Are we all guilty, at times, desiring too much of a good thing?

After all, as Annuity Guys, we often extol the virtues of income riders and the good they do; however, they are not always good for you! Annuity income riders typically offer benefits such as lifetime income and roll-up or ratchet growth **guarantees toward future income. Unfortunately, most of these **guarantees come at an expense and for some people this expense or rider fee makes perfect sense while foolhardy for many. Riders used correctly can give the annuity owner a lifetime income **guarantee that makes the expense well worth it. But, wait just a minute… [continued below video]

[continued]… some annuity owners actually purchase annuities for reasons other than the lifetime income. In fact, many people decide to purchase an annuity for safer **guaranteed growth or growth potential. Now, we will let you in on an Annuity Guys secret – annuities purchased for growth typically don’t need an income rider. Adding an income rider with a fee to any annuity will place a drag on the annuity’s growth potential.



Where we typically see annuity income rider abuse is on fixed index annuities with riders using a formula for **guaranteed growth toward future income. Read that sentence carefully, notice that the **guaranteed growth is toward a “future income” using a formula and not **guaranteed growth in your cash or accumulation bucket. The abuse we typically see is from annuity salespeople who must not understand or believe that a fixed index annuity can offer important retirement benefits without misusing the rider’s dubious growth pitch.

So…

Some annuity agents find it easier to sell you an annuity by offering you a “6% to 8%” growth **guarantee. We refer to this as the lie of omission. If they tell you that your annuity has a “6%” **guarantee, most annuity purchasers believe that the 6% **guarantee is in their real money account value growth – but it’s not, and if questioned further they will even admit as much, but they hope you don’t ask. Remember using annuity income riders is not necessarily wrong, most help retirees accomplish future income goals that fulfill their income need for retirement.

In summary, know what you want your dollars to do for you in the future and ask enough questions to insure that the financial product you decide on will accomplish your goals and not an advisor’s commission goals! Hopefully, you can now avoid being a victim of “annuity -income rider- abuse.”

Videos are educational and conceptual only and not a solicitation. They are not to be considered investment, insurance, tax or legal advice. It is recommended that you work with licensed professionals for individualized advice before making any important financial decisions. Annuities are not FDIC insured and their guarantees are based on the claims paying ability of the issuing insurance company. State Guarantee Associations, while offering specific protections, are not the same as FDIC insurance.