need a  securities license. You only need a state life  

insurance license. So, a lot of people out there  that are selling them have never been in managing  

real market assets, etc. So, you really have  to be careful. Don't believe the sales pitch.  

I would encourage you to get my book. Schedule  time with me. If you want to see a quote,  

we can go over the quote and I can fully  explain it to you and very easy-to-understand  

terms. There's advantages to indexed annuities and  there are disadvantaged to index annuities. Just  

like with every single annuity product, but you  have to know both before you make a good decision.  

So, what is the difference between a fixed annuity  and a fixed index annuity? You know, I was talking  

to my team before we went in to shoot this. And  they're giving me all these examples. And of  

course, I can't remember anything. You know, I'm  on the fly, man. I'm just riffing here. But what  

you have to understand is a fixed indexed annuity  is a fixed annuity. The fixed annuity category is  

fixed indexed annuities, multi-year  guarantee annuities, immediate annuities,  

deferred income annuities, qualified longevity  annuity contracts. Those are all fixed annuities.  

So, a fixed index annuity is a fixed annuity.  Let me see if I can remember how that my team  

explained it and my CEO. She's so smart. But  I can't remember what she said. But hold on,  

let me see if I can pull it. All thumbs are  fingers. But not all fingers are thumbs. That's  

the way she says. Which means that (english)  all fixed indexed annuities are fixed annuities.  

But all fixed annuities aren't fixed index  annuities. We clear yet? Of course, we are. So,  

the question is I guess, "Are fixed index  annually is a good investment?" Number one,  

I don't consider them an investment. Annuities  are contracts. So, a fixed indexed annuity is a  

contract issued by a life insurance company. It's  a CD product. That doesn't make it good or bad  

but it's not a security, it's not a market  product, it's not a market growth product, it's  

not a principal... It's a principal protection  product but it's not a too-good-to-be-true,  

pie-in-the-sky, unicorns chasing the butterflies  type product that you hear. One of the things  

about index annuities on the sales pitch... And  this will sound so good to be true that when  

I say it you'll lean into the screen and go, "Oh,  that sounds good." Here's the pitch" You get a  

10% up front bonus for signing the paperwork.  You get market upside with no downside. You get  

free long-term care. And you get an income rider  for lifetime income. And you go, "Wait a minute,  

that sounds really good." Okay, let's go through  that. The bonus, never buy an annuity for an  

upfront bonus. You never transfer an annuity for  an upfront bonus. I call upfront bonuses candy for  

the stupid. Because if you believe that someone's  giving you free money, then you're the rube at the  

table in Las Vegas. It's just part of the overall  contractual guarantee. Upfront bonuses are fine.  

Like for instance, when we quote fixed index  annuities with income riders... You know,  

some of the products have bonuses, some don't.  Funny thing is a lot of the times the contractual  

guarantees the highest do not include the upfront  bonuses. Let's go through the rest of the pitch  

--market upside with no downside. We covered that.  These are cd type products that just really sounds  

good as a 30,000-foot pitch. The next thing that  they'll talk about is free long-term care. That  

is not true. Long-term care is a health insurance  product that is a great product. You should never  

cash in your true long-term care coverage  for an indexed annuity with a confinement  

care rider. You can get confinement care  nursing home care coverage. And I have done  

videos on that and on that. I'll send you my  Income Rider Owner's Manual as well. That explains  

that. But these are guaranteed issue products. If  you're smoking 12 packs of lucky strikes with no  

filter and you're drinking a bottle of Jack  Daniels every day, number 1, congratulations, you  

are killing it out there and killing yourself. But  you do qualify for these confinement care nursing  

home care riders. That doesn't make them great  because there's no bar for entry. I mean, with  

traditional long-term care, you have to go through  the underwriting procedure, etc. So, when someone  

pitches you all those things and they all kind of  sound too good to be true --up front bonus, market  

upside with no downside, free long-term care, etc.  You know, don't nudge Mard or Fred to say, "Uh,  

that sounds too good to be true." And if it sounds  too good to be true, it is every single time with  

annuities without exception. So, are fixed indexed  annuities a good investment? Getting back to the  

original question. Maybe. Again, I don't call  them investments, I call them contracts. So,  

if you want that type of contractual guarantee,  it could fit in your portfolio appropriately  

and suitably if you're looking for principal  protection, if you're looking for cd type growth.  

And if there's a possibility that you want  future income we can attach an income rider  

and quote all income riders for the highest  contractual guarantee. So, under those scenarios,  

it might fit your specific situation. Just don't  buy it for market growth. Hey, do me a favor and  

share, like, subscribe. All that stuff to make me  and my wife happy and make my wife happy. That's  

good. But if you're really serious about index  annuities, you need to book a call with me. Go to  

theannuityman.com, top left-hand part of the home  page, you can book a call. And then me and you can  

talk one-on-one. I can fully explain it. So, I'll  see you on the next Stan The Annuity Man video.