A Reminder About Retirement Unknowns | 7 Figure Annuity Sales Podcast | Ep. 299

It's important to remember when you're positioning annuities that the unknowns are extremely important for clients to consider. Welcome back to the seven Figure Annuity Sales Podcast. Caleb north here with Chad and Chad. Today we're talking about just retirement unknowns. Those things that nobody can answer, those things that nobody knows, but they're extremely important to talk about. You know, the way that I like to think about it is annuities are a type of insurance, right? They're distributed by life insurance companies. Some people want to call them investments. Regulators don't like us calling them investments. They want us to call them insurance. And truth be told, you know, with SEC trying to regulate things and dol and all this stuff, I think it's important for agents not to try to start categorizing annuities as investments. Otherwise we're liable to subject ourselves to more scrutiny in that department. But it is a type of insurance. And when you think about it, why do people buy insurance? People don't buy homeowners insurance because they assume that their house is going to burn down or flood. They don't buy auto insurance because they think they're going to get in a bad car wreck on the way home. Right? They don't, they don't buy insurance because they think the worst is going to happen. They buy insurance because they don't know that it won't happen. And so the annuity is a type of insurance for retirement funds, creating the guaranteed lifetime income, creating that 0% floor if you're using the right types of annuities. And so you gotta ask yourself what are the unknowns that this type of insurance then is protecting me from? And that's what I wanna talk about today. And Chad, you've got a couple of questions that you ask every client and I think they're extremely impactful to paint the picture of why an annuity is important in any legitimate retirees portfolio, retirement portfolio. And what are those two questions?

The first one is what type of longevity insurance do you have? You know, that's really important to understand because longevity insurance simply means what insurance do you have that will protect your income for the rest of your life no matter how long you leave? And it's important to get to that standpoint because you go back into the auto insurance, the home insurance, you know, we, it's very unlikely you're ever going to have a home fire. That's just very unlikely. But you still have to have the insurance. It's very unlikely you're going to end up having.

A Car crash. I mean, statistically, I've driven thousands and thousands, hundreds of thousands of miles and I haven't ever been in a car crash. And I'm thanking God for that. But when I look at it, I'm going, there's, I still have to have that insurance. There's a, statistically, you know, when I'm 20 years old and I buy a 30 year life insurance policy, there's a slim chance I'm going to end up using that. But I still get it. But yet people constantly are taking their money and they have no idea how long it's going to last them. And that's what longevity insurance does. It's an annuity with an income rider. And I do preface, I said this isn't an actual, actual insurance. This is just something that my product does. It provides its insurance to provide income no matter how long you live. And then I'll add, what type of market protection insurance? In other words, what type of insurance do you have that protects your money from never going backwards due to stock market losses or volatility? And that's another form of an annuity. So in other words, and that doesn't have to have an income rider. That's just, it protects your money from going backwards. Now, you could argue that a CD protects your money, a savings account protects your money. Yes, it does. I'm just talking about a product that is already called insurance that protects your money from market volatility. That is a fia, that's a fixed indexed annuity.

Yeah, yeah. And you get people to start thinking about this concept with these two unknowns. Right. You'll ask them, how long are you going to live for? Nobody knows. And what's the stock market going to do? Well, nobody knows that. So now you're priming them to think about longevity insurance and market protection insurance. And again, those are marketing terms. Those are, those are, those are things that people can understand conceptually to help them understand what an annuity is actually going to do for them. How is this thing, what is a benefit to me in this annuity policy? Well, it does, it helps protect you in the event that you live longer than you anticipate or regardless of how long you live. And it will protect you in the event that market doesn't perform the way you hope or think it will perform. You know, I think just a couple of practical questions that, that you could ask a client is you have, do you have auto insurance? Yes. Do you think you're going to get in a wreck on your trip to the grocery Store? No. But you still have it. Yes. And you're just writing those checks every single, every single month. And you're probably never going to see that money again. And you may never get to benefit from having that policy because think about it, the only time you benefit from having that policy is if you actually need it. And you only need it when something.

Bad happens in our insurance. You will need it. You will need income for a lot. You will, it's a guaranteed need insurance. There's very few insurances we have that we spend money on that we actually will guaranteed need this. We guaranteed need.

