Why Sell Fixed Annuity Products? Marketing Tips Part One
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In this 5 Part Series on “Why Sell Fixed Annuity Products” my goal is two-fold.
As a Fixed Annuity Specialist, I want to see agents successfully selling fixed annuity products and for agents to see the benefits these products have for their clients.
Also, for the Insurance Agent that wants to add fixed annuity products to their business, I want to provide you with some basic background on what annuities are and how to get started marketing them.
Part One is pretty basic including definitions and general information. Why do you need to know this stuff? The KLT Factor. Bottom line is that people want to buy from someone they know, like and trust. Now obviously there is more to the KLT Factor than just memorizing some definitions but that’s for another post. What I will mention though, is that a big part of the KLT Factor is that people want to know that you are an expert.
Relax… if you are new to Fixed Annuities that doesn’t mean you have to wait until you know everything there is to know about annuities before presenting the products to a potential client. Part of being an expert in any field is honesty. Yes, it would be great if you were to know everything but, if you don’t know an answer be honest enough to say so. Be sure to find the answer ASAP and follow up with the client immediately.
What are Fixed Annuities and Why are the Right for my Clients
In an earlier post you can see a short video on what Fixed Annuities are but for clarity, here are some definitions:
Fixed Annuity – by definition, a fixed annuity pays a fixed, set rate of interest on the money invested in the annuity. Payments paid to the annuitant are unchanging over a designated period of time or over the annuitant’s lifetime. The annuity issuer will pay a guaranteed minimum rate of interest on the annuity account with the possibility that it may pay a higher rate of interest if the market conditions allow.
Annuitant-simply put, is the holder or benefactor of the annuity
Annuity Issuer-usually an insurance company or financial institution
Here are some additional definitions you may want to become familiar with:
Deferred Annuities- An annuity that delays income payments until the holder chooses to receive them.
Immediate Annuities- is a financial instrument that converts a lump-sum premium into a stream of payments over a certain period of time or for as long as the annuitant lives. Immediate annuities are generally used to provide a guaranteed income during retirement.
Equity Indexed Annuities-
The issuer agrees is a financial instrument that converts a lump-sum premium into a stream of payments over a certain period of time or for as long as the annuitant lives. Immediate annuities are generally used to provide a guaranteed income during retirement.to pay a return on your account that is tied to a stock market index??usually the S &P 500. Equity Indexed annuities also guarantee to pay no less than a certain return in a given period if the return on that stock market index falls below that minimum percentage. There is usually a cap and a participation rate involved.
CD Type Annuities- the number of years the interest rate is guaranteed is the same as the number of years the surrender charge exists. Basically, annuities products that have a 5 year guaranteed interest rate and a five year surrender charge would be considered CD Type Annuity
Traditional Fixed Annuities- usually a higher rate in the first year and then renews each year at the rate the insurance company declares. – With this type of annuity, the carrier can allow the client more flexibility such as the ability to add more deposits.
FIAs- Fixed Indexed Annuities
SPIAs- Single Premium Immediate Annuities
MYGAs-Multi Year Guaranteed Annuities
There are many different types of annuities that exist with many different types of features so it is hard to give you all the information you need all in one sitting. Working with a qualified FMO is one of the best ways to get access to all the information you will need to stay on top of the fixed annuity market.
Also, today’s consumer is much more educated and informed then ever before thanks to the Internet.
That is the good news and the bad news.
Why? As incredible as the World Wide Web is, the information that it provides may not always be accurate or up to date. That is why it is important for you to stay informed and on top of the latest information out there that will benefit your clients. To keep on top of Fixed Annuity news, feel free to sign up for our Agent