Episode Transcript
Speaker 0 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 1 00:00:48 Hello and welcome everyone to the annuity straight talk podcast. My name is Brian Anderson, founder and creator of all things, annuity straight talk. My co-host is a very intelligent man. Just a little ways west to me and west just about everyone else. His name is a show. Go ahead and say hello and introduce yourself. Hello everyone. This is a show crumbs you with top planning. I must say, although Hawaii is technically a little bit west of us in the states. Well, but yeah, continental us. How about that? I was going to say north too. And then he's always arguing with me. We are broadcasting from the continental us and weren't we looking last time at some of the listeners at annuity straight talk. And I think we found we had listeners internationally as well. I mean, that's the beauty of the web, right? Russia. Italy. Yes.
Speaker 1 00:01:33 Yes. It was interesting in an international. Oh, and I've I have clients who, uh, found me from Saudi Arabia and Indonesia people that were contract working elsewhere, retired when they came home. So everyone in Russia you're welcome. Who loved to see it out there? Uh, south America, Africa, whoever needs this advice, we're happy to give it so annuities of course regulated under McCarran Ferguson done on a state by state basis. But no reason we can't share all this information worldwide. Yes. Regularly. Well, contracts issued based on where it is signed and not necessarily where you live, but solicited is included as well. So if you want to come knock on my door in Montana, I don't care what state you're from. You can buy a Montana contract, write a joke. Yeah. Just be careful. I've been hearing by the way, some of these Western states that are getting a lot of people moving around the country, they're not keen on so many people coming into some of these areas, right?
Speaker 1 00:02:28 You must be seeing traffic jams now in Montana that are probably, there's more people in Montana on the road now than you might've seen. In other times today, we're going to talk about something we've been wanting to do for a while now, which is product reviews. Yep. And we had technical problems and we decided to start talking about products. So we're just a few weeks ago. What came out is a pretty compelling income product. Right? A joke that is correct. Let's talk first a little bit about why product reviews, right? I mean, it's hard to be in this industry and just keep talking generically about strategies. At some point, people say, well, how would you execute on this? Right. Yeah. People come in and say, yeah, but I want to see some numbers. And I've sent numbers out and proposals and ideas to people. And in some ways I'm jaded about it.
Speaker 1 00:03:19 And I'm going to be honest that I do a lot of work for people that just grab this stuff. And then I never hear from them again. So I don't know what their goal was or if they're an advisor and they're just looking for a little bit of help, but we really are here to help everyone. But we're trying to give general information. So you can determine whether you want to work with us or whether you want to use that information to go work with someone else. But our time is limited. I can't send an illustration and analyze a situation for everybody on my list. That's why we have appointments. So that's why you want to talk about something specific and you want to get numbers personal to you. You go to annuity straight talk.com and you hit the green schedule, a call button and get on the calendar or just call 804 3 8 5 1 2 1.
Speaker 1 00:04:04 And I had a guy this morning that found the podcast on YouTube and gave me a call. Simple as that we talked for about a half hour. I fortunately had time. It kind of sorted a few things out and gave him something to think about, but it was a lot easier than taking a generic, Hey, show me income for a 65 year old. Okay. What state, when do you want it? Single or joint life, all that stuff. Right? We can talk about some of those things. In fact, today, what we're going to talk about is, like you said earlier, a very compelling income story. And we have one carrier where we found one of the best use cases is when you have a couple that really wants a high amount of guaranteed income, but they don't necessarily want to have a big drop because once you cover two lives, the payment amount usually drops versus single life.
Speaker 1 00:04:54 Correct? Brian, that is correct. And this is going to go along with the last couple of episodes where we talked about guaranteed lifetime withdrawal benefits. And then we talked about income versus accumulation, where you can do, and a lot of ways, the same things, but in a more flexible manner. And I saw this come across my desk a few weeks ago. I, again, I said in the, uh, just, it's a pretty compelling case for those people who want the set and forget idea. Now we've got the flex strategy. We've got accumulation products that are very flexible, but there are a lot of people that want that. They don't want to think about it. They just want to know they're getting a check every month, right? Typically we find people who might gravitate to this strategy, and this is not to put too broad, a brush stroke on it.