So think about it. Yeah, I didn't go to the, I don't think I went to the doctor's office one time last year, which is probably not a good thing. I probably should be having checkups and physicals and whatnot. But I didn't go. I, I paid for health insurance for a 12 month period that I never once used. I haven't had a claim on my auto insurance policy ever. I've never had a claim on my homeowner's insurance. I've been paying for these types of insurance for years and never had a claim. And I'll never get that money back. I'll never see it again. It's just gone in an annuity.

I'm actually still in the hold on ours with Ariel's brain aneurysm, we're still. And with my health conditions, the insurance companies have lost money on us for sure.

That's true.

Yeah.

But the problem is like you, it's, it's a system where you would rather pay and never see the return on that money than to pay it and actually be in an interest. Because if you're in the insurance company's pocket at that point, it's because something not good has happened. Right. But an annuity, yeah, it's the opposite.

Leilani has a cousin right now that gotten a severe motorcycle accident. He's literally been in, in a coma for eight days now. They've had a flight for life them two times. And I'm like going, if you didn't have medical insurance and you know, hopefully pulls out of this, but if you didn't have medical insurance, not only do you lose someone you care about, you have medical bills for the rest of your life. And you're right, I mean, I know you're going to continue in this, Caleb, but you know, with an annuity, you know, you get that benefit. You know, it's like, it's, it's something you will use and you say, well, what if I go to use it and I die and you know, the money I don't get to use. Income for life. Yeah, but you still have a death benefit likely going to someone. And in your auto insurance that you don't get, say, hey, I didn't use this for five years, I get all my money back.

No. So, yeah, that's exactly right. I mean, it's, to me, it's like you don't ever anticipate needing your homeowners, your auto, your, you know, hopefully not anything major with your health. You know, you, maybe you use your health insurance for your doctor's checkups and you get your co pay or whatever. Okay, that's, that's a little bit more, it's got a little bit more utility to it than most PNC insurance. But point being, we buy all these PNC policies for things that we don't actually think will happen. Well, logically, do you think the stock market's going to go down at some point? Well, of course, it always does. So. Wait, so you, you think that the stock market going down, but do what?

Another thing. Unless we're printing money the way we are.

Well, sure, but you think the stock market going down is more likely than your house burning or you getting in a major car accident or whatever? Of course it is. Right. Because for our whole lives we've seen the stock market go up and down, but we buy insurance for something we don't think will happen, and then we, it's like, you know, sometimes it feels like it's pulling teeth with clients to, to get them to see the value of an annuity when, when it's protecting them from something that they actually think will occur.

It's part of the biggest, the biggest thing you'll find though, is you have to have, I mean, legally, you have to have health insurance, you have to have auto insurance, you have to have, you have to have homeowners. You have to have homeowners car and health insurance. Think about if they mandated you had to have retirement insurance.

Yes.

I mean, that's what the DOL needs to be doing.

You need a mandate that you, you're going to have, you're going to have retirement insurance. You must buy an annuity with an income rider.

Yeah. It's crazy to me. You think about it, it's like, why does, why do our governing systems regulate and mandate certain types of insurance and then try to make other types more difficult?

Well, it's. What's all of the money. It's what's in it for them, it's what follow the money. Yeah. I'm telling you, man, I'm. I love America. I absolutely love where we live. I think we are still in the best country in the world. But, man, to watch money go where it goes and it does nothing just drives me nuts. It goes to people that aren't even part of our country. And you know, the thing I think about, and this is totally separate from what we're talking about, but the government doesn't make money. They take money and they distribute it and we have no say in where it goes. And so when you look at that, you know, an income rider. So out here I'll tie it back in. An income rider with that small little fee tells your money exactly what it's going to be doing. You don't have to question or think, where's that money going? It literally protects your income for the rest of your life.

Yeah, that's exactly right. And. And if it's the unknowns that cause people to buy insurance, then I think you've gotta, you've gotta double play with the annuity because there are elements of things that are known. We know that the market's gonna go up and we know that the market's gonna go down, and that's how it functions. And we know that if you're alive right now, you're going to live a little bit longer, but we don't know how long and we don't. So we know the market's going to go up and we know it's going to go down. So do you want protection from that? And we know that you're going to live a little bit longer. We don't know how high the market's going to go or how low it's going to go, and we don't know how long you're going to live. But we know both of those things are true to a degree, and the severity of them, we're unsure. So now you've got both knowns and you've got unknowns, both of which catalyzing the. The conversation about the annuity in the place of an annuity forward. And I would make an argument that in a retirement plan, an annuity is as important or possibly more important than some of these other types of insurance that we're required to purchase. My $0.02.

