Annuity Guys®

Annuity Rates, Features & Ratings: America's trusted annuity resource. Compare best options for hybrid, index, fixed, variable & immediate annuity quotes.


Helping You Create Great Results Your Retirement Deserves!



(217)753-1515
  • Home
  • About Us
    • About Us
    • Contact Us
    • Site Terms & Disclosure
    • Privacy Policy
  • FAQs
    • Most Frequently Asked Annuity Questions
  • All Annuity Guys Videos
  • Annuity Types
    • Best Annuity Reviews
    • Market Free™ Annuities
    • Choosing an Annuity
    • Deferred Annuities
    • Hybrid Annuity Choices
      • Hybrid Annuity Pros&Cons
      • Hybrid Income Riders
      • Hybrid Annuity Guarantees & Strategies
    • Fixed Annuity Choices
      • Fixed Annuity Performance
      • Better Fixed Annuities
      • Fixed Deferred Annuities
      • Fixed Rate Annuities
      • Fixed Annuity Alternatives
      • Fixed Annuity Pros & Cons
      • Fixed Annuity Negatives
    • Index Annuity Choices
      • Fixed Index Annuity Features
      • Fixed Index Annuity Performance
      • Better Fixed Index Annuities
      • Fixed Index Annuity Alternatives
      • Fixed Index Annuity Pros & Cons
      • Fixed Index Annuity History
      • Fixed Index Annuity Negatives
    • Immediate Annuities
      • Immediate Variable Annuity
      • Immediate Fixed Annuities
    • Variable Annuities
      • Variable Annuity Features
      • Better Variable Annuities
      • Variable Annuities Disadvantages
      • Variable Annuity Alternatives
      • Variable Annuity Negatives
      • Variable Annuity Performance
    • Pre-Issued Annuities™
      • Hybrid Annuities versus Pre-Issued Annuities ™
    • Annuity Glossary
  • Articles
    • How Do MarketFree™ Annuities Work?
    • Are Annuities Safe?
    • Living Benefits
    • FIA Performance
    • Beware of FIAs?
    • Annuities & Retirement
    • Annuities & Estate Tax
    • Rollovers & Annuities
    • Annuities & Tax
    • Charity & Annuities
    • The Lost Decade
    • Best Annuity Videos
    • Social Security Benefits
  • Calculators
    • Retirement Planning Calculator — Basic
    • Retirement Shortfall Calculator — Basic
    • Immediate Annuity Calculator & Quotes
    • Fixed Index Annuity Calculator & Fixed Annuity Calculator
    • Variable Annuity Calculator & Hybrid Annuity Calculator
  • Blog
    • Annuity Guys® Weekly Annuity Video Blogs
  • Get Annuity Guys Help
    • Request Annuity Guys’ Planning Help Today
You are here: Home / Annuity Commentary / Are Hybrid Annuities too Complicated?

Are Hybrid Annuities too Complicated?

October 19, 2012 By Annuity Guys®

In our conversations with people considering annuities we often hear them repeat a phrase they have read or heard from someone else, “hybrid or index annuities are too complicated”. Most of the people we know drive cars even though they can’t explain how the internal combustion engine works. Similarly, hybrid annuities can have a number of moving parts — but that should not stop you from owning one if the non-moving parts (contractual **guarantees) meet your income, growth or estate planning objectives.

Dick and Eric reveal the reason why people would choose a hybrid annuity and then provide a list of the “moving parts”.

[embedit snippet=”video-specialist-button-hybrid”]

 

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Some of the “Moving Parts” that may be in a Hybrid Annuity

  • Contractual Guarantees (absolute, non-moving)
  • Income Riders
  • Index Strategies
  • Annual Point-to-Point with Caps
  • Annual Point-to-Point Average Spread
  • Annual Point-to-Point Monthly Average or Sum
  • Annual Point-to-Point with Participation Rate
  • Caps
  • Spreads
  • Fees
  • Uncapped Index
  • Blends
  • Biannual Point-to-Point
  • Quadrennial Point-to-Point

Annuity Guys® Video Transcript:

Dick: Eric, we hear it all the time.

