Why an Agent Should Consider Offering Annuity Products to Clients
What if you could provide a finanical vehicle that is about safety and guarantees and still provides an opportunity for a fair rate-of-return? That’s what an annuity can do.
Read further to learn about a few considerations when contemplating whether you should bring an annuity product(s) on board to what you already offer.
An annuity is a legal contract between an insurance company and the owner of the contract. It is an agreement whereby the insurance company makes specific guarantees in consideration of money being deposited with the company. An annuity can only be issued by a life insurance company and can only be sold by a currently licensed life insurance agent. The only place that can sell an annuity is a Life Insurance Company. Why? Because it is the only institution that calculates mortality and the average life expectancy is an important factor when annuitizing.
#1 Consideration: An annuity is not for everyone but it is for a large portion of society because of the many benefits they offer. For example:
Safety without market risk
Liquidity
No sales charges
Tax advantages
It bypasses probate due to named beneficiaries
No medical underwriting required
Strong compound rates
Tax deferred growth
Numerous withdrawal options
Ability to stay in full control
For some annuities, in the event that the annuitant is unable to perform 2 of the 6 activies of daily living (ADLs) the company waives surrender charges or may have an income doubler.
With a product that offers these types of benefits, an agent can offer more value to their clients by providing more than just the one (or two) product lines they already sell (i.e. medicare, life insurance, long-term care, critical illness, etc.). This leads me into the 2nd consideration an agent should take into account.
#2 Consideration: Prospects/clients may have never been approached by anyone about the benefits listed above, which then allows an agent like yourself to cross-sell in addition to what you’re already selling.
Someone once told me that a study was done by a research company that showed that if you have more than 2 products (preferably 3 different products) sold in a household, the chance of losing that business to another agent is almost non-existent. The goal for every agent should be to get 3 products in every household as quickly as possible so that they have a lower likelyhood of losing that household in the future to another agent. To be able to do that, you must have products that can be tailored for every individuals needs. Every situation is different. And that needs to be taken into consideration when looking at an annuity as a possible solution. This leads me into the 3rd consideration to take into account.
#3 Consideration: Because every prospect/client’s needs are different, no one product is a fit for all, EVER. Every carrier has their niche which allows an agent to find the right product for each case they come across.
There are many types of annuities that allow you to add value to a person’s financial asset base. A financial asset, like an annuity, can bring something to the table that fulfills a need or needs of an individual and could fulfill some of their wants. To be able to fulfill those needs/wants, you must understand the fundamentals of an annuity.
Every agent must know that there are two phases of an annuity. First phase: Accumulation. Second phase: Distribution. Simply put, the accumulation phase allows the money to grow and the distributoin phase allows the consumer to dictate how often and when they want to receive money.
For example, say you have a client, of any age, that wishes to save money without risk and plan for retirement. Or another example, an individual that is in retirement and now needs to supplement retirement income (i.e. social security, pension, etc.).
The first one we would want to find a product that fulfills the need of cash accumulation for the individual that wants to earn a fair rate-of-return on their money for a future date versus the low interest paying accounts they’re currently in (i.e. CDs, savings accounts, money markets, etc.). For the second individual that needs to supplement their current retirement income, we’d want to fulfill the needs of some-sort of income distribution that provides liquidity and a way to withdraw money systematically or occasionally as needed. Knowing those needs of the individual, we are now able to look at the different types of annuities that could fulfill those needs.
Cash Accumulation Annuities: Fixed Indexed Annnuity (FIA), Multi-Year Guarantee Annuity (MYGA), Traditional SPA/FPA
Cash Distribution/Income Annuities: Single Premium Immediate Annnuity (SPIA), Traditional SPA/FPA, FIA with Income Riders, MYGAs
Now you might be asking, how would I transition in an appointment from selling medicare, long-term care, life insurance, etc. to selling an annuity?
Easy. You ask one simple question: “Oh and by the way, how is your interest on CDs, savings accounts/checking accounts treating you?”
If they say, “It’s terrible, I’m not receiving anything.” This tells you right away that they own something.
This is where the discussion begins! And this is where Legacy Solutions, LLC can help.
Call our marketing team at 712-244-5258 to learn how our agents “Cover the Bases” to make this additional sale.
With our Covering the Bases Training tools, our agents uncover the new opportunity and bring the solution to the table. Many individuals won’t recognize that there is a possibility that what they own is not as good as what they could have. Everything here is about safety and guarantees. The benefits and opportunities an annuity provides is not being communciated to the public very well. As a matter of fact, there are many commercials talking down on annuities. These commercials lead consumers to believe annuities are bad. This is absolutely false!
You need to be the individual that brings this valuable information to your clients and community! Be the agent that gets 3 products in the households you currently own so that you have a less likelyhood of losing them to another agent.
Legacy Solutions, LLC recruits new and experienced agents and train them to become top producers! Interested in learning more? Contact us below to learn more about how we can help grow your book of business in the life, health, and annuity space.
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