Single Premium Deferred Annuity - Am I right to not trust it?

[rembrandt]

Check out stantheannuityman.com . The cheesiest branding I've ever seen, and he's that guy that says "Mr so and so is my father, please call me Stan". But ... Perplexingly he's the real deal. I do believe he's the largest seller of Spias, dias and mygas in the US (absolutely could be wrong). Check his blog out if you can sit through the jokes, and stories about his mother. He's very big on being cautious about those bonuses.

"Candy for the stupid".

 

[jazz4cash]

I think this is long settled but I don’t see where OP mentioned withdrawal. I see it as a non taxable rollover.

if I invest a good bit of money rolled over from my IRA ,

Since they already paid the taxes on the money when it was withdrawn from the
IRA, then this payment into the Annuity will be classified as after tax money. e

 

[jazz4cash]

"Candy for the stupid".

I didn’t mean to like this comment. I don’t know what it means but I think Stantheannuity man is a good resource”

 

[GaryInCO]

As long as you're talking annuities ... I'm seriously considering an annuity-based LTC product. My story: I was almost through applying for an LTC policy when I got two cancer diagnoses, and then the LTC guys didn't want to talk to me any more. It looked like LTC was not an option.

That was 4 years ago. There have been new annuity-based products introduced since then that address my situation. I've talked to two agents recently and both pitched the same deal: a Bridge annuity with EquiTrust.

There are lots of details, but the gist is: I make a one-time $100k (or whatever) payment. The interest funds the LTC policy. My $100k buy-in gets me a monthly LTC payment of roughly $4000-$5000, depending on when I start drawing from it. Once I make a claim, the benefit only lasts for 5 years. (But LTC doesn't usually last long, unless you have Alzheimer's.) The benefits are tax-free.

The guaranteed benefit runs out after 20 years without a claim. (The policy costs eat up the account.) But the guaranteed benefit is almost always worse than the actual benefit. The actual benefit (or at least their example) grows the account about 4-5% per year. They have several options for managing the money in the account, e.g. track the S&P with a cap of 8% and a floor of 0%. (So if the market goes up 10% and down 10%, the S&P return is 1.1*0.9 = 0.99. I'd get 8% and 0%, 1.08*1.0 = 1.08. That example returns about 1/3 - 1/2 the recent S&P returns, but the S&P was going berserk during that time. It removes a lot of volatility and would be better in a period where the market went down.)

Any funds left in the account when I die are passed on to my heirs.

Does that sound like a reasonable package? I looked at the ImmediateAnnuities.com site, but they don't have anything that's directly comparable.

 

[rembrandt]

I didn’t mean to like this comment. I don’t know what it means but I think Stantheannuity man is a good resource”

It is one of the "Stanisms". See below:​

Stan’s Sayings​

Stan The Annuity Man®’s sayings and “Stanisms” are used by agents and advisors across the country. Below are just a few of his factual informational nuggets of wisdom when it comes to annuities.

• “Own an annuity for what it WILL DO, not what it might do.”
• “There’s no perfect annuity answer, just bad sales pitches.”
• “Don’t buy annuity sale pitch dreams because you are going to own the contractual realities.”
• “Be wary of bad chicken dinner annuity seminars.”
• “The Annuity Man® is where annuities are bought, not sold®.”
• “If it sounds too good to be true with annuities, it is, every single time without exception.”
• “Annuities are contracts, not investments.”
• “Annuity companies have the big buildings for reason, they don’t give anything away.”
• “Upfront bonuses on indexed annuities are nothing more than candy for the stupid.”
• “Income Rider percentages are NOT Jimmy Carter interest rates.”

 

[Koolau]

One of my investment tenets has been “if I can’t explain an investment to my mom and have her understand it, I shouldn’t be buying it”. Mom is now 92 and no longer my soundboard but the principle holds.

If you have so many questions about the product, move along

Yeah, I learned this investment tenet relatively late and it cost me money (even fraud in one case) not knowing it. BUT now, it is my FIRST tenet when considering any investment.

 

[Crewer]

YMMV as they say. DH and I purchased single premium deferred annuities using tax-deferred money that we got in lieu of pensions when a former employer got rid of the defined benefit pension. We considered them pension replacements and part of the fixed income part of our portfolio. One attraction is double payout if you are unable to do two of the 6 tasks of daily living. It's instead of LTC insurance and the only thing like that that DH could qualify for. There is a substantial minimum payout, the balance of which goes to heirs so there is a life insurance component sort of. It won't be tax-free but like an inherited IRA. DH's annuity passed to me after he died and I started taking them this year when the extra 10% pot-sweetener expired. That money, after paying taxes, and soc sec covers all my spending except for large lumpy expenditures or extra travel. No need to withdraw from my IRA since the payouts make up my RMD, at least for now. (This was only part of our fixed income AA and my IRA is much, much larger than what we invested in the annuities.) So I think it's doing what it should - working like a pension. I'm 75 and can outlive the minimum payout so that's the annuity part. Worked for us. The way the stock market has been going we could have had better returns in a more heavily-weighted-toward-stocks IRA but that's the thing about AAs.

DH was very skeptical at first since his mother invested in annuities that had alot of the bad old annuity stuff. I think annuity companies have done what they could to sweeten the pot - minimum payout in case you die a month after taking the first payment, and a LTC-ish component, etc. The LTC-ish part is capped at 2 - 3 years of payouts so the annuity company doesn't have the unknown black-hole drag of original LTC insurance - here the payout amount is capped and known. It was a reasonable diversification for us.

 

[mickeyd]

When you ask him how he gets paid on this deal, he will tell you that he gets paid directly by the insurance (annuity) company, not by your new annuity policy.

RUN AWAY...RUN AWAY

 

[jazz4cash]

It is one of the "Stanisms". See below:​

Stan’s Sayings​

Stan The Annuity Man®’s sayings and “Stanisms” are used by agents and advisors across the country. Below are just a few of his factual informational nuggets of wisdom when it comes to annuities.

• “Own an annuity for what it WILL DO, not what it might do.”
• “There’s no perfect annuity answer, just bad sales pitches.”
• “Don’t buy annuity sale pitch dreams because you are going to own the contractual realities.”
• “Be wary of bad chicken dinner annuity seminars.”
• “The Annuity Man® is where annuities are bought, not sold®.”
• “If it sounds too good to be true with annuities, it is, every single time without exception.”
• “Annuities are contracts, not investments.”
• “Annuity companies have the big buildings for reason, they don’t give anything away.”
• “Upfront bonuses on indexed annuities are nothing more than candy for the stupid.”
• “Income Rider percentages are NOT Jimmy Carter interest rates.”

Ok thanks. The first part of that quote makes a difference! Those are gems.