Stan is brilliant an exploring, understanding, and explaining the important mechanics of FIAs. Most insurance people are great at selling FIAs, but they cant explain the nuts and bolts like this guy can. Thanks, Stan!
I wish I was learned 4 months ago you are fantastic . now I feel I wasn't someone who even needed an annuity. at all .. I was punched into it .and I'm getting out before my 30 days
I just started watching your videos this morning. After attending a bad chicken dinner seminar last night, I’m glad my intuition was telling me to do more research. Thank you for explaining FIA’s to us so that we can understand the upsides and downsides and also understanding that this isn’t a market investment. Comparing a FIA to a CD is probably the easiest way for me to understand the logic behind them. Thank you very much, Stan!
I'm glad you find the videos helpful. Be sure to check our out podcast - Fun with Annuities, available on all podcast platforms and RUclips. Thanks for watching!
You're correct. You can expect 1-3% return per year (but remember, you have to add on the return from the promotional 20 or 30 or 35% they give you up front). Those returns plus the return from the bonus DEFINES the "pension" checks will will get from the annuity company..FOR AS LONG AS YOU LIVE. AND.....any money that's left over, your KIDS will get (as long as they follow the annuity company rules and take the money out slowly, over a period of years).. So...for a conservative investor who wants the security of wealth preservation PLUS some wealth (1-3%) increase over time PLUS a guaranteed monthly pension check....NOT A BAD DEAL! I've done options before (buying and selling)....THAT AIN'T EASY! Let the professionals do it!
You sound like an agent that likes to sell bonuses. I'm glad you agree that FIAs don't have the return that is sometimes hyped, but you bring up the large upfront bonuses. If the bonus give you the best GUARANTEED "pension" checks GREAT! But in our analysis, the big bonus FIAs do not usually provide the highest guaranteed income. Additionally, the bonus is not part of the value that is left for the beneficiaries unless certain rules are followed - i.e. taking the money over a period of time. In most cases the bonus is for income only and if the income isn't the highest guaranteed number it doesn't matter how large the bonus is.
So today CD rates near 5.5% 8/14/2023 ....Expected FIA's Interest would be 6% or so?? Thanks Great Video BTW. So there are 2 moving parts for Interest...CD like corporate Bond rates and S&P 500 rates caped at say 10%......Still confused
Great video. Question for anyone that can answer it: As mentioned, an annuity company is immediately required to buy investment grade bonds to protect the floor. If the FIA is a 10 year product (for example), and interest rates happen to rise during that 10 year period, wouldn’t the annuity company lose a significant amount of money reselling those same bonds on the market at a discount? I understand they would have received the semi annual interest payments in the meantime, but wouldn’t they lose a substantial amount of money when reselling these? Or do they simply buy 10 year bonds and hold them to maturity? Thanks.
@@jimbo7300 They hold the bonds until maturity. That is why there can be substantial surrender charges if the policy is cashed in before the end of the term. The insurance company may need to sell the bonds backing the policy. Thank you for your question and for watching!
There are carriers that offer uncapped FIAs with average rates of return over the past 10 to 15 years of 7.8% to nearly 9% and the interest can be locked during each contract year. There is a 1% charge for the 2 indexes with the interest lock but they still outperform the non-fee indexes (Midland RetireAdvantage 10). These average returns are higher than CD rates....what are your thoughts on uncapped FIAs?
Based on the average return of FIAs since they have been released it is a 3 - 5% return. Yes some can have larger returns in some years but on average you can expect CD type returns. If you are looking to maximize potential returns then an uncapped strategy is the way to go, but do not expect 7% every year or even on average. The products were not built for that.
what you have mentioned about buying options does not make sense; if companies buy 'call' options, we are paying a premium for a right to tap in to unlimited profits; the premiums are fairly large & cannot be accounted by what you term as putting money into bonds; it is not clear how indexed annuities are managed internally
The majority of the premium placed with an annuity company is used to purchase bonds to support the guarantees in the contract. A small portion is used the purchase the options. The options purchased by the insurance company have the "levers" built in. Participation Rate, cap, and/or spread. If the option returns a gain, all of the gain is credited to the policy. If the options do not return a gain, the expire and no credit is given the policy. I hope this helps.
Stan is brilliant an exploring, understanding, and explaining the important mechanics of FIAs. Most insurance people are great at selling FIAs, but they cant explain the nuts and bolts like this guy can. Thanks, Stan!
You are welcome. Thanks for watching!
I wish I was learned 4 months ago you are fantastic . now I feel I wasn't someone who even needed an annuity. at all ..
