Pretend for a moment that your securities broker-dealer told you the following:
“There is an account you can get that offers a 10 percent immediate bonus, guaranteed lifetime income, guarantees you 4 percent growth for income purposes or death benefit in addition to all account crediting. And in the past 10 years, account crediting has averaged over 7 percent. It has only a 0.5 percent spread, meaning you get all crediting after one-half of 1 percent yearly with no caps on earnings and gains are ‘locked in.’
“If you need more income for health purposes your income doubles for up to five years and can be used for any purpose and you qualify for this if you cannot do only two of the activities of daily living (ADLs).
“This account has zero fees and zero commissions deducted from your money and guarantees no losses. The only fee is a 0.95 percent yearly fee only if you choose the guaranteed income rider or death benefit rider. (Much lower fees than securities accounts.) This account grows tax deferred, bypasses probate and has designated beneficiaries. This account has decreasing surrender charges like a CD but only comes into play if you cancel and want all your money or withdraw more than 10 percent yearly. You can withdraw all funds if you are terminally ill or need to go into a nursing home. Last but not least, this account is offered by a “Legal Reserve Company” that, by law, must have a reserve account that at least matches your account, dollar-for-dollar, at all times. No other financial vehicle has this requirement. It is also reinsured 100 percent by another insurance company and the State Guaranty Association also insures this account.”