Believe the Annuity Policy, Not the Sales Pitch

If you watch cable TV, listen to the radio, or surf the internet, you will be inundated with annuity sales pitches that sound appealing on the surface. Local bad chicken dinner annuity seminars and face-to-face sales presentations can even be more fantastical and high pressure, so it's important to know how to filter the sales pitch to get to the truth.

Annuities Are Contracts

Annuities are contracts issued by life insurance companies. It's a legal agreement between you and the issuing carrier, and the contractual guarantees are backed up by the full faith and credit of the specific company.  Regardless of what an agent tells you or promises, you should base your decision on what is written in the annuity policy.

Ask for a Specimen Policy

Most agents will not offer this service, but every one of them can provide you a specimen policy of the annuity you are considering. You can read the exact policy you will own before completing the paperwork. In addition, all agents can provide the actual annuity application that you will sign before you sign it.

Never hesitate to ask for copies of a specimen policy or the application. Both can be provided via a PDF through email, or a mailed hard copy. If an agent claims they cannot provide this paperwork, then you need to find a new agent.

Own Annuities for what they "Will Do."

You should always own an annuity for what it will do, not what it might do. In other words, own annuities for their transfer of risk contractual guarantees.

Never allow an agent to convince you to buy an annuity for hypothetical, theoretical, back-tested, non-guaranteed or hopeful return scenarios. Don't buy the agent's dream sales pitch; rather, buy the contractual realities of the policy.

Every proposal that is generated by an annuity carrier has a page that shows "guaranteed" returns. That is the only page you should look at, even if you are purchasing a variable or indexed annuity that has unknown future returns the agents seem to focus on.  With annuities, always buy a worst case scenario.

Have your agent sign off on their own sales pitch

Since you are at the mercy of any agent's moral fiber during the selling process, protect yourself by having the agent "own" their sales pitch. Here's how this works. After the agent finishes their sales presentation, write down every single item exactly how you understand it. Be as detailed as possible, and at the bottom of the page you should sign and date that piece of paper.

The next step is particularly important. Simply turn the paper around, slide it to the agent, and ask them to sign and date it, as well. If they refuse to sign off on their own sales pitch, then you have your answer about moving forward. If they sign and date your understanding of the sales pitch, then they are legally owning what they have promised. You the consumer will win either way.

If it sounds too good to be true, it ALWAYS is with Annuities

We all have been told by our parents and grandparents that if something sounds too good to be true, then if probably is. When it comes to annuity sales pitches, it ALWAYS is too good to be true!

Remember that when you are purchasing any type of annuity, you are buying a contract. You should not believe the agent's "version" of that contract, or the positive bullet points presented. Buying an annuity, regardless of type, is that simple.

This article is commentary by an independent contributor. Stan The Annuity Man is the top independent annuity agent in the country, licensed in all 50 states, and a co-founder of Annuities.direct, the first direct to consumer annuity shopping platform.

Stan The Annuity Man has published six best-selling books on annuities, and will send them as a gift to all TheStreet readers under no cost or obligation. Simply email Stan (stan@stantheannuityman.com) your physical mailing address or click to fill out the online form.

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