Speaker 1 00:05:34 But if you need guaranteed income and for whatever reason, this is what the income projection is. This is where social security and or a pension comes in. And look, there's certain expenses that still need to be covered. Maybe we bridge that gap with an annuity and which are those that offer the highest payouts. Some of the things you and I think about, I think are, do we like the carriers? Do they have a high credit rating? What is the payout for single? What is the payout for joint? Is it fair? And the way it pays out, what are the fees? Right, exactly. And that holistic discussion helps us give recommendations for particular people. I think what's nice too, is that I've shared this story with you before. One of my clients was looking for some tires for his car and he was able to reach out to a certain company that they test drive those tires.
Speaker 1 00:06:25 And then they said, look, we've tried this. And we think this works well with your car where, so in a very similar way, since we see these annuities working day in and day out, and we know what our clients are looking for, we can say, Hey, I think this particular annuity might well work well for you. And here's why, and things like no significant drop in joint income versus single payout. So if it's okay, Brian, I'm going to share my screen with everyone here and jump right into it. Yeah, let's do it. Let's talk about it. And so what do we like about this when we like the fact that when I first noticed it at night, I saw this product earlier in the year and a man made an appointment with me. It's not that hard. I'm not that bad a guy. And he told me what he was trying to do, told me about his assets.
Speaker 1 00:07:13 And he was going to take about 20% of his assets and he was going to purchase this contract. And, but he saw my other videos and he saw the flex strategy and all that. And I looked at it, then he knew exactly why he was doing it. He had his purposes figured out he was a bright guy. And I looked at it and said, Hey, that's a pretty good deal. The problem was that was not available through the channels where I can sell. So I just said, I think you got to figure it out. Boy, he seemed like a good guy. I'd love to do business with you, but this looks like the best thing for you. And I can't get it. And since then, when it was appropriate and available and say there were some state availability issues as well, I've told a couple of people about it.
Speaker 1 00:07:53 And then, then they go, but where do I find it? I said, well, find some more for if you want. And I don't know if it went anywhere, but I've told a couple of people about it when it was appropriate and now they nationwide changed it so that we can, the independent channel insurance channel can, they've got a replica product of that. And I thought, Hey, this is really good for that guy. Let's check it out. Exactly. And so we're talking about here is from the carrier nationwide, it's their peak 10 fixed indexed annuity nationwide as a mutual company, based in Ohio, a plus credit rating by am best I believe. And so we like it because obviously I pay out what we'll see here is the difference between the joint payout versus a single life payout. And so what you see on the screen right now is the illustration for a single person.
Speaker 1 00:08:41 We assume the single person is age 65 and we just arbitrarily I'm working in the state of Washington. So I said, state of Washington as well, we're assuming a hundred thousand dollars in premium to keep the math really easy. And we also configured this. There's a couple of different ways of configuring this annuity. And one of them is with the bonus, right? So we said, let's go ahead and put a bonus and the income rider on there. So you can see, it says, featuring the bonus income and rider, there's a 1% annual charge for that writer. And we also configured this to be where income starts immediately. Brian, any takeaways, just from the way this has been design, I think what hit me the first time you'll get to the second point. There's two things that help this contract stand out. One of them is that 10% bonus.
Speaker 1 00:09:36 And the fact that you can take the 10% bonus, but then also take immediate income income can start within 30 days. And I don't know specifically about company practice, maybe it's seven days, but you can basically start taking paychecks as soon as you put the money in. So you can just transfer it over and exchange you get paychecks for the rest of your life. And the 10% bonus really kicks it over the top. Now we know products and I know everybody out there listening is going to say, well, I bought one with a 25% bonus. Uh, but what's the catch to that because you got to have also, in addition to that, to factor the income, you've got to have a payout rate, correct? We were looking at a couple of products with a client of mine yesterday, and one of them has a high bonus, but a low payout, right?
Speaker 1 00:10:18 The other one has a high payout rate, but no bonus. But when you multiply them mathematically, you get to a very similar dollar amount. So I said, it's like, when you drive, my I've mentioned it before my Prius gets great fuel efficiency, but it's not the most fun car to drive. Say in a Beverly Hills down rodeo drive, you can't exactly put the top down. What am I sacrificing? I'm sacrificing those aesthetics for fuel efficiency. So when a company says, let's give you a big bonus. Similarly, they have to sacrifice it from somewhere. And usually it's the payout, right? Sure. Yeah. Your Prius can't tow my horse trailer can it that's right. I have to give, there's always some trade-offs in life. I have something that shows my horse trailer, but boy, the fuel economy is not that great. So, so it's like, what is most important for you?
