As always, there are thousands of financial products you have to sift through while drinking your daily coffee. Unfortunately, as you’re trying to watch Dancing With the Stars, you’re continuously reminded of all the bad options, like the Fixed Indexed Annuity from Oceanview Life and Annuity. Dubbed the “FIA”, this product should be avoided at all costs!
The specifics of the Oceanview Life and Annuity FIA
In their defense, Oceanview does offer a fixed rate annuity as well, which would certainly be a better deal…. I think. Nonetheless, I just wanted to make sure I’m not casting doubt on all their products. An FIA, specifically, aims to do the things in the graphic below, provided courtesy of the Oceanview website:
A couple of points I’d like to highlight. First, premium protection is overrated. Why would you want to protect your premium from market downturns? In order to do that you would need to remain out of the market, which is the most profitable place you can be. Historically, the S&P 500 has returned around 10.6%. I wonder if the FIA rate is anywhere near that? Also, the “wealth transfer” section is misleading. The federal estate tax doesn’t apply until nearly $13MM. So unless you’re approaching that number, this is completely irrelevant. Adding to that, only 6 states have a tax of this type.
Don’t forget, we’re not discouraging annuities while not offering you valid alternatives. You have endless options, including your workplace 401k, IRA, Roth IRA, Brokerage Account, Certificate of Deposit (CD) or High Yield Savings Account (HYSA). These are all superior products to an annuity in most cases.
When you need an annuity
If you are trying to fill a spending gap in retirement and know exactly how much money you need and for how long an annuity could be right for you. Obviously this is a highly subjective decision and could depend on a number of factors including social security claiming strategy, pensions, and 401k and IRA assets. But nonetheless, there are some situations in which an annuity can make a ton of sense and allow someone to sleep really well at night.
The Good Annuities
The bad annuities are plenty, and we’ve beaten that horse to death at this point. So let’s move on to the good ones! Instead, I’d recommend checking out Stan the Annuity Man, who offers Multi-Year Guaranteed Annuities (MYGAs). An MYGA can most easily be described as a CD-like annuity or a fixed rate annuity. In other words, you pretty much know what you’re going to get rather than reading through thousands of pages of disclosures. The other good annuity is a Single Premium Immediate Annuity (SPIA) which exchanges a specific amount of cash for a specific benefit over a finite period of time. The terms are pretty dang simple, and the product is self-explanatory. You don’t need a degree in micro economics to understand the terms of the product, which in our opinion, is a huge plus.
Avoid companies like Oceanview Life and Annuity with FIAs and other similar products
Sometimes, the best thing to do is nothing. I mean holy cow, how many of these companies are there? We’ve given you a few good recommendations in this article and hopefully that’s enough to get you started on the right foot. We’ll try to add some more information in the future that will hopefully provide more clarity on Oceanside Life and Annuity products and those like it!