I was punched into it .and I'm getting out before my 30 days
Sorry to hear about that. If you have any questions, don’t hesitate to reach out to us.
www.stantheannuityman.com/book-a-call/
I just started watching your videos this morning. After attending a bad chicken dinner seminar last night, I’m glad my intuition was telling me to do more research. Thank you for explaining FIA’s to us so that we can understand the upsides and downsides and also understanding that this isn’t a market investment. Comparing a FIA to a CD is probably the easiest way for me to understand the logic behind them. Thank you very much, Stan!
Michael, you are very welcome. For more information, head over to my website. TheAnnuityMan.com
As someone who is new to annuities, this is gold!
I'm glad you find the videos helpful. Be sure to check our out podcast - Fun with Annuities, available on all podcast platforms and RUclips. Thanks for watching!
Thanks Stan. Very informative I have fixed indexed annuities.
Glad it was helpful! Thank you for watching!
You're correct. You can expect 1-3% return per year (but remember, you have to add on the return from the promotional 20 or 30 or 35% they give you up front). Those returns plus the return from the bonus DEFINES the "pension" checks will will get from the annuity company..FOR AS LONG AS YOU LIVE. AND.....any money that's left over, your KIDS will get (as long as they follow the annuity company rules and take the money out slowly, over a period of years).. So...for a conservative investor who wants the security of wealth preservation PLUS some wealth (1-3%) increase over time PLUS a guaranteed monthly pension check....NOT A BAD DEAL! I've done options before (buying and selling)....THAT AIN'T EASY! Let the professionals do it!
You sound like an agent that likes to sell bonuses. I'm glad you agree that FIAs don't have the return that is sometimes hyped, but you bring up the large upfront bonuses. If the bonus give you the best GUARANTEED "pension" checks GREAT! But in our analysis, the big bonus FIAs do not usually provide the highest guaranteed income. Additionally, the bonus is not part of the value that is left for the beneficiaries unless certain rules are followed - i.e. taking the money over a period of time. In most cases the bonus is for income only and if the income isn't the highest guaranteed number it doesn't matter how large the bonus is.
So today CD rates near 5.5% 8/14/2023 ....Expected FIA's Interest would be 6% or so?? Thanks Great Video BTW. So there are 2 moving parts for Interest...CD like corporate Bond rates and S&P 500 rates caped at say 10%......Still confused
Great question, please feel free to book a call with me to discuss:
www.stantheannuityman.com/book-a-call/
Thank you. Very informative
Thanks for watching!
Great video. Question for anyone that can answer it:
As mentioned, an annuity company is immediately required to buy investment grade bonds to protect the floor. If the FIA is a 10 year product (for example), and interest rates happen to rise during that 10 year period, wouldn’t the annuity company lose a significant amount of money reselling those same bonds on the market at a discount? I understand they would have received the semi annual interest payments in the meantime, but wouldn’t they lose a substantial amount of money when reselling these?
Or do they simply buy 10 year bonds and hold them to maturity?
Thanks.
@@jimbo7300 They hold the bonds until maturity. That is why there can be substantial surrender charges if the policy is cashed in before the end of the term. The insurance company may need to sell the bonds backing the policy. Thank you for your question and for watching!
@@StanTheAnnuityMan Great. Thanks, much appreciated.
You are too funny on the clothes LOL
There are carriers that offer uncapped FIAs with average rates of return over the past 10 to 15 years of 7.8% to nearly 9% and the interest can be locked during each contract year. There is a 1% charge for the 2 indexes with the interest lock but they still outperform the non-fee indexes (Midland RetireAdvantage 10). These average returns are higher than CD rates....what are your thoughts on uncapped FIAs?
Based on the average return of FIAs since they have been released it is a 3 - 5% return. Yes some can have larger returns in some years but on average you can expect CD type returns. If you are looking to maximize potential returns then an uncapped strategy is the way to go, but do not expect 7% every year or even on average. The products were not built for that.
what you have mentioned about buying options does not make sense; if companies buy 'call' options, we are paying a premium for a right to tap in to unlimited profits; the premiums are fairly large & cannot be accounted by what you term as putting money into bonds; it is not clear how indexed annuities are managed internally
The majority of the premium placed with an annuity company is used to purchase bonds to support the guarantees in the contract. A small portion is used the purchase the options. The options purchased by the insurance company have the "levers" built in. Participation Rate, cap, and/or spread. If the option returns a gain, all of the gain is credited to the policy. If the options do not return a gain, the expire and no credit is given the policy. I hope this helps.
I have an index annuity. Is that the same as a fixed?
An index annuity is a type of Fixed Annuity.