Speaker 1 00:11:03 But I think it's important. This is an example of annuity straight talk where we can show different products and say, Hey, look, this one has the 10% bonus. But before you get dazzled with that, let's also look at the payout rate because it's always payout rate times. Like for example, here we have the bonus. What is the income base that ultimately drives how much income is going to be coming out of the contract? That is correct. So, yeah, and that's where I noticed I saw the 10% bonus immediate income. And then the couple I was talking to, or they said they were getting a 5% payout at age 65, which for joint life is not very, I haven't seen it in several years. A lot of products are about 4% at 65. Some of them even three and a half. So you take a 25% bonus and a joint life payout three and a half percent, then it doesn't matter what the bonuses were out.
Speaker 1 00:11:56 All this does is factors into maximum, maximum payout, which is what we talked about in the GL WB episode a couple of times ago. So you've got a single guy up here, right? Single person you do. And what we're looking up here on the screen is the way the money can grow inside the account. This particular one shows a cap maybe of two and a half percent. I think most of the options by which the money can grow is somewhere in that two and a half to 3% range that is appropriate for a contract where they're going to have a high income payout. And I think Brian, we've spoken with one of our listeners before where he was looking at an accumulation oriented contract, where again, the caps were around, say two to 3%. And we said, if your focus is accumulation, you want to have higher crediting than that.
Speaker 1 00:12:51 But when we have a contract that can pay out a high amount of income, again, going back to the example of the Prius, going down rodeo drive, there's a trade off. So if we're going to have high-income, we're usually going to see somewhere between two to 3% in the crediting for the actual money for the accumulation of, okay. Yeah. And so that's, again, gonna really in this contract is all it's going to do is determine how much money is left when you pass away, if any. Right. So it's going to be residual value. Residual value will lead to additional options with the money and that, that kind of thing. So not, it's nice to see money sitting there, but if you're in it for lifetime income, then that's just kind of a side benefit, but really focused on the maximum income. What do you see here on the page now is where this person is age 65 because they get that 10% bonus.
Speaker 1 00:13:47 And then based on the payout rate, their lifetime income withdrawal is around a 5.6% rate. And that's at age 65, which is pretty good. Yeah. That's pretty aggressive. Yeah. Why is it that way? It's because at age 65, there is expected to be a still enough years and we're using a hundred thousand dollars in actual premium. So in what, 20 years or so the contract would eventually be exhausted. And so now someone who was still alive would now be getting the same $5,665, but it's coming from the carrier and not their own money. That is correct. Yeah. So you, it takes less time to get in the insurance company's pocket when you have higher payout. Yeah. If we look at the joint just to cut right to the chase there, what we assume, because that's right. That's where, that's where it's really powerful. To be honest, we took the same 65 year old.
Speaker 1 00:14:43 And again, when you call 804, 3 8 5 1 2 1 hit the schedule, a call button, chances are, we're not going to see someone who's both, you know, male and female, for example, that are both age 65 it's possible, but we would run the numbers and see what actually happens. It's the youngest person, but there's a lot of times where you see a 67 65. So assuming 65 was the youngest age. What we notice here is that that payout for lifetime income is closer to 5.4%, $5,445 versus $5,665 for a single, just to back up again here, the carrier is saying that they would make a payment of 5,400 and change to cover two lives. So if both people are still living or if just one of the two is still living, the carrier keeps making the payment. But if it's on a single life, then once the person who is the annuitant passes away, the payments keep going until the money hits zero, right?
Speaker 1 00:15:49 And when the accumulation hits zero, then the payouts stop. So I've had discussions with clients where it's a husband and wife, and they're trying to figure out, boy, I want to really maximize the payout. We want to maximize the payout, but we're sort of wondering, which is more important high payout, or how are we really going to live? How long are we going to live? And I believe what I really like about this product is we're able to take that discussion off the table for the most part and do so with an A-plus rated carrier, anyone listening, we're on YouTube as well. If you want to see the illustration, um, you can subscribe to the YouTube channel or the podcast itself, and you get notified when we release a new episode, but anyone listening, if you think about it, single versus joint, going from 5,600 to 5,400, that is unbelievable.
Speaker 1 00:16:35 Typically what I've seen is as much as a 20% reduction for a joint life. So starting at 5,600 and ended up at 4,500 for a joint life. So that's where it's really powerful as in a joint life scenario where you've got very healthy payout rates and there's no major reduction for adding an extra life. And I think that's, that's what makes this one look really good in the income scenario. Now, everybody knows I'm not an income guy. I'm more of an accumulation guy, but I recognize a good deal when I see it. And for the person who really wants, there are those that say, well, I understand your strategies are better. And that does give me a mathematical advantage and all that stuff. But I want to sit on the beach and I don't ever want to have to think about it. I just want to know that every month that paycheck comes.
