Episode Transcript
Speaker 1 00:00:05 This is Annuity Straight Talk. Since 2008, your host Brian Anderson, has helped clients nationwide navigate the complex market for annuities With Brian's assistance, hundreds of clients have achieved a profitable and secure retirement. I would know because Brian has answered many of my questions concerning annuities and retirement planning, so that you can benefit as well. Let's get started. Here's Brian.
Speaker 2 00:00:47 Hello and welcome everyone to the Annuity Straight Talk podcast, episode number 84. My name is Brian Anderson, founder and creator of Annuity straight talk.com, answering all your questions about retirement and annuities in retirement. Uh, got a good handle on it, man. Dang, I'm good. Anyway, um, don't need to go through that all again. I guess I could like to start things out for people who are just getting here or just finding this one for the first time. There's a lot of 'em that go back. As I said, this is number 84. There's 83. Before this, um, I have not repeated myself too much, but I've talked about s uh, the same topic in different ways several times. I'm gonna do that again today. Uh, not gonna share my screen because, uh, the newsletter's mostly written. It's gotta be finished off and what the heck, it's visual aid.
Speaker 2 00:01:30 Anyway, you guys can look at my nineties style camper, uh, still at the Tucson, k o a, uh, a little issue with my truck. So I was happy to stay here. I got some really good buddies, have, you know, some good family time with them and, uh, it's been an enjoyable trip and it's almost time to go home. So by the time I think you guys see this, I'll be mostly home, if not all the way there. Um, but it's time to talk about, uh, talk again about my favorite product, the most popular indexed annuity maybe in history. The ions 2, 2, 2. Um, um, I've got a case study that illustrates a pretty solid point. Uh, there's a newsletter for this if you wanna read it. Of course. I'm gonna go into a lot more detail. It's kind of funny, sitting here in this campground, we had some new people just pop in.
Speaker 2 00:02:14 I'm doing the open air today. Uh, it's a little cooler than it had been, but it's warm enough. I might have to turn the AC on figure, maybe one of my, uh, neighbors will hear me talking about annuities and want to come, uh, join the conversation. But, um, as I can see, a lot of these people have a fair bit of money tied up in their motor homes. So maybe they don't have any left anyway, or they're already set up. Who knows? Okay, so Alliance 2 22. Um, anybody who's been around for a while knows that I don't have a problem with the product specifically. It's about how it's sold. Okay? It's got the big bonus. Um, I always say lazy agents love it. Uh, for that big bonus, it's an easy sales pitch. Hey, it's, right now it's 35%, 35% bonus. It's not free money.
Speaker 2 00:03:01 A lot of people bought it thinking that it was, uh, a lot of different ways to use it. It's a deferred income product. You can also use it for a death benefit for LE or for legacy planning, okay? But there are a lot of people I've heard from in the past, and this is why it was, uh, turned onto it several years ago. It's like eight, nine years ago this thing came out. Um, a lot of those people own a product that doesn't really work for what they're doing. So they got money stuck in something that really serves 'em no purpose, uh, which is kind of changing. It's, it's, it's getting better. I don't see that as often, but people are still like, those, the clowns in this, uh, annuity business are still saying, Hey, it's a 35% bonus. It's not okay. So this case actually happens instead of ragging on the product.
Speaker 2 00:03:50 Um, and I've illustrated before I go to the Ion's website, they, the company explains it perfectly. This is not a dig on the company, it's a dig on the stupid agents that sell it without doing research. So, um, it happens to be a case where it fits perfectly for these guys. So these guys are in their, uh, early fifties. They don't plan to retire for at least 10 years. They own a non-qualified annuity. That's kind of a separate topic. It's a cool annuity that they bought obviously in their early forties. It was a 10 year point to point on the s and p 500. It was a hundred percent participation rate, 10 year point to point. So they've waited this whole time and they're just getting to the point where, I mean, they, I think they're pretty much doubling their money, which is pretty cool.
Speaker 2 00:04:29 Um, I remember seeing that product years ago and it's like, who in the world is gonna wanna wait that long? Uh, for these guys, it was a small part of their portfolio. They decided to stuff some money away to protect it and maybe get some upsides. So, um, pretty cool move on their part. But they're about to cash in and get a really nice yield on the index annuity. So it's gonna be surrender free pretty soon. Um, someone recommend it, they roll it into the 2 22 and get some retirement income guaranteed in 10 years or so. It's a small, small part of their portfolio that seemed to be a good idea for them. They like the, the thought of that. Um, and so they got pitched the 2 22 of course, cuz that's, um, I dunno, probably 70, 80% of the people I talked to got pitched the 2 22.
