Annuities can intimidate some insurance agents; it’s not part of insurance sales 101, but it can be a great add-on to your sale, as well as helping protect your client’s retirement assets. The best thing to do is to study up on the basics and understand how an annuity will satisfy your National Agents Alliance client’s needs concerning a savings plan.
But let’s start with the basics first…
What is an Annuity?
An annuity retirement product that allows you to save for your future on an tax-deferred basis and then allows you to choose a payout option that best meets your need for income when you retire—lump sum, income for life, or income for a certain period of time.
What are the Types of Annuities?
Below are the most common types of annuities that you should be familiar with.
- Fixed Annuity -An annuity contract in which the premiums you pay are credited with a fixed rate of return by the life insurance company, and the company guarantees a fixed payout every month.
- Deferred Annuity – A contract in which annuity payouts begin at a future date.
The above annuities are those that can be sold with a standard life license.
At National Agents Alliance, we understand how important annuities can be in adding extra value to a client’s policy, as well as extra sales for you. Our resident annuity sales guru, Gina Hawks talks about three crucial questions that you must answer to make the sale and protect your clients’ accounts for many years to come.
“Is my money safe?”
Question number one asks you to prove that the client’s accounts are in a safe place. Because annuities are not often discussed as a primary means of savings, many people don’t know the answer to this question. Here’s the answer:
Annuities are as safe as banks, but there are further advantages than banks. Recently several banks insured by the Federal Deposit Insurance Corporation (FDIC) have gone bankrupt, however stayed in business. Because all reputable banks must file with FDIC and make a payment into the system, this allowed them to ensure a certain amount of money
Just as banks are supported by the Federal Reserve System, insurance companies run under the Legal Reserve System. Each state has a State Insurance Department that requires Insurance companies operating in their state to file reports proving they have money to cover policies with their clients. Insurance is a highly regulated industry.
The bottom line is annuities are 100% safe, dating back to the Roman soldiers. No one’s ever lost money with annuities.
“Can I get my money if I need It?”
Annuities are not 100% “liquid”, meaning they cannot withdraw money at any time and at any amount. However, in order to ensure stability and safety of their savings, this may be a worthy exchange. Make sure that your client has the amount of liquidity you’re providing is enough. It’s called “being suitable,” and it is part of being a responsible mortgage protection specialist.
“Can your National Agents Alliance client compromise with access to about 10% free withdrawal every year? Can you qualify that by 10 percent access is enough for them?”
If the answer is yes for both you and your client, an annuity may be a good idea.
“Am I going to get a fair return?”
People want a floor with no ceiling: 100% upside potential with no downside risk. The biggest thing that annuities have going for them is the great amount of growth with minimal interference from tax deductions.
Annuities offer the strongest guarantees on principal and interest. Unlike a 401k, no matter how volatile the market is, your annuity will stay at the original principal amount you invested, unless withdrawals are taken. It can only go up! Considering the economic climate this is a huge selling point.
With annuities through National Agents Alliance, you’ll can earn a bonus on your initial premium. Some carriers have annuity products that offer a 10% bonus, your client may move $10,000 into and annuity and have the value of his/her annuity immediately rise to $11,000. If they Move $75,000 in, add 10% and it becomes $82,500.
Like any sales, the important thing to remember about an annuity sale is to highlight the benefits, but also to make sure your client is going to receive the correct type of savings plan that will lend itself to their lifestyle and needs. If you do this, the annuity sale can become an additional thousand or so payment to your policy. Remember, this is Commission on top of your insurance sale!