Speaker 1 00:17:21 So for those, this is a pretty nice deal in today's market. Brian, what are some of the, uh, I mean, this is really a nice sweet spot. As we said, the strength of the carrier, not a huge discount for single versus joint based on assuming both husband and wife were say age 65, what might be some of the trade offs? I mean, in order to make that happen, obviously the insurance carrier has to give somewhere else any areas that you feel, uh, some of those trade offs are occurring. Well, I think what you're getting is you're getting the perception of a residual value where there is no, there's not really, I mean, there's a little bit in it, you know, in a guaranteed scenario, you're basically paying yourself back with your own money. Once you've received aggregate payments at equal, what you put in which I'm in this scenario, I would think would be about year 18 as my guests here, 17 or 18, which isn't bad, then you're in the insurance company's pocket.
Speaker 1 00:18:18 That's when you truly profit. And that's kind of the biggest one, but again, a strategy can do more than one thing with a product, but a product itself cannot do really more than one thing. So you can't expect, oh, I'm going to get maximum income and I'm have all my money left at the end, no matter what anybody else says, it's just not possible. So again, this is just for the people with an income goal and people who want to maximize it. And it's not something you do. You don't put all your money into it, but if you say, Hey, you know what, the necessary expenses, or maybe a little bit of fun money, a hundred thousand, 200,000, whatever it is, you know, an extra five, 10 grand a year would be perfect. And then I don't have to worry about all that other stuff.
Speaker 1 00:18:57 But yeah, I don't see a major drawbacks again because that's up to the individual. And when we presented the ins and outs of the product, you've got the fee, you've got the high income payment. There's not a lot of growth value to it, but it's a good, maximum income product. I would completely, I agree with you. One thing we didn't touch on completely was there is a fee for the guaranteed lifetime withdrawal benefit for the single it's 1% for the joint. It's 1.3. Now this is computed off of the benefit base. So if we start with a hundred grand, you get a 10% bonus. Assuming somebody turns on income right away, that benefit base, as you can see on this illustration is locked at 110. That fee is assessed on that 110, even when the contract is coming down in terms of the contract value, because withdrawals are occurring.
Speaker 1 00:19:50 So to me, that's okay, because this is how a carrier like nationwide is able to make these high payouts occur for something like that, guaranteed lifetime withdrawal benefit fee. So it's okay. As long as our clients who we're working with, get the straight talk to say, in order for this high-income payout, understand that there's going to be fees that might be higher than a competitive product, but we removed the concern over single, over joint, but this is how we do it. And maybe this is for this pool of money. What was the end goal was you may be getting this much from social security. Maybe you have this much from a rental, maybe this much from a pension, this pool of money is going to do this. Here's your income plan. So definitely appropriate to use something like this for income planning. I wouldn't necessarily be thinking of a, of a nice product like this for say the flex strategy, or if someone's pure purpose was, I need to just accumulate safely.
Speaker 1 00:20:48 Right? And you talk about the flex strategy, as you were saying, all that I found out. One thing I don't like about this illustration is that then we had some confusion about where the fee was charged from and how it was calculated. And a lot of illustrations I look at will actually have a separate column showing you the fee, what the charges were. And so that's a bit of a disclosure point where, and I think from a sales perspective, people don't want to see what would it be 110,000 for joint life. 1.3, it'd be $1,430 per year. So it'd be a separate column saying annual rider fee. Now it is calculated into the residual value here, but just to see that just again, no sticker shock. You're going to get your statement every year. And it's going to say, here are your fees. Why don't they put it in the illustration?
Speaker 1 00:21:37 Well, since they are not going to put it in the illustration though, our listeners and people who come to us can see these numbers because we'll include that analysis in addition to the illustration so that people can make an informed decision, best way to do that. Go to the website, annuity straight talk.com, hit the green schedule, a call button, call us (800) 438-5121 that's 804, 3 8 5 1 2 1, subscribe to the podcast. If you're liking what you're hearing. And if you like what you're hearing. And even if you don't like what you're hearing, leave us a review and give us some feedback as to what you think of the podcast. Yeah. Let us know, say, yeah, you guys are a bunch of scumbags. You don't know what you're talking about. Ah, we do know what we're talking about. We're talking about nationwide peak, 10 fixed index annuity. And I will say one other thing is this is not us telling you or anyone else that this is the product to use.
