Retirement Expert Rants: Where Are the Guaranteed Products?

Hi, my name is Stan The Annuity Man, America's Annuity Agent, licensed in all 50 states. I'm concerned right now because I'm seeing with many carriers that they have stopped promoting their guaranteed products.

A Historical Perspective on Annuities

Back in the day when annuities were first designed during Roman times as a lifetime income stream for dutiful Roman soldiers and their families, Immediate Annuities were the foundation. These products are contractually guaranteed, simplistic, and easy to understand—so simple that even a nine-year-old could grasp the concept (no offense to nine-year-olds).

Today, we have similar products such as Deferred Income Annuities, Single Premium Immediate Annuities, and Qualified Longevity Annuity Contracts. Additionally, there are straightforward CD-like products, such as Multi-Year Guarantee Annuities, which are incredibly simple to comprehend.

A Shift in Focus by Carriers

What concerns me is that many carriers have said, "You know what, we're not doing that anymore. We're just going to focus on pie-in-the-sky numbers, return scenarios, and backtested returns. We’ll promote the products that are most profitable for us."

The most profitable products for many carriers are Variable Annuities and Fixed Index Annuities. Now, I don’t sell Variable Annuities because I don’t deal with products that can potentially lose value. Typically, Fixed Index Annuities with riders are priced higher than Variable Annuities with riders. While I have nothing against Variable Annuities—if you like them, go ahead and invest in mutual fund-like options—the trend of carriers focusing solely on these profitable products is concerning.

The Purpose of Annuities

Annuities are meant to provide guarantees. They are transfer-of-risk contracts designed for lifetime income and principal protection. However, some carriers neglect Single Premium Immediate Annuities, Deferred Income Annuities, and Qualified Longevity Annuity Contracts. Instead, they are pushing Fixed Index Annuities and Variable Annuities, which offer higher profit margins and commissions for agents.

The Disservice to Consumers

This shift is a disservice to the public. With 10,000 baby boomers reaching retirement age every single day, there is a growing demand for guarantees, lifetime income, and principal protection. Yet, some carriers are not offering these fundamental choices. While carriers are still providing these options and receiving significant inflows of money, others are missing the mark by neglecting the core purpose of annuities.

The Importance of Shopping Around

Annuities are commodity products that should be shopped across all carriers to secure the highest contractual guarantee for an individual’s specific situation. Quotes are like a gallon of milk—they expire every seven to ten days. In this commoditized environment, having a wide range of carriers offering simplistic, guaranteed transfer-of-risk products is essential. The more carriers competing, the better the quotes, the more options available, and ultimately, the better the outcome for consumers.

When I provide quotes, I don’t know which carrier will offer the best terms. My goal is to secure the highest contractual guarantee for the consumer’s specific needs and goals. However, if carriers opt out of providing these policies, it diminishes the choices available and hinders consumers from getting the best deals.

A Call to Carriers

I’ve been in this business long enough to remember when many carriers actively offered Single Premium Immediate Annuities and Deferred Income Annuities. Unfortunately, for various reasons, they have abandoned Qualified Longevity Annuity Contracts—a product that should be one of the top-selling annuities. Why? Perhaps it’s due to lower profit margins or reserve requirements. Frankly, I don’t care about the reasons. What matters is the demographic tidal wave of baby boomers retiring—10,000 every day—and the need for these guaranteed products.

As an industry, we need to hold carriers accountable. All carriers should offer a full range of annuity products to ensure consumers have access to the highest contractual guarantees.

Leveling the Playing Field

In my perfect world of annuities, all annuity types—Variable Annuities, Fixed Index Annuities, Single Premium Immediate Annuities, Qualified Longevity Annuity Contracts, Deferred Income Annuities, and Multi-Year Guaranteed Annuities—would have similar commission rates. This would eliminate the incentive for agents to favor higher-commission products and encourage them to recommend products that truly fit their clients’ needs.

Such an equalized commission structure would also motivate carriers to offer a broader range of products, fostering competition and ultimately benefiting consumers. However, this straightforward solution is unlikely to be implemented.

A Shrinking Guaranteed World

The guaranteed world of annuities is shrinking as carriers focus on promoting their most profitable products. This trend goes against the foundational purpose of annuities: providing contractual guarantees. Agents should educate themselves about all annuity products, regardless of commission rates, and carriers should reintroduce the guaranteed, simplistic products they once offered.

A Message to Agents and Carriers

To agents: Diversify your offerings. Don’t focus solely on high-commission products. Understand all annuity types to recommend the best solutions for your clients.

To carriers: Please return to offering the products that provide true guarantees. Consumers deserve a wide range of options, and the industry needs you to fulfill your role as a provider of transfer-of-risk solutions.

The more carriers offer guaranteed products, the better it is for consumers.

My name is Stan The Annuity Man, and I’m committed to advocating for simplicity, guarantees, and consumer choice in the annuity industry.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.