Eric: “They’re too complicated!”

Dick: We see it all the time that hybrid annuities or fixed index annuities are too complicated.

Eric: “There are too many moving parts. How can you explain these things to me? It doesn’t make sense. There’s too much!”

Dick: Well, there has to be something to this because everywhere you look, that is one of the most prominent things that are written about annuities, in general. I don’t care if it’s a variable. Sometimes they say immediate annuities are simple and they are in general, but there are a lot of different parts to an immediate annuity.

Eric: Oh no, they’re simple.

Eric: They’re immediate, immediate gratification. I give you this much. You send me a check for this much.

Dick: Okay, so if these are too complicated, why should somebody even consider getting one?

Eric: Well, there’s the **guarantee aspect.

Dick: Right, that might have something to do with it.

Eric: Well, maybe a contractual **guarantee would be a good thing.

Dick: I think that might be one of the reasons why these have become so popular.

Eric: You think?

Dick: Folks, when you look at an annuity and you look at all the moving parts, there’s no question it can become very complex, very complicated. If you get lost in all of the things about an annuity, you’ll miss some of the main points, which are what you just said Eric, it is the contractual **guarantee.

Eric: That’s right when you go, and you start looking or considering an annuity for retirement, typically. What do you need? What are you solving for? Do you need lifetime income and if you do, how much? Then you look at what you have and if you purchase an annuity, this is what the minimum **guarantee is. That is the key element of a purchase of that level. What’s the minimum **guarantee?

Dick: So if I want to know that I have a certain level of income, at a certain age that is just flat out **guaranteed and I’m satisfied with that and that meets my retirement objective, then why do I have all these other moving parts?

Eric: Well, I think we refer to it maybe as gravy or icing, depending on which type of plate you prefer.

Dick: That’s what we talk to our clients about is if we can first of all, make sure that we’ve met your objectives, and that you’re satisfied, and that is absolutely iron-clad **guaranteed, then anything we can get that comes with the moving parts is extra.

Eric: That’s right. That’s what you have to understand. Working backwards, I think is the best way to look at it. It’s what do you need? Is it income? Is it growth? When we look at growth, what’s the **guaranteed rate? You know what’s the **guaranteed rate of return? If we get more than that, will you be disappointed? No.

Dick: And we might achieve a higher rate, by utilizing a death benefit.

Eric: Exactly. It’s another **guarantee. The **guarantee may come from the base of the contract or it may come from a rider.

Dick: That’s right.

Eric: But those riders are part of those contractual **guarantees, it’s built into the contract.

Dick: Yes, when we talk about moving parts and things being complicated, I know a lot of folks that are watching have had experience with mutual fund^s and different items of this nature. When we think in terms of prospectus, how complicated is that?

Eric: Well, you’re assuming one thing, people have read the prospectus. Most people don’t bother to pick up the prospectus they get from a mutual fund^. They don’t want to read the 40-50-200 pages of information, in print this small. They just don’t want to look at it.

Dick: And if you do read it, I mean obviously there is a certain complicated aspect to it, and yet it’s very similar when you’re looking at an annuity, from the standpoint that there are some parts of it that can seem complex.

Eric: Right and it usually has to do with the growth potential side, in both the mutual fund^ and in the annuity world. It’s that aspect that creates the sizzle, I think as you call it.

Dick: Truly, we’re aware of this because we’ve seen it, where an advisor or an agent is overzealous trying to sell an annuity. They paint this picture of all this upside potential. No downside risk, but a lot of upside potential. That is not always going to be the case. In fact, it’s just way overstated.

Eric: People take the marketing components of everything and talk about the potential. When we talk to prospects, clients, whoever here, we’ll have someone come in and say “I just talked to this guy and he talked about this 7.0% or 8.0% **guarantee.”

Dick: Right 7.0% or 8.0% growth and compounding.

