Annuity Examples: A Beginner’s Guide to Annuities (TAM Classic)

Hi there. Stan The Annuity Man, America's annuity agent licensed in all 50 states, even including the one you're sitting in, the one you love so much, and have the state flag in front of your house. You have that, right? I don't. I should, though. I don’t even know what the state flag of Florida looks like. But I spend time between Florida and Nevada, so maybe I should have two flags.

What Are We Talking About Today?

I digress. Today, we're discussing annuity examples, a beginner's guide to annuities. There’s so much misinformation, bad information, and sales pitch nonsense about annuities. It's time to get back to the basics and build a foundation. Let’s take it from the beginner’s standpoint—a simple, elementary look at annuities. And by the way, spoiler alert: everything we do here at The Annuity Man is simple. If you can't explain it to a nine-year-old, you shouldn’t buy it. No offense to nine-year-olds, but that's how I look at annuities—they're simple transfer-of-risk products. Let’s dive into them after this.

A Brief History of Annuities

Let’s start with the beginner’s guide to annuities in Roman times. Annuities were introduced as pension payments for the dutiful Roman soldiers and their families who risked their lives for the empire. That’s where annuities originated. They’ve been sold in the United States for hundreds of years, with many early annuities being lifetime income Single Premium Immediate Annuities.

When we talk about annuities, one thing that drives me crazy is when people generalize. John Olsen, a good friend of mine who has written many books on annuities, said something brilliant the other day. He said, "If anyone ever starts a sentence that says, 'annuities are...' everything after that is misinformation and possibly a lie." It’s like saying "restaurants are..." or "shoes are..." as if all restaurants are bad or expensive or are uncomfortable. It’s absurd.

Yet, in the annuity world, people say, "Annuities are bad," "Annuities are expensive," or "Annuities aren’t worth it." Give me a break. You already own the best inflation annuity on the planet—Social Security. If you have a Social Security number, you own it.

The Different Types of Annuities

There are many types of annuities, and to simplify, I’ve created an acronym, P-I-L-L, which summarizes what annuities solve for:

• P stands for Principal Protection.
• I stands for Income for Life.
• L stands for Legacy (leaving money to your heirs when you die).
• The other L stands for Long-Term Care.

If you don’t need to contractually solve for one or more of these items in the PILL, you do not need an annuity.

A Warning About Misleading Sales Pitches

Now, you're probably thinking, "Wait a minute, Stan The Annuity Man, America's annuity agent licensed in all 50 states. I was at this expensive steak dinner seminar, and they said they have an annuity for growth. A market growth annuity that will go up in value with the market and protect the downside."

Let me be clear: If it sounds too good to be true, it is—every single time. With annuities, there’s no exception. What they’re describing is an Indexed Annuity. It’s essentially a CD product introduced in 1995 to create CD returns. The dream, or the sales pitch, is that you can have your cake and eat it too. But you can’t.

In the world of annuities, you buy them for what they will do, not what they might do. You buy them for the contractual guarantees, not for the hypothetical, theoretical, back-tested hopeful returns that a salesperson promises you.

Primary Types of Annuities

Let’s go through some primary types of annuities. Remember, you can't just say "annuities are..." because there are many types.

I love it when people call me and say, "I just want to talk about annuities." And I ask, "What type?" They reply, "Just annuities." And I ask again, "What type?"

So, I always ask two questions:

• What do you want the money to contractually do?
• When do you want those contractual guarantees to start?

The key word is "contractual"—not hypothetical, not might, not could.

Going back to the PILL:

• Principal Protection products include Multi-Year Guarantee Annuities (MYGA) and Fixed Indexed Annuities. These are like the annuity industry's version of a CD.
• Income for Life products include four main types: Single Premium Immediate Annuities, Deferred Income Annuities, Qualified Longevity Annuity Contracts, and Income Riders attached to some Deferred Annuities. These can be set up to pay for as long as you’re breathing.
• Legacy products are deferred annuities with attached riders, such as a legacy death benefit rider. This is especially useful if you can't get life insurance but still want to leave a legacy.
• Long-Term Care is a health insurance product, but there are also annuities designed for long-term care needs.

Conclusion

A beginner's guide to annuities is pretty straightforward. To help with this, I’ve created several videos—I'm not sure how many—maybe 600, 700, 800? I lost count. But if you go to our Stan The Annuity Man YouTube page, you can browse the playlist and choose the annuity type you want to learn about. We also offer PDF downloads of six excellent annuity owners' manuals at The Annuity Man, free of charge and with no obligation.

I’m here to educate and entertain. You've come to the right place if you're starting to learn about annuities. The Annuity Man is the top educator and seller of annuities in the world. I’ll help you understand what you're buying—on your terms and your timeframe. There's never an urgency to buy an annuity, but there is an urgency to get educated on what you are purchasing and the contractual guarantees it offers.

It’s a good start. Thanks for joining us. Go to The Annuity Man to get started with all our free educational content. I’ll see you next time!