Question: Every time I try to do some internet research on annuities, I am inundated by a ton of annuity pop up ads. Are these good resources? What’s the catch? Some of the returns and video claims seem too good to be true. from Kevin in Alva, Oklahoma
Answer: This is a great question, and what you have discovered is that there is absolutely no oversight or enforcement on what is said, advertised, or promised concerning annuities. It’s the wild wild-west out there. This is especially true for the agents on the internet who push fixed index annuities, or as many inappropriately hype and refer to as “hybrids.” Hybrid is a car and a plant, but it is NOT an annuity.
You might also hear these strategies called equity indexed annuities or indexed annuities….but they are all the same type of product. By the way, fixed index annuities were designed to compete with CDs, not market returns, so don’t fall for the pitch of all the market upside with no downside. It’s true that there is no downside with an indexed annuity, but the upside is very limited and that fact is back up by legitimate research and back testing.
Internet Pop-Up Ads
If you happen to click one of these enticing display ads, and subsequently sign up for information or whatever the offer is, then get ready to be inundated from agents in your area trying to set an appointment with you. Many of the annuity internet promoters take your contact information, and then immediately sell it or farm it to agents in your area. Some of these ads will display very high return percentages or actually try to scare you about annuities as a way to get you to click. In most cases, after your name is immediately forwarded to a “representative” in your area, that agent typically is going to do or say whatever it takes to sell you that too good to be true indexed annuity. It’s the ultimate high pressure approach.
In the annuity industry, these online lead mills are the latest in a long line of the next hot/bad thing in prospect marketing. In addition, some of my clients who have actually signed up at these online annuity “information” lead farms tell me that after they provide their contact info, they get inundated with daily emails hammering away with different fear and greed sales pitches. I guess these annuity promoters look at “sign-ups” as a numbers game and are simply implementing their versions of pestering submission closing techniques. It’s appalling and certainly an ongoing black eye on the annuity industry. The rules are in place to shut this stuff down, but for some reason there is no enforcement at all. I’m sure Madoff would be envious of what these annuity internet promoters are getting away with.
Once you click the enticing pop-up ad, the goal for a lot of annuity hypesters is for you to watch their videos or read their reports. If you are looking for the perfect product, then they are going to try to convince you that this impossible product (usually an indexed annuity) dream exists. This is where the powers that be in the industry should be enforcing what is being said, promised, and pitched. I’m not saying all of these videos/reports are bad, but I can comfortably say that most of the ones that I’ve seen definitely are. The “hybrid” hype happens here. The too good to be true indexed annuity sales pitch usually focuses on upfront bonuses, high % income riders (monopoly money unless used for income payments), or contractually implausible return scenarios. Hopefully you are smarter than that, but a lot of middle America is unfortunately falling for these hybrid hype pitches.
My advice to anyone surfing the internet for annuity information is to be very careful, go slow, and evaluate where and what you are signing up for. If you have signed up already and are getting daily emails, then unsubscribe. If the locals agents are pestering you for an appointment, then tell them that you will be in touch if interested. In other words, go at your pace, and always remember that if it sounds too good to be true (especially with annuities)…it is. It’s important to always remember to own an annuity for the contractual guarantees within the policy, not some hypothetical or projected dream return scenario.
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