Episode Transcript
[00:00:00] Speaker A: Hello and welcome everybody to the Annuity Straight Talk podcast, episode number 153. My name is Brian Anderson, founder and creator of annuitystraighttalk.com. all the information is mine. Looking things up today and sharing some, a little bit of research didn't take too long to put it together, but I'm going to follow up last week's episode. Please like subscribe or comment any of your favorite podcast platforms or on YouTube. Share it with your friends. Get it out to people who you think might be interested in the topic. Heck, send it to your advisor if he's a buddy of yours and you like him. It's like, hey, listen, different perspective. Check it out, see what he thinks. She thinks, whoever it is, get a nice community of advisors that reach out and say thanks or they have some ideas or, you know, once in a while somebody is going to correct me. I'm not right about everything, but I'm right about a lot. So anyway, last week I talked about an index annuity is pretty interesting. Five year deal for Midland national and we didn't look too much. Hypotheticals I looked at. It's built to beat them. Beat a myga. That was the idea. And a lot of people are asking this. We're seeing some really nice returns on indexed annuities this year. So I did something I haven't done in a few years. Markets were down, indexes were poor. We're going to talk about 2024 annuity index performance, and I'm going to take my top three carriers and just grab a handful of them now. There's hundreds of them out there. I always say if one does well, they all do well. I like a strong company. I like really good customer service. I like a good online platform for people to check their account, do service stuff. And all those things rank into this right now. Why I put the certain companies at the top that I do, and I will share my screen with you so that I can show you some of these indexes and then I'll tell you how I calculate it. There's going to be more information in the newsletter. If you want to just see the numbers, you can go check that out.
But I talked about how migrates are coming down a little bit. Index annuities are down a touch too, not quite as much, but still have that outsized potential. And that's when people get more interested in it, where the five and a half from an a plus company isn't out there for mygas anymore. It's under 5%. But there's always, it's always been a toss up in past performance, what I've seen, the index annuities are supposed to meet beat the myga most of the time they do by a little bit. Sometimes they do it by quite a bit and sometimes they run neck and neck or a little below, but it's really close. And now, but I've never really had these types of rates to work with an index annuities, but I haven't been around for twelve or 15 years and so we're seeing some really nice yields. I thought I would share that with you. Now I'm going to run these indexes on today's rates. This is the past year of what we're going to do.
And I'm going to talk about the companies that I like. So I've got the bullet points from the newsletter. So the newsletter is not even written yet, but I. No big deal. So I'm going to talk about Midland National first. Let's share the screen and we'll go to this. And all I did is even within these companies, there's different products. Okay. Each company's got a range of products. I'll explain that. And they've got probably Midland. I'm going to start with Midland national. They've got twelve different index options within their ten year contract. That five year deal I talked about last week, there's only four or five. It's a little easier. It's one thing I say when you extend the surrender term of the contract, you usually get a little bit higher rates, but you also get a lot more index options. So you have more variability in what type of returns you can chase.
So Midland national right now, obviously the S and P 500 had an incredible year since one year ago I had that pulled up, it's like 34% now. A year ago it was down ten or 12% off of its previous high. So I had to recover that and then go up another 20 or so. So it's really good. So with each of these, I'm going to talk to you. So Midland national, they've got index annuities built for accumulation that range from five year surrender to ten or even 14 year surrender. I've never sold the 14. I've gone up to ten. It's a really nice contract, one of my favorites of all time. Very good. So you can get five. And I'm going to talk generally about the products as a whole. These aren't going to apply to every single one of their products, but this is what it is. So their S and P 500 cap rate right now is 9%. If you bought it last year and put it in the s and P, since it's up 30, you would have been capped at nine. You got a 9% yield, you lock it in, and that's your new guaranteed minimum. That's what people like about it. Now, what we're looking at right now is a new index. They have the Nasdaq 100. It's a 12% volatility index. If you want to go back and look at the newsletter, there's a podcast I did last year about crazy annuity indexes. I'll say it real quick, that 12% volatility level is pretty aggressive. It's depending on the VIX, the volatility index, which averages around 12%. But if the VIX, like it has been when it's really volatile, is up at 24, 25, a 12% volatility target is only going to have half of the funds dedicated to the equity portion of that. A lot of the indexes are 5% volatility. And if it's a 24 5% volatility, it's only going to have 20% of its money. That means that it's got, the whole fund has a 5% volatility exposure. That's how that works. So 12% gets into very aggressive, where you see big upside movements in that. So if I look at now, I did some rough calculations. This is not exact. All right? And this, I don't like the screen because they pop up a video every time I open the page. This is up, in the past year, the Nasdaq 100, the 100 biggest stocks in the Nasdaq, it's up 10.62%, a little bit below the market, but it's a volatility control, and we've had a lot of volatility with Midland, you can get up to a 70% participation rate. So that equals a 7.43% annual rate of return. Good for safe money, good for equity exposure. If you look at it in the past, there's some bigger movements available. A lot of that could have been more, you could have been looking at double digits. But we've had a bit of a sell off in the Nasdaq, and that's a big part of the S and P 500 is those big stocks. But anyway, that's always an exciting one because you can see some really chase some really big returns. The other one, and I'm only do a couple for each one of them, even though there are more, and I'm not, I'm typically picking some of these are new each company. I'm going to do one of the new ones and I'm going to do one that's been around for a while. So S P mark five. A lot of people I've had in that index in the past, it has years where it's done extremely well. This past year it is up 10.82%.
