Best Variable Annuity Income Riders

Best Variable Annuity Income Riders

October 12, 2019 0 By Ronny Jaskolski


Hi! Stan, the Annuity man. In today’s topic is
“Best variable annuity income riders”. And I also encourage you to click that video
as well as how to choose an annuity which coincides with what we’re talking
about. But we’re going to go over all the variable annuity income rider types. I’m
also going to blend into that. Some of the fixed indexed annuity income rider
types. Because at the end of the day when you’re searching for income riders, you
know, you’re searching broadly. You’re looking for the highest contractual
guarantee. So, by the end of this video, you’re going to understand them backwards
and forwards. So, we’re talking about variable annuity
income riders. Disclaimer: Stan, the annuity man does not sell variable
annuities. Because I only sell contractual guarantees. I’m a will-do-not,
might-do person. So, but I do understand income writers and have written a book
on it including the variable annuity income rider. So, I know this topic
backwards and forward. So, what we’re going to talk about today is actually
what a variable annuity is. You know, what type of income writers can be attached
to the variable annuity, the top ones. The limitations, the benefits, how to quote it.
Where it fits in your portfolio. All of that. And at the very end, if you hang in
there with me, I will tell you how to get that book that I’ve written on the
income riders and I’ll send it to you for free. So, what is a variable annuity? I
mean, they’ve been around since about 1955, I think. That was when they were
first introduced for tax-deferred market tight growth. Sounds good because it is
good. So, what is a variable annuity? Variable annuities were introduced in
this country around 1955 and they were put on the plant for tax-deferred market
growth which is a good thing. A variable annuity is a security. You need a
securities license or the equivalent to sell them. Which is a good thing. And the
reason for that is there’s mutual funds, they call them separate account. So,
there’s mutual funds inside the variable annuity. That’s the growth portion of the
product that you get to choose the mutual funds and hopefully get really,
really good growth. And use outside of an IRA a non IRA account. That growth can
grow in compound tax deferred which is the reason variable annuities all on the
planet in the first place. Now, what is an income rider attached to a variable
annuity? The variable annuity can be standalone. It doesn’t have to have an
income rider. But at the time of application, you can attach what’s called
an income rider which is a future benefit or future guarantee for lifetime
income that starts at a date that you dictate. That’s a good thing. Now, income
riders are kind of a… They’re commodity type product they can be a tested variable
annuities. They can be attached to fixed indexed annuities. But at the end of the
day and my “will do” not “might do”. Your honor annuity for it will do contractual
guarantees. Not what it might do. The will do part is the income rider. So, that’s
what an income rider is. It solves for future income.
It’s a future pension plan and it’s flexible. But you attach it to the policy
at the time of application. So, how does a variable annuity or a fixed indexed
annuity income rider work? Let’s visually look at it. Draw a line
down the middle of a blank sheet of paper. That’s your blank sheet of paper.
This side is the investment side, for variable annuities it’s mutual funds separate accounts. They call them separate accounts. Index annuities is the
index option strategy. And the other side is the income benefit rider side. 2
separate calculations. They grow separately. One typically with income
riders is a specific percentage that it grows by during the differials. Once you
turn on the income stream, that percentage growth goes away. But that’s
the way that you can calculate a new to the penny say 7, 10, 12 years
from now what that guaranteed income stream will be. So, that’s how they work.
So, with variable annuities, there’s primarily for income writer types that
are available. And let’s kind of go through them. Not get into the weeds of
the details of them but I’ll tell you what they are and you know you can get
my book at the end of this video and I explain them in detail. The first one is
called the guaranteed minimum accumulation benefit. G-M-A-B. The second
one is called the guaranteed lifetime withdraw benefit. The G-L-W-B. The third one
is the guaranteed minimum income benefit. G-M-I-B. And the fourth one is the
guaranteed minimum withdrawal benefit, G-M-W-B. So, you’re like, “Hey, Stan. Your
G-Ming to death. What’s all this G stuff?” G is for
guaranty. They all work differently. Not one’s better than the other. They all
provide future income guarantees. And without getting into the weeds and… I’ll
