Tell us. Dick: Just give me a quick answer. Let's get this video over. Eric: That's right.
How do you take care of the answer of which one is best? Let's start with some of the positives on the pre-issued side. Dick: Okay. Eric: You're looking at higher than normal growth. Dick: You're going to get a much better yield.
Eric: Then you contrast that with, on the hybrid side . . . Dick: Hybrid and all fixed annuities.
If you really come down to fixed annuities, fixed indexed annuities, what we call the hybrid annuities, which are the fixed index with the income rider. When you're looking at actual APY, your annual percentage yield, it is not good in fixed annuities or fixed indexed annuities. We might be talking about somewhere between 2% to 4%. Eric: I.
Agree. If we're looking at it simplistically, growth potential, if we're lining up, we put the check under the pre-issued annuities. Dick: Yes. What kind of yield are we looking at there, Eric? Eric: We're looking at 5% to 8%, typically.
Dick: Yeah. I think being realistic without overstating it, you are right; it is 5% to 8%. Eric: He's going to down downplay it. 5% To 6% is where.
. . Dick: 5 to 5 is more standard. If we step into not life-contingent, but what am I trying to say? Eric: When you're using the life insurance backing of [inaudible: 01:48].
Dick: That is what I'm trying to say is life-contingent. I was thinking life settlement when I was questioning. Eric: Which is another video in and of itself. Dick: Another video.
Life-contingent, you can get up into the 8%. I have seen some period certains in the pre-issued that will get up into 7%, that type of thing. With the pre-issued, yes, you can expect a much, much better yield. Eric: The guaranteed yield.
Dick: Yes. Eric: You know what you're getting when you start into it. Dick: Yes. It's backed up.
Let's touch on that again, we did from the last couple of videos. On the pre-issued annuities, it's backed up by the same A-rated insurance company that we might do with a new issued annuities. Safety is there. Eric: Okay.
All right. We've got growth probably edges out on the pre- issued side. Now you take the next step here, and that's . .
. Dick: The hybrid. Eric: You look at the hybrid, and what's the positive in the gross side. You're not necessarily .
. . Dick: Right. Eric: .
. . Not necessarily in the cash account. Dick: If all we're thinking about is yield, we wouldn't maybe choose the hybrid.
Obviously, there has to be something good about the hybrid because there's a lot of people that this works for. Eric: The hybrid is really good for income, guaranteed income for life. Dick: A pension-style income. Eric: Exactly.
When you're taking an allocation into a hybrid, you're usually focused on lifetime income because there are guarantees on the rider that will give you that higher accumulation amount, but it's usually only for income, for future income. Dick: Right. If we need a pension-style income, and we can defer it for some length of time, typically with a hybrid annuity, we can get about an 8% rollup, which will . .
. 7%. Eric: 7%, yeah. Dick: See, I'm overstating now.
Eric: I was going to say. Dick: Things have changed in this rate environment, from what we used to be able to say, even in the recent past. About 7%. Eric: You got the income rollup.
In deferral, those are able to grow at a guaranteed rate, higher than what we say is on pre-issued. However, after the end of your contract period, you're walking-away money doesn't necessarily always grow at that rate. Dick: Correct. Overtime, as you take it out on a pension-style income, you will get it out and you will get the benefit.
However, if you want to take it all out at one time, you couldn't. Another thing I want to contrast between the pre-issued and the hybrid is the flexibility that you have when you're setting up a hybrid. You set it up the way you need it, the way you want it, the way it's going to work for you. When you want a pre-issued, no.
Eric: For me, that's the strongest point. When you're constructing a hybrid allocation, basically a hybrid [inaudible: 04:47] allocation, it's designed for you. You're building it based off of your needs. When you're getting a pre-issued annuity, you're getting something that was designed, basically, for somebody else's purpose.
Dick: Right. You have to be flexible. Eric: Repurposing is what I . .
. Dick: Yeah, repurposing. Eric: It may not always fit like a glove. Dick: Or may not fit, at all.
Eric: You're finding benefit in usually another area. Typically in this time, it's growth, you're getting better growth than you're going to get someplace else. Dick: If you can be patient with a pre-issued annuity and your goal is really yield, you can get that yield to many times be structured the way you want it to come in, rather than lump sums in 5 years, 10 years, or rather it's a monthly income stream. You can still get yield and a monthly income stream, this type of thing, but it isn't typically a lifetime income.
Eric: One of the questions I've been fielding, especially after the last couple videos, is, "Talk to me about these pre-issued annuities. Am I. Going to get a lump sum at the end? Am I. Going to get an income stream? Am I going to get .
. . How does that configure?" The answer was, "Yes." Dick: Yeah. Eric: They come in all those different varieties.
The same set of pieces that are constructed when you're doing a first-issue annuity are out there on the secondary market. The problem is it's not been designed for you. If someone took a 20-year period certain, there may be 16 years left on the piece you're able to purchase. Dick: Right.
If that works for your scenario, then it's an ideal situation to get a great yield, get safety. In this market, where can you get yield like that? Eric: That's the key. Dick: Safety. Eric: I really like the pre-issued market for somebody who's had CDs that are maturing, that just needs a bigger yield.
They say, "Where can I get 5%? I wish I could get 5% again." This is one of those places. Dick: Exactly, CDs. I. Like it also for those folks that come out of the stock market, and they're like, "Look.
I just don't want the volatility. I. Don't want the craziness anymore." Eric: This is predictability, but without flexibility. You have to know it's not money you're going to go back in and dip into.
Dick: Right. Eric: It doesn't always fit for somebody that needs to get a stream of income. It can sometimes, but you don't want to put all of your money in this bucket. Dick: Right.
As we've said, the hybrid annuity has its advantages, because you can tailor it to what you need, what your income needs are, to a husband and wife sharing a joint income; many different areas that you can tailor it to your specific needs. Eric: Yeah. Like you said, pension-style income is the best way. That's the perfect fit for today's 401K world, where you got a lump sum, you're walking, and you want income for life.
You want to guarantee that portion. The hybrid annuity fits like a glove for that. That's where it realizes its strong point. Dick: I think we've done a pretty good job here of being fair to both.
They're both great products, great financial vehicles if they're used properly. Is there any way to say that a hybrid annuity is better than a pre-issued annuity, or a pre-issued annuity is better than a hybrid annuity? Eric: Sure, but I. Wouldn't advise it. Dick: You could say it, but it wouldn't always be true.
Eric: It wouldn't always be true. Like we classically end almost every segment here, it depends on your situation. Dick: It does. You want to work with an adviser that really understands the merits of each and can be fair and unbiased about it.
Eric: Exactly. Like we say, make sure you work with somebody that's going to basically set it in your terms so it fits your situation. Dick: Right. Maybe you need one of each, or a couple of each.
A. Little diversification, imagine that. Eric: Wow. Allocation diversification.
Dick: What an idea. Eric: Thanks for coming in today. Dick: Thank you..
Tidak ada komentar:
Posting Komentar