National will give you up to 150% participation on that index, which would have given you a 16.23% annual return. I have other clients who got that contract in the last year or so or in the or like four or five years ago that still have an 85, 90, 95% participation. They're still looking at percent rate of return if that holds for through their contract anniversary. So looking at where the contracts, what's available now, when the index moves that way, you've got 16% upside potential is very good. This is what would have happened last year. That 150% might have been 167, might have been a little higher, would have been even better. But we're talking about today's numbers, last year's performance. One year. What is possible within one year? I'm going to move on to massmutual ascend. And they currently have. This is a former, formerly great american. Love the company.
I actually got a call. They have a photo contest with clients. One of my clients was chosen at a winner of the photo contest. They're going to interview us together and we're going to talk about what this business means to me, what his annuities meant to him. This is going to be really fun. So I got to talk about Phil. I love you. This is going to be great. And by the way, that photo was awesome. With your permission, I will use it on the website because it is a cool shot. Horseback riding in Wyoming. Yeah. Phil and his wife are great people and been working with him for six years now. So cool. But that's what massmutual ascend is doing. Gonna be really fun. They currently have cap rates up to 8%. Now, you might remember earlier in the year they, in that 8% rate, they'll guarantee that for the entire year term. So their contracts are five or seven years. They're both good. The seven year has a few more options. So they'll guarantee that for the entire surrender term. Obviously, Midland has rates. They'll guarantee for the five year surrender term, that entire contract. That five year deal is really good at a few handful of people asking about it. Yeah. What's not to like? What's everybody scared of, right? Okay, so cap rates up to eight. You would have got eight. Last year they were quite a bit higher. Um, those guys, those have, you know, about from maybe ten or 11% cap down to. So they have done that. But this one I'm looking at, I'm going to look at right now, the S P 500 daily risk control 10% index. I really like this index. This has done very well for clients of mine in the past have seen excellent yields. I had one person follow this index in their 7th year of a seven year contract. They did nine and a half percent yield on a contract that was bought back in 2017 when rates weren't that great. That's phenomenal performance for an index annuity. Back then, a seven year mygo would have paid about three to three and a quarter for seven years. So excellent yield in a final year. And what did they do? They renewed it into a new contract to get even higher rates. This was great. It worked fine. That's what index annuities do. They're nothing to be afraid of. There's a lot of really good potential if you want to play that game and have some of those years of, wow, this is really cool. Double digits. This is it. So they got this index based on the dates, which is as of September 24. That's the day I'm recording this. So by the time this comes out in five days, big deal, it's close. So massmutual ascend will give you up to a 65% participation of that. That equals a 16.54% annual return for anybody who was in that the past year. A lot of times I took those contracts, I split it with the S and P cap and the S P risk control ten. So some of those are going to come through this fall. I'm really looking forward to those. People are going to be looking at 1213 percent. Nothing wrong with that. Guaranteed safe money, locked in, no fees, awesome contract. They also one of the other indexes they've had for a long time that I think is a nice hedge. Some people don't like it. You don't have to do any of these indexes and you can choose other ones. It's not a rundown of all the products between. Massmutual is one of the simplest companies.
I'll do this a little bit more about that later. Their SPDR Gold shares, it comes with a cap rate of up to 10.5%. That Gold shares index went up substantially. Gold spiked at about, it's probably up 2020 5%, maybe more this past year. Obviously that capped out so two or three different ways within the massmutual contract to get a double digit yield, two or three within Midland national as well. Next I'm going to go to Athene now. I talked to somebody about this morning. Why don't you really like Athene? Well, I'm not going to come out and really bash anybody. I haven't had the best customer service experience with them going back about six or seven years. And in recent years they've been better. They're really busy and I don't, I've had a hard time servicing stuff, which is more my a problem for me because I choose to do that for the people that want to work with me. I always say let me do it because it's faster. Some issues with that, we won't go into credit rating, private equity. Some people don't like the private equity angle. The TSR ratios are a little bit out of whack. If there's truth to that. I don't know. It's all speculation. But I put them in my third position because of just the combination of all those things. They're not my first choice. And again, some people say I just really like that contract. Yeah, let's go for it. Fine. It's okay. They've got five to ten year contracts. I highly recommend only the seven for the number of options plus the rates that you have. But in a general sense their S P cap rates are up to about nine and a half percent. So it's a touch higher than Midland. That goes for their ten year contract.