Speaker 2 00:05:11 Um, well they found me and they read some of my information. They discovered a few things about the new contract the agent hadn't disclosed. So that's a red flag. I mean, if you can go out and independently verify details, material details that the agent didn't tell you, like you probably need to find somebody else to work with. And I know a lot of people that give the guy a second chance. Oh no, it's okay. I mean, uh, uh, stories. I could go more stories, but I guess I don't need to go off on too many tangents today. Um, so they asked me for a second opinion. Now this is where I could jump into sales. I could go sales and be like, okay, well, uh, theme's got a similar contract that's gonna illustrate better so I can show bigger numbers. Um, you know, Midland's got a contract that's going to, you know, has got more options and flexibility in it, plus it's got better growth rates.
Speaker 2 00:06:01 I could show that and I could go real aggressive and say, oh, no, no, no, don't buy that, buy this. But instead I tried to ask 'em. I say, okay, well there's two ways to go about it. You can go with the performance based, you know, you know, you guys know that 2 22 is the income's based on performance in the future, right? So the performance over the 10 year period that you defer, re uh, translates to the income that you can get guaranteed for life. So the thing about the 2 22 is, uh, it doesn't have a fee. So go back, I think a few episodes to guaranteed income with or without a fee. That's one of them. And you can, the difference between those two. So this is one without a fee. So the base guaranteed income is very low. Um, and all the potential depends on performance of the contract.
Speaker 2 00:06:44 It's hypothetical in nature, okay? So we don't really know what it is. You won't know how much to expect for income for several years. So I just explained this to 'em and make sure they understand. There were already a couple of things that I pointed out, tell you what those are. But you know, again, you can't guarantee anything. You don't know what you're gonna get for a long time down the road. So if you rely on the money and if you want, which is not necessarily this case, but if you rely on the money you need to hit a specific goal, then you don't wanna leave it up to chances where you go for the guarantee. You gotta pay to pay a fee to do it. And that's fine cuz you want maximum income, right? Um, the sticking point for these guys was that, uh, Allian, and I did a specific, uh, newsletter on this.
Speaker 2 00:07:25 I don't think I've done a podcast, so probably won't go back and do it. But Allian reserve the right to add an allocation fee to the indexes. So if they slap an allocation fee on it, um, then, uh, it's gonna re it's gonna drag down performance over long run, which is gonna affect the amount of income they get. So there's a lever that the insurance company can pull to control the cost of that contract. At the very least, they need to see an alternative. So, you know, athe Midland, they don't have an a, a possible allocation fee on those things. So those would be better options again, if I wanna take the sales route. But again, advice, okay, if you wanna go out, hey, that's fine, but they didn't like, they didn't like that fee potential. Um, I talk a lot about setting benchmarks. You find the highest guarantee available, then you can evaluate the likelihood of the 2 22 meeting or exceeding the income figures that are guaranteed hypothetical versus guarantee.
Speaker 2 00:08:22 In this case, the money is a small part of the couple's, uh, total asset. So there's not a real negative implication for whatever they choose. If they want to take the re take the shot and go for the 2 22, they can do that. Um, and so that's kind of what I talked to 'em about the first time. Listen, you can go guarantee. Um, so they're projected to have roughly 218,000 to roll into the new contract. So I ran it through the database. Again, objective analysis, uh, and North American, which is the sister company in the Midland came with the top number. I I can't control that. It's just what, it's just what it is. That's how simple it is, right? $218,000, they defer for 10 years. Uh, north American would guarantee to give them over 27,000 per year for joint life. So as long as either one of them is living early fifties, collect in early sixties, lived to early eighties, they're gonna get $540,000 out of the contract lift past that.
Speaker 2 00:09:21 It's just gravy on top, right? So the numbers for the 2, 2, 2 work a bit differently. Like I said, the guaranteed is low because there's no fee. If you factor in the initial purchase price along with a 35% bonus in 10 years, the minimum guarantee is set to be 13,250 ish. For, for joint life, same thing. Half the income, right? Less than half the income. This obviously assumes that there's no growth in the contract. We know it's gonna grow a little bit. I will never say it won't grow, it's not set to grow super, super well, but, um, it's gonna grow a little bit. So it'll be higher than the guarantee. Um, but is it gonna be high enough to double that payment to equal what the guarantee was from North American? So it will grow some and I don't think it's gonna grow that much. So you're talking about, um, okay, so the 2 22 has a 6% cap rate on the s and p 500. That's the best index to use because we have real numbers for the projection. We're not dealing with the hypotheticals on a back tested index. Okay? 6% cap rate.