I completely agree with that. It's. Yeah, that. I mean, the things we don't know. How long are you gonna live for? We don't know that. I say this all the time. Two questions. Nobody can answer. I don't care how smart you are, how long you've been in the industry, it's number one, how long are you gonna live for? And number two, where's stock market gonna be tomorrow, let alone five or ten years from now? There is one product that will cover that period.

Hey, anybody says different, make comments in the section and let's see. But it's an. It's is a fixed indexed annuity with an income rider. That is the only product that can cover those two questions. Because how long are you going to live for? It doesn't matter. I have income for life. Where's the stock market going to be tomorrow, let alone five years, ten years from now? It doesn't matter. I have income for life. I'm covered. I can't lose when the market falls. Now, in some annuities with income riders, is there a possibility you could run out of the death benefit? Yes, but. But I have income for life. So it answers those two questions exactly.

And to go back to our podcast, last week, you know, we talked about internal rate of return versus interest rate of return. If your death benefit goes away in the annuity, congratulations. Because now you're in the insurance company's pocket and it's because you've been paid so much income for this amount of time and the market has performed poorly enough, you could draw a very logical conclusion that you wouldn't even have money at all right now if you were left exposed to market risk. Because to get to that place, your income has to be high enough and your interest rate of returns have to be low enough that you've depleted that account value. And if you've done that really good.

Way to put that, because, you know, people sit there, I don't want my income to go up. I don't want to jump up in another tax bracket. Put poor you, you're making so much money, you're in another tax bracket now. We shouldn't have that many tax brackets, but that's another thing. Well, I ran out of a death benefit. Now all I have is my income. Poor you, you live too long.

Yeah, you live too long.

Congratulations.

Yeah, the market performed poorly enough for you over, you know, since you protected yourself.

Yeah. And now you're literally outliving the amount of money that you put into it.

Correct.

I mean, that's actually an accomplishment. Now, granted, you want there to be a death benefit. Like I always try saying, the number one priority is I make sure you two have enough money to live off of, no matter how long you Live. But who would you rather get the money when you die? The insurance company or your heirs? And most of the time they're going to say they're heirs. And so every once in a while you get wow, I don't care, I'll burn my last money. No, you're not, you're dead. But that's a whole nother thing. But the point is, is you lived so long that the product you bought originally did exactly what you designed it to do.

Yeah, that situation is only a bummer when it's compared to upside potential of something. And it is never a bummer when it's compared with an alternative of their situation exposed to risk.

For sure. I do have clients at times. I do have clients at times. Goes, man, I wish I was in the market right now. The market did really good. I said, yeah, but what did it do in 2022? And they're like, well, went down. He said, did you? They go, no. I said, well, you're happy not being in the market. Then they're like, you're right. No, no, I like what, I like where I am.

Yeah, it's, it's crazy. I've, I've had this concept for a while when I was, I did a recording. I think it might have been sent out via email and like a Tuesday training tidbit or something which by the way, if you don't get those, reach out to me, we can add you list. But point being, I was talking about the short sighted nature that, that just people tend to have in general. Right. And it's like man, if they credited 5% in their annuity, but the stock market was up 15 and they go to a party and they're talking with their friends, they're bummed they only got 5 instead of their friends who got 15. You fast forward a year or two or go back a year or two and their friends took a 20% hit and they were flat. Who's talking now? You know, it's like, but, but we all, we just, it's like we get consumed by these, you know, if you remember the Gamestop and the amc. And it's like we get consumed with these unicorn things rather than just the slow, steady, the tortoise beat the hair. Okay. The tortoise beat the hair in the long run.

But they both ended up in soup.

Yeah.

Okay, so before I close out, anything else you'd like to add, Caleb?

No, that was my last little one.

Really? So now that, yeah, now that you.

Get, now that you open the door, it's more fun to interject when you're trying to wrap it up than it is to walk through a door you open for me.

So no matter what Caleb says right now, we are done with this podcast. I appreciate you listening. Jump on to Retirement Realized financial Sign up for one of our courses. I'm telling you, you will not regret it if you you that. It's constantly about learning, constantly about getting better and the number one place to invest in is yourself. So I hope this helps you. You have a great day and of course, happy selling.