They've got a different Nasdaq index. Now forgive me if I can't totally explain this, but they've had this one for a year and a half or two. It's called the Nasdaq fast, fast convergence. It's a twelve and a half percent volatility target. If I look at this, the one year rate of return is on there. Very good year. So what did it do? Let me see here. I already had it. It's up about twelve and a half percent. In the last year. It went up 30 points from 240. That's roughly twelve and a half I didn't do. They're offering you up to 110% participation on that. So you're gonna get 110% of 12.5% which would be an annual return of 13.7. And then they're tried and true. This is a consistent index they've had for a long time. We've seen good years. It is bond related, it's got some fixed income in it. So it's had a good little run in the past six months or so. With the rates coming down, you can see that this one is a 5% volatility target. So it's very conservative. A lot of that money, if the market's volatile, is going to be sitting in cash or bonds, whatever that would be. And so you're highly susceptible to movements in interest rates with that index. But you can see the one year return is 5.39%. Those low volatility indexes, they have higher participation rates on it. You saw, like with Midland, the S and P mark five was 150% of the BMP Paribas multi asset 539. They give you up to 190% participation equals 10.24% rate of return. All of these contracts, multiple options to do double digits in the past year. This is just parking money somewhere and having the upside potential. We can see higher. I if you're getting into the mid double digits with any investment yielding that, I would say you're doing pretty well. So massmutual ascend, I've done a lot of business with them, a lot of with Midland and a fair bit with Athene as well. So Athene and Midland have very competitive income products. A lot of times they come up to the top. Massmutual Ascend has not been competitive income products. I just really, their customer service is outstanding. Their financial strength is incredible, and they've got good, user friendly, easy products. So most everybody who bought one of those went through their surrender term, just decided to keep it there or buy a new one and stay there. They liked it. Everything was fine. I they want to go play pickleball, they want to golf. They don't want to worry about it. They don't, they make money and they don't pay fees. So this has been just a snapshot at what the index performance of 2024 has been what I would consider for accumulation. My top three companies that I go to, I want to say something about other products. Now, you've got contracts from dozens of insurance companies that are relatively similar to this. This is a pretty good snapshot of what the entire market would look like. Now. If you want to pull a wild index out of there again, go to the newsletter to look up crazy annuity indexes, how they're calculated, how they're back tested, all that stuff. You got to take it with a grain of salt because a lot of them are new, but I don't change from these ones. It's easier for me to have a large block of business at a couple of companies than it is to have a little bit of business at a lot of companies. I will say MassMutual Ascend was the first company I used because they had a seven year product when everybody was. There was nothing but ten year products out there. Really, about 15 years ago, I'm like, let's sell a shorter deal. I thought that was a pretty good deal. They were one of the first. And then everybody started adding sevens. It's like, well, why am I going to change from something that works unless there's a material difference? There's not. You got a touch different s and P cap. Maybe you got a different blended index.
I know track record on these ones. And we got a few that I can look back at. 15 years of true performance, not back tested historical data. And these things do pretty well.
So I'm going to stick with what I know. Prudential's got a contract. Lincoln's got some contracts. They're all about the same. If one does well, they'll all do well. Go with good customer service, high financial strength ratings. That's what I say to do. So if you guys want to talk about any of these in particular, you can get a hold of me on the top right corner of any page on annuity straight talk.com. schedule a call, enter your name, your phone number, time zone, time, email. I'm gonna give you a call.
It doesn't have to be a Zoom call right away. We can do that. If you want to follow ups, I typically do a screen share, and I just talk to you on the phone. You can view my screen. We can go through numbers. If you want to see me eye to eye and you want to look at Zoom, I could set up this camera. Because if it's not, if I use the computer, it's like right here. I'm like right in your face. Wouldn't that be great? So anyway, this has been episode 153 2024 Annuity Index performance good numbers, good timing. Elections coming up. Maybe I'll cover it, maybe I won't. But you guys appreciate everything you do and all the questions I get. I'll be back next week for episode 154. You guys have a great day. Okay? Bye.
[00:17:05] Speaker B: You have been listening to annuity straight talk.
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