Speaker 1 00:22:36 It's a great product for immediate income near-term income, but what's going to happen is, and I had, I wrote a newsletter about this product a couple of weeks ago, and I had a gentleman from Texas get ahold of me and say, I want to put this much in how much is it going to give me? I don't know the guy, how old are you? Do you want single or joint life? And he said, well, single life. And here's my age. And I want to defer five years. Well, if you're going to defer five years, it could well be a different product and a single life product. There are good, healthy payouts on single life products. This is really powerful and a joint life scenario. And it's very compelling on a single life scenario in the right situation. So the example I'll use is that if you have a 60 year old who wants to defer until age 65 versus a 62 year old, that wants to defer three years till age 65, they're both going to be getting a payout at 65.
Speaker 1 00:23:27 One's going to have a longer roll up one than the other. And I dunno, a shock. What are the chances that those two people have ended up with different products based on their, on what they want or what's best for them? Oh, absolutely. They could end up with, if they feel like let's turn on the money right away, or let's wait five years, our recommendations going to be rooted in what are you going to do? And so therefore you might see different recommendations. Yeah. So in this product, I really think it's going to be powerful for near-term income. But then again, like if you make an appointment, we look at that. And I, you know, that's what I told the guy from Texas. And it did turn out to be a completely different product that had a more aggressive roll-up rate than this one does.
Speaker 1 00:24:04 And it had a fairly comparable payout rate as well. So that was for single life. If he were a joint life, then the other product just dumped at the bottom. But you have to understand, we're not saying this is the best product period. It's just really good. And a couple of situations that we see a lot, this has been a, the first of many product reviews for annuity straight talk. It shows that we really do take the time to study different products. Sometimes I think we've mentioned before we like wholesalers, they serve a valuable role in their industry, but there's something to be said for us to actually run our own illustrations, analyze it. I know with this contract, I said, I wanted to see a specimen contract. The only way we can give straight talk to our listeners is by really knowing these products.
Speaker 1 00:24:52 And this is just one example of several products that we want to know cold. So that way, when we make a recommendation, we can say, well, in this particular case, we like this. But in another particular case, we might like something very different, right? And it's not even the helmet. What we like or don't like, it's exactly serves the client the best. So I have for years, I've said the only thing I like about nationwide is the Peyton Manning commercials, good company. But for accumulation products, they've kind of had a couple indexes that didn't really do what they were expected to do. And I've met a couple of people that were a little bummed out. No, again, your money's safe. It's a great company, but this one they're going to compete with it and it's going to do well for a lot of people out there.
Speaker 1 00:25:33 I agree. Well, we're going to have more product reviews again, if you like what you hear and you want to see some thoughts about your particular situation, give us a call 804 3 8 5 1 2 1, go to annuity straight talk.com. Hit the green schedule a call button. Go ahead and subscribe to the podcast. And again, just go ahead and give us a review. We welcome feedback it straight talk after all. Heck yeah, that's what we're here to do a show. Thank you for pulling up the numbers and the illustration on that. Uh, I think we did a pretty good job covering everything and uh, want to thank everybody for joining us. This is going to be out there on YouTube and the podcast next week.
Speaker 2 00:26:09 So you'll be able to listen to it. Thank you again for joining us. My name is Brian Anderson out there in Washington, and <inaudible> everybody have a great day and we'll see you on the next episode,
Speaker 0 00:26:20 You've been listening to annuity straighter. The preceding information is for informational and educational purposes only and does not represent tax legal or investment advice. The views expressed by guests on this program, aren't their own and do not necessarily reflect the views. No information presented today should be acted upon without meeting with the license. It is important that you read all insurance contract disclosures carefully before making the purchase decision guarantees are based on the financial strength and claims paying ability,
Speaker 2 00:27:08 Uh, showcase. Ron G is an investment advisor, representative of insight, folios and sec registered investment advisor. The firm only transacts business in states where it is as filed or is excluded or exempted from notice filing requirements, any fee based financial planning and investment advisory services are offered through his association with insight folios top wedding LLC is not a registered investment advisor and is not another name under which insight folios provide services. Insurance products and services only are offered through top planning, LLC inside folios Inc. And top blending LLC are not affiliated companies.