Eric: Yeah, and it’s **guaranteed. And then we always have to pull them back a little bit and say that may be on the income rider portion. Now it’s a contractual **guarantee component, but they have to understand that that’s a number they can only use for income. As long as that meets their basic need, it’s part of that contractual **guarantee, but they have to understand how it works.

Dick: Right, exactly. Folks, there are genuinely a lot of different aspects, especially to a hybrid annuity or what we would call a fixed indexed annuity which is the hybrid annuity. Eric, I thought we’d just kind of run down this list and we’ll put this on the blog site.

Eric: List the moving parts here for you.

Dick: Yeah, and maybe we could aim for next week or something, to get a little more into each moving part.

Eric: I think that would benefit most of the people we speak with, because the confusing part, the complication comes from the moving parts.

Dick: And I would say, folks don’t get too hung up on this, because we’re going to make it sound real complicated here. The fact of the matter is that, if you’ll truly focus on the contractual **guarantee aspect, you’ll understand that these are just options that you have, that can be used. And that’s where you do need an advisor, to help you to make those decisions, on what might give you greater potential.

Eric: All right, so what are the moving parts? You made a list, because we didn’t want to forget anything and I’m sure we will forget something.

Dick: Our biggest challenge will be not to actually start describing these, as we go through them. He’s just going to read the list.

Eric: We decided it would take way too long to describe each one individually in this episode.

Dick: Well, I’ll tell you what, you want me to just go ahead and read it?

Eric: Yes, read them.

Dick: Okay, we’ve got first of all the annual point-to-point with a cap. There’s an annual point-to-point with an average, where the index is again, averaged over the course of a year, and typically there will be a spread in there.

Eric: See, he’s explaining them already. He’s trying to explain it. See now your head’s starting to spin isn’t it?

Dick: Okay, I’ll stay on track. Here I go, annual point-to-point with a monthly average, or also called monthly sum. Annual point-to-point, with a participation rate could be 100% could be… There I go; caps, spreads, fees, uncapped indexes, blends, two-year, four-year, three-year, five-year point-to-point.

Eric: Points, yeah. I’m sure we left out something.

Dick: I did pretty good.

Eric: He finally reined it in a little bit. He really wants; we really do want to break it down for you.

Dick: We will. It’s tough not to start explaining, folks.

Eric: We really do want to break it down for you.

Dick: We will. We’ll break it down more.

Eric: Give you a reason to come back and check the email registry.

Eric: We appreciate you tuning in today.

Dick: Thank you very much.

577
SHARES
ShareTweetGoogleLinkedinPinterestSkypeStumbleuponTumblrDeliciousDiggRedditMail

Filed Under: Annuity Commentary, Annuity Guys Video, Hybrid Annuities Tagged With: annuities, Annuity, Hybrid Annuity, Hybrids, Index Annuities, retirement

About Annuity Guys®

Annuity Guys®, Dick & Eric, enjoy entertaining you with their off-beat sense of humor, lighthearted sarcasm, and no shortage of expertise on annuities as they discuss today's retirement challenges. Got annuity questions... they've got annuity answers!

 

Empowering Annuity Reference Book

 
DOWN-LOAD NOW - FREE!
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 

  • Who Should Not Buy Annuities?

    Who Should Not Buy Annuities?

    Are You One of These Five Profiles who probably should NOT buy an annuity?Are you an Aggressive Investor with an Appetite …Read More »
  • Is an Annuity the Wrong Choice for You?

    Is an Annuity the Wrong Choice for You?

    Should I or shouldn’t I – that is the question.Many of our site visitors struggle with the decision to choose an annuity …Read More »
  • What’s Your Best Retirement Income Strategy?

    What’s Your Best Retirement Income Strategy?

    Retirement encompasses many joys, fears, and unknowns. One of the biggest fears according to our field observations is running out …Read More »

Revealing Fun Video: Fiduciary Advisors Vs. Annuity Salesmen
MUST KNOW FACTS 90% of
ANNUITY ADVISORS AVOID TELLING!
  • *FIDUCIARY RETIREMENT REVIEWS
    Second Opinions Improve Retirements
     
    "For Your Retirement's Success"
     Choose a *Fiduciary Advisor who gives you Full Disclosure of Cost & Selection.
     
