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Annuity Truth Or Dare: The Embarrassing Facts

There’s nothing more fun than playing a party game to get to know someone better. Annuities are one of the most confusing financial vehicles in the investment world. Choose the wrong kind, you could end up losing money, having to pay exorbitant fees, or being locked into a bad decision for 10 years or more. Get a good annuity and it’s like having a best friend. So how do you choose?

Let’s bring a group of annuities to the party and ask them our most potentially embarrassing questions. We will present each annuity with a choice, “truth or dare”? But we also dare YOU to investigate the facts.

The following is a transcript:


Truth: What is the most amount of money you’ve ever charged an investor in fees?
Dare: We dare you to NOT charge investors an M&E risk fee.

Mr. Variable Annuity: “Um, well, since I’m not legally able to get around the M&E fee, I’ll have to answer the question. One time, there was this investor who never read his prospectus. He just looked at his statements, saw that he was earning 12%, and felt good about himself. (Chuckles.) Meanwhile, by the time you added up his M&E fee, the income rider fee, all the fund fees, and his portfolio operating costs, he was paying 12.4% in fees. I kid you not. He had $755,000 invested, and that year he paid out $93,620 in fees.”

To learn more about variable annuity fees, click here to sign up for our free report.


Truth: If I invest my retirement money with you to get an immediate income, will I be able to take out $10,000 next year to pay for my daughter’s wedding?
Dare: We dare you to NOT charge investors an M&E risk fee.

Miss Immediate Annuity: “Okay, well this is easy. I’ll take the dare. An M&E fee is a risk fee assessed by the insurance company that underwrites the annuity. This fee is charged when there is a risk of market volatility. I never charge an M&E fee because I don’t participate in stock market investments that can lose investors their money! So, no problem.

To sign up for our 2017 Annuity Buyer’s Guide click here.


Truth: Is it true that the interest rate in a fixed annuity never changes?
Dare: We dare you to guarantee us an income for life, no matter how long we live.

Mr. Fixed Annuity: “As a stable and predictable kind of investment that can give you no surprises, I would never undertake such a dare. So, I choose to tell the truth. Although the word “fixed” in my name might suggest otherwise, my interest rate can change over time. The contract from the insurance company will explain when and how this can happen. Usually, I offer a fixed rate like 2% or 3% guaranteed for the first year, and then it changes based on current rates.

To compare the current rates and test one annuity against another, click here.


Truth: How old are you?
Dare: We dare you to guarantee us an income for life, no matter how long we live.

Mrs. Indexed Annuity: (Laughing.) “I’m not embarrassed about my age – I’m the youngest annuity in the room! Which is why I love a good dare. I accept your challenge. While you don’t have to add an income rider when you purchase an indexed annuity, doing so can absolutely guarantee you an income for life, even if you live to be 100. Income guarantees can also be purchased for your spouse. The fee is usually around 1% and you can still access 10% of your money, so taking out $10,000 on a $750,000 investment to pay for your daughter’s wedding is no problem. Oh – and I don’t charge an M&E fee, either, because while I offer market-linked gains, I guarantee your principal.”

All party games aside, annuities are serious business. This article is by no means an exhaustive explanation of all the differences between the different kinds of annuities, but rather we hope it served as a fun introduction to the four different types.

If you still have questions, we invite you to reach out to us, no obligation, no strings attached. Let us know what’s on your mind!

If you already have an annuity and you want to have it tested against other kinds of annuities to see if you are getting the best deal possible, we’re happy to provide this service to you. Most of the people we end up helping find that they CAN improve their financial standing. Find out how.

Annuity Truth Or Dare- The Embarrassing Facts

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