tell you how the sausage is made in the book. Because the book goes through the
details of how each one of those G’s, those choices for variable annuity
income writers work. So, let’s talk about the benefits of these income riders and
I’m going to group the income riders to both variable
and fixed index because at the end of the day, your if you’re shopping for
future income, you’ve got a shop income rider, right? So, the benefits of income riders.
I mean, in essence, they provide future income. It’s a contract. You know
exactly what that payments going to be. You can structure it through your life.
You can structure it for joint life with a spouse. You can structure so that 100% the money goes to the beneficiaries if you died early in the
policy. There’s some flexibility to lifetime income benefit riders that are
great. You can change your mind. You don’t have to use it if you buy it. Some of
these you can start and stop. Meaning, you can get the income and you can stop it.
So, you have to tell me what you’re looking for. What do you want the money
contractually do? When you want this contractual guarantees to start? And how
do you want the money to work? And then I will go out and shop for every single
carrier on the planet to try to match that guarantee scenario up with what
your goals are. Also some benefits to understand. Not all writers do this but
some provide a death benefit. Some provide confinement care benefits. But
all of them provide transfer risk income benefits. And at the end of the
day when you buy an income rider and attach it to a policy, that’s what you’re
buying. You’re transferring the risks of the annuity coming. For them to pay you
for the rest of your life. It’s a pension that you can never
outlive. Okay, let’s talk about limitations of these income riders.
Number 1, they’re not yield. I mean that calculation that you’re gonna see on
your statement. The right hand side will edge. Remember
draw a line down the middle the page. Accumulation here and income benefit
Rider here. You can’t peel off the interest, you can’t cash it in. You can’t
transfer it. Okay, it’s only used to calculate your income stream payment
when you start it. That’s a limitation. But if you know that, it’s not going to
shock you, right? The other limitation is the fees from the income rider come out
of that accumulation value. So, that can be expensive as well. And those fees are
for the life of the policy. But I think a lot of the limitations and negativity
and disadvantages of lifetime income benefit riders circle around a lot of
the sales pitches. You know, the 8% or 7% or whatever that high percentage is
that the agent or advisers tell you that gonna get, that’s not yield. That’s
monopoly money. You have to be smarter than that. If it sounds too good to be
true, it is every single time. So, the limitations of the income rider, you just
have to understand them and make your decision based on this facts.
Alright. Structuring these income riders and quoting these income riders
pretty simple. Because structure your life, joint life. You’ve got to just tell
me exactly what you want the money to do. And then quoting them is like you know,
quoting a plane ticket. You quote all carriers, you look for the highest
contractual guarantee and then from there, you make it a decision on which
carrier you like. The claim span ability of that carrier. And the high contractual
guaranteed number. So, where do these income rights fit your portfolio? 3
places. Future income, legacy and confinement care. Well, let’s
go over three of them. The future income is the primary decision that you’re
making. It’s a future Pension Benefit that you never outlive. It’s a
contractual guarantee. I can tell you the number is going to be. If you tell me the
deferral time period. From the sample and a death benefit some income riders, it
also provide a death benefit, that growth. Which is a good thing, if that’s what
you’re looking for. We can do that as well. And confinement
care. You know, you get your money back quicker when you get sicker. What they
do is they just start speeding up the payments or enhance the payments if you
qualify for that. But at the end of the day, you should be making your decision
on the highest constructive guarantee of that income rider. You don’t have to use
it but if you’re planning to use it, you should get the highest contractual
guarantee and attach it to whatever variable annuity or index annuity
whoever provides that highest contractual guarantee. As I mentioned in
the opening, I will send you my book on income riders. and I go over all the
details of all the specific types that get in the weeds. I tell you all about it.
I’ll send this to you for free and I’ll send it to you in this package, Gold
Package, if you click below. And also, please join my YouTube followers. Because
guess what? I’m providing this type of information all the time. So you know,
it’s not salesy, it’s informative. Get my books. Watch the videos.