    Material Fact 1:
      About 90% of advisors ARE NOT REQUIRED by law to do what is best for their clients!
     
    Material Fact 2:
     Fiduciary Advisors ARE REQUIRED by law to do what's best for their clients! 
     
      Hence, clients of a fiduciary can know that their advisor chose the highest legal standard required by law to work strictly for their highest good.
     
     We estimate Fiduciaries are less than 10% of total U.S. financial service providers. Fiduciaries are held to the highest client legal standard of financial planning and investment advice.
     
     The other 90% are sales oriented advisors, brokers, bank reps, registered reps. & insurance agents, selling products on a much lower suitability legal standard, not necessarily what's best for their client!
     
       Fiduciaries also must disclose conflicts of interest that could potentially bias their advice, such as; selling products that pay them higher commissions having higher fees or costs, and their lack of investment product access limiting their client's opportunities, to name a few.
     
    Choosing your advisor can have
    "The Largest Single Impact on
    Your Retirement's Success or Failure"


  • Are Annuities a Better Answer for The Impending Correction?

    Are Annuities a Better Answer for The Impending Correction?

    Sir Isaac Newton said it best, “What goes up must come down.” Even this booming V shaped recovery is no …Read More »
  • Annuities versus Securities

    Annuities versus Securities

    When you build a house, you don’t start with the roof – you start with the foundation. For many retirees annuities help …Read More »
  • Stop Annuity Procrastination: New Years Resolution!

    Stop Annuity Procrastination: New Years Resolution!

    Procrastination – or the act of replacing high-priority actions with tasks of lower priority.We always hear of people who spend more …Read More »
  • Choosing a Retirement Advisor or Annuity Advisor You Trust

    Choosing a Retirement Advisor or Annuity Advisor You Trust

    Let me start with this basic truth as a Retirement Advisor & Annuity Advisor – THE ANNUITY GUYS ARE GUILTY …Read More »
  • Top Five Reasons Not to Buy an Annuity

    Top Five Reasons Not to Buy an Annuity

    What are the top five reasons not to allocate funds to an annuity? Based on many years of experience and an informal office survey the top five reason …Read More »
  • How are Annuities Affected by the New 2015 Rollover Rules?

    How are Annuities Affected by the New 2015 Rollover Rules?

    The Internal Revenue Service is changing the IRA rollover rules this year – if you don’t know about this change …Read More »
  • Five Top Annuity Safety Risks to Avoid

    Five Top Annuity Safety Risks to Avoid

    Annuities are safe, secure, and without risk…. hmm, well not exactly. As Annuity Guys® we expound quite a bit on the safety …Read More »
  • Annuity Scams – Fear Factor or Reality?

    Annuity Scams – Fear Factor or Reality?

    The Internet is full of warnings and alerts about annuity scams that create the appearance of  industry run amok with …Read More »

View Our Newest Videos! Subscribe Now
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • What do index annuities, mutual funds and ETFs have in common?

    What do index annuities, mutual funds and ETFs have in common?

    Fixed index annuities, mutual funds^, and exchange traded funds (ETFs) could not possibly have very many things in common or …Read More »
  • Fed Up with Exaggerated Annuity Claims?

    Fed Up with Exaggerated Annuity Claims?

    There is a saying in the annuity world that annuities are sold, not bought! Yes, at times this may be …Read More »
  • Can Annuities Enhance Stock Market Investing?

    Can Annuities Enhance Stock Market Investing?

    The stock market is well known for its roller coaster effect of up and down account values. For many retirees, this can mean more than …Read More »
  • Enjoy Annuity Income While Maintaining Your Principal!

    Enjoy Annuity Income While Maintaining Your Principal!