Speaker 2 00:10:27 Now, they asked me to assume that the contract hits the cap every year. So what they do is for the income, your account goes up by 6% and they give you an extra 50% bump on that for the income value, it's an additional bonus. It's not your money, okay? So if the, if it hits a cap of six, then your income gets a 9% jump. They said, well, let's assume the contract hits that cap every year for 10 years. They asked the agent who was selling it, Hey, what would that look like if it hit the cap every year? He said, oh, I I can't do that. Um, that's really easy to do and it's one of the very basic things you can do to demonstrate your knowledge of, uh, financial products and just numbers and compounding. Come on. I don't know what to say about guys who will not calculate that.
Speaker 2 00:11:12 Um, income amount is increased by the index growth plus 50% boost to that each year. So it's basically 9% compounding. If it caps out every year, I plug the numbers in, found out in the best case scenario, which would be the s and p 500 going up 6% or more every year, the income will be just over $31,000 per year, which is better. But the s and p has to go up every year by at least 6% and Allon can't change that rate or add an allocation fee along the way. Now it's the only way to beat the guarantee. So the guarantees 27, they gotta luck out. And I would say if the market's gonna go, if you think the market's gonna go up every year for 10 straight years, and you probably shouldn't buy an annuity, just stay in the market, right? Um, I don't even have to explain how unlikely that is to happen, right?
Speaker 2 00:12:01 6% every year, uh, no drop in rate, no allocation fee, impossible. Okay? And because there wasn't a big difference in that knowing that that had to, you know, the contract has to double the match the guarantee. They said, Hey, this is a little piece of what we got. Let's just take the guarantee. Yeah, there's a fee on it, but we're looking for maximum income. We'll take the 27 because even if they took the 2 22 really great performance might get 'em to 27 might, but they wanna guarantee it. They bought, had annuity they forgot about for 10 years, right? So they can forget about this one, knowing that the contract is gonna guarantee that figure when they, when they turn it on. Um, and if they wait longer, it'll be higher. They can take it earlier if they want, but they turn it on and it goes, all right.
Speaker 2 00:12:44 So, um, rather than rag on the product, um, just show you in a competitive scenario why you need to look at options no matter what you do. Um, don't take my word for it or anyone else. Um, I can show you and verify where I get my numbers. That's, I guess the point of doing this to say, here's how I come up with the solutions. Um, and this is different, you know, again, I'm not, uh, you know, I've been watching income contracts. I haven't been selling them a whole lot until the last year or so when the rates came up and we had some really solid guarantees. But, you know, for these guys to more than double their money, like 250% return of their money by age 82 or 83, right? Um, on a guaranteed basis, that is pretty dang strong. If one of 'em lives even one of 'em lives 90, holy cow, it's gonna be really good.
Speaker 2 00:13:39 So anyway, this is the kind of stuff I go through. Again, I'm not just gonna try to sell you a better product. I'm gonna explain the different strategies These guys decided to go for it. I appreciate the business. Um, but that's not how everybody decides to do it. So you are you and you decide what you like to do. Anyway, this has been episode 84, allons 2 22 versus fully Guaranteed Income. My name is Brian Anderson. This is Annuity Straight Talk podcast episode 84. Please, like, comment or subscribe to any of, give it the little thumbs up on the podcast apps or on YouTube. Uh, let me know what you need from me. I had a g I had a guy I met just last week. Gave me a pretty good topic, uh, for the podcast. I'm gonna do that soon. I've got a couple other ones on tap that I'm gonna work on. I'm gonna be heading back to Montana soon, but I will see you guys when I'm there. Obviously, there's a little lag for this, so you'll probably see proof of that about a week after I get there. Anyhow, uh, thank you so much for joining me. I look forward to seeing you next week. Four, episode number 85. Uh, have a great day. Bye.
Speaker 1 00:14:53 You have been listening to Annuity Stray Talk. The proceeding information is for informational and educational purposes only and does not represent tax, legal or investment advice. Reviews expressed by guests on this program are their own and do not necessarily reflect the views of annuity, straight talk or its partners. No information presented today should be acted upon without meeting with the qualified licensed professional. It is important that you read all insurance contract disclosures carefully before making a purchase g based on the insurance.
