How to know if an annuity is right for you
By Stan The Annuity Man
The biggest mistake that consumers (and the financial media) make with annuities, is referring to the category as one product. The misleading mantra of “I hate all annuities” is like saying “I hate all restaurants.”
The simplest way to find out if an annuity would be suitable for your specific situation and to find out what type of annuity is the best fit, you need to only answer 2 questions:
- What do you want the money to CONTRACTUALLY do?
- When do you want those CONTRACTUAL guarantees to start?
That’s it. From those 2 answers, it easy to choose which annuity type provides the best contractual guarantee for you.
There are many different types of annuities that all have a unique benefit propositions. Below is a listing of those specific types.
- SPIAs (Single Premium Immediate Annuities)
Solution: immediate lifetime income guarantees starting as early as 30 days and up to one year
- DIAs (Deferred Income Annuities/Longevity Annuities)
Solution: future lifetime income guarantees starting as early as 13 months and can be deferred up to 40 years
- QLACs (Qualified Longevity Annuity Contracts)
Solution: future lifetime income guarantees using your Traditional IRA money while lowering your RMDs
- MYGAs (Multi-Year Guarantee Annuities)
Solution: annuity industry’s version of a CD, with interest compounding tax deferred in a non-IRA account
- FIAs (Fixed Index Annuities)
Solution: historically better than CD returns, and overhyped by agents as “market upside with no downside”….which is misleading and incorrect
- VAs (Variable Annuities)
Solution: separate accounts (i.e. mutual funds) provide potential market growth that is tax-deferred in a non-IRA account
- Income Riders
Solution: attached future lifetime income benefits offered by some VAs and FIAs, and mis-sold by agents as yield
- CGAs (Charitable Gift Annuities)
Solution: immediate or deferred lifetime income guarantees using a charity, with that non-profit providing a lifetime income stream but keeping the $$ when you die
- LTC Annuities
Solution: long term care or confinement care coverage while still retaining full control of your money.
Annuities are not investments, they are contracts. Because of this fact, you should always buy an annuity for that specific contractual guarantee. In other words, own an annuity for what it will do, not what it might do. Do not be swayed by an agent’s dream sales pitch of non-guaranteed return scenarios, cherry picked back tested numbers, or hypothetical and projected %’s. Buy the contract. Own the contractual guarantee.
I’ve written easy to read Owner’s Manuals on most of the annuity types listed above, and will ship you those books under no cost or obligation. Simply go to my website at www.stantheannuityman.com and fill out the form. No one will contact you or show up at your door. My gift.
So, the next time you see that TV commercial saying, “I hate all annuities”, then you must assume that person hates all restaurants as well. Makes as much sense.
Stan The Annuity Man®
“America’s Top Independent Annuity Agent & Annuity Educator”
800.509.6473 Toll Free