    You can’t have your cake and eat it too… or can you?When it comes to choosing annuities, most folks want steady growth and …Read More »
  • Are Annuities Best in a Difficult Economy?

    Are Annuities Best in a Difficult Economy?

    Dick and Eric reflect on a email they received this week highlighting a Tony Robbins video (see below) on the …Read More »
  • Can MarketFree® Annuities Balance Your Portfolio?

    Can MarketFree® Annuities Balance Your Portfolio?

    It has been more than four years since the pandemic started and the stock market has reached some new historic …Read More »
  • Is an Old Variable Annuity Better than a New Hybrid?

    Is an Old Variable Annuity Better than a New Hybrid?

    “Don’t buy an annuity! The **guarantees they offer are often unnecessary and costly.” – has turned into “that annuity sure …Read More »
  • Annuity Scams – Fear Factor or Reality?

    Annuity Scams – Fear Factor or Reality?

    The Internet is full of warnings and alerts about annuity scams that create the appearance of  industry run amok with …Read More »
Get Newly Released Annuity Guys® Videos on Saturday Mornings
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Government Shutdowns Affect Annuities

    Government Shutdowns Affect Annuities

    Can you feel the impending doom of the government shutdown?Every night, it seems that the media cannot wait to tell …Read More »
  • How Do MarketFree™ Annuities Work?

    As you consider your overall strategy for retirement planning, one financial product to consider is a MarketFree® annuity. There are many …Read More »
  • What’s Your Best Retirement Income Strategy?

    What’s Your Best Retirement Income Strategy?

    Retirement encompasses many joys, fears, and unknowns. One of the biggest fears according to our field observations is running out …Read More »
  • Choosing an Immediate Annuity

    Choosing an Immediate Annuity

    In the golden era of career based retirements, everyone could count on a company paycheck for life in retirement. Unfortunately, in …Read More »
  • Hybrid Annuities as an Inflation Hedge

    Hybrid Annuities as an Inflation Hedge

    Inflation – this one word strikes terror in the hearts of many retirees on a fixed income.Never to fear, we have a cost of …Read More »
  • Why are Hybrid Annuities so Popular?

    Why are Hybrid Annuities so Popular?

    What made fixed index annuities and hybrid annuities the fastest growing annuity type on the market according to a LIMRA …Read More »
  • What do Annuities Really Earn? No Hype…

    What do Annuities Really Earn? No Hype…

    Apples and oranges – what do they have in common? Both are fruits!Why would we start a discussion about annuity earnings …Read More »
  • Fed Up with Exaggerated Annuity Claims?

    Fed Up with Exaggerated Annuity Claims?

    There is a saying in the annuity world that annuities are sold, not bought! Yes, at times this may be …Read More »
  • Choosing Annuity Potential or Income **Guarantees

    Choosing Annuity Potential or Income **Guarantees

    Have you ever heard the quip “It can be hard to remember that the objective was to drain the swamp …Read More »
  • Beat the Tax-Man Fair & Square with Annuities!

    Beat the Tax-Man Fair & Square with Annuities!

    Pay Less Tax with Annuities – Legally!Here is our list of seven advantages you should know so annuities can help you avoid …Read More »

 

Empowering Annuity Reference Book

 
Start Reading Now - Instant Download
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 
Comprehensive Site Terms and Disclosure | Privacy Policy | Copyright © 2025 Annuity Guys®


  ** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
Annuities are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.


  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping Annuity Guys website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this educational Annuity Guys Website. He still maintains his insurance license in good standing and assists his current clients.
Annuity Guys' vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)



  # Investors should consider the investment objectives, risks, charges and expenses of a variable annuity and its underlying investment options. The current prospectus and underlying prospectuses, which are contained in the same document, provide this and other important information. Please contact an Investment Professional or the issuing Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.


  ^ Investors should consider investment objectives, risk, charges, and expenses carefully before investing. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.


  ^ Eric Judy offers advisory services through Client One Securities, LLC an Investment Advisor. Annuity Guys Ltd. and Client One Securities, LLC are not affiliated.


577 SHARES