What is a Hybrid Annuity?
The Annuity Man
In the real world of rational thinkers and annuity salespeople who tell the truth and never over-hype products, a "hybrid" is a plant...a car...and sometime a mattress. A "hybrid" is not an annuity! Period. End of story. If an agent or advisor uses the word "hybrid" when explaining or pitching their annuity of choice, then hang up the phone or walk out of the room immediately.
If you want to analyze the palm of your hand, "hybrid" means multiple benefits. Under that factual scenario, every single annuity type offers multiple benefits. Single Premium Immediate Annuities (SPIAs), Deferred Income Annuities (DIAs), Qualified Longevity Annuity Contracts (QLACs), Variable Annuities (VAs), Multi-Year Guarantee Annuities (MYGAs), and Fixed Index Annuities (FIAs) all offer their own unique multiple benefits.
However, Fixed Index Annuities (FIAs) is the product type that is attached to the misleading "hybrid hype." I'm really not sure why, except for the fact that it is easy to get licensed to sell the product...and the commission to the agent is very high. That's a bad combination when it comes to sales pitches to the consumer.
The bottom line is that FIAs are not bad products, and they are not too good to be true. Just remember that if it sounds too good to be true, then it is...every single time...without exception when it comes to annuities. Annuities are transfer of risk contracts. Nothing more. Nothing less.
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