How do I find the best annuity price or deal?
The Annuity Man
Everybody is always looking for a deal. You want the best price. You want to be prudent with your money. You go to Orbitz or Priceline for plane tickets. You go to Wish for inexpensive daily items. You shop Amazon to find the best price for practically anything. Almost everything available today is a commodity, which is always good for the consumer.
"Annuity" = Many Types
Annuities are also commodities in my opinion…regardless of type.....and there are many types available to the consumer. Multi Year Guarantee Annuities (MYGAs), Fixed Index Annuities (FIAs), Variable Annuities (VAs), Deferred Income Annuities (DIAs), Charitable Gift Annuities (CGAs), Single Premium Immediate Annuities (SPIAs), Qualified Longevity Annuity Contracts (QLACs) and Income Riders attached to FIAs and VAs pretty much round out the annuity roster. With all of these unique annuity choices, it's impossible to say that you "hate all annuities," unless you also say you "hate all restaurants." Makes as much sense.
Because annuities are commodities, you should quote as many carriers as possible for the highest contractual guarantee for your specific situation. So here’s The Annuity Man’s advice on how to do that.
Only Takes 2 Questions
The first step is you have to answer 2 questions to determine what type (if any) of annuity fits your specific situation:
- What do you want the money to CONTRACTUALLY do?
- When do you want those CONTRACTUAL guarantees to start?
The reason I bolded the word contractual is because annuities are contracts between you and the issuing life insurance company. This fact is the reason you should base your buying decision solely on the contractual guarantees.
Finding the right type of annuity is really this simple. No over-hyped sales pitches. No bad chicken (or expensive steak) seminars. Just answer the 2 questions, and then you can determine if you even need an annuity...and if so, what type will provide the highest contractual guarantee to achieve your specific goal. So let's go through some typical answers and scenarios to those 2 questions, and the product types that match that contractual solution.
Scenario #1: I want guaranteed lifetime income starting within the next few months. It might be using IRA or non-IRA money.
Product Match: SPIA (Single Premium Immediate Annuity). The granddaddy of all annuity types is your only solution here, and will always provide the highest contractual number for "Income Now" needs.
Scenario #2: I want guaranteed lifetime income starting a few years…and maybe 7 to 10 years from now using non-IRA money.
Product Match: DIA (Deferred Income Annuities) & Income Riders. This is what I call an "Income Later" quote, and both product types should be quoted with all carriers to see which one provides the highest guarantee.
Scenario #3: I want a future lifetime income stream for me and my wife using my Traditional IRA money.
Product Match: QLAC (Qualified Longevity Annuity Contract). QLACs can be used within your Traditional IRA for future income needs. Income can be started as late as age 85 and as early as age 72, and you can add your spouse/partner for joint lifetime income stream guarantees.
Scenario #4: I just want to protect the principal and not lose a penny. Could be IRA or non-IRA money.
Product Match: MYGA (Multi-Year Guarantee Annuity) & FIA (Fixed Index Annuity). Both of these are fixed annuities, not securities, and are classified as life insurance products.
Once you determine what's the best product match, then you need to quote all carriers for the highest contractual guarantee available for your specific situation. Remember that annuity quotes are like a gallon of milk, and typically change every 7 to 10 days. In order to lock in a quote, you need to be starting the application process. You can't just lock in the quote and think about it for a couple of weeks. It doesn't work that way.
Annuity Square Pegs
Too many agents and advisors choose a specific product type and/or carrier, and just sell their favorite one to every single person regardless of that person's unique goals. That's what I call "annuity square peg into round hole" selling. A lot of times, the sales pitch is that their favorite annuity is pitched as a "one size fits all." There's no such annuity product on the planet, regardless of what you will hear.
Don't be "steered" toward the product the agent wants you to buy, and always demand at least 3 to 5 carriers to be shown when running the quotes. If someone says they have the "best" annuity for you, most of the time that translates into the "best" annuity for them.
Use the 2 questions, do your homework, and always make your buying decision on your terms and on your time frame. It's your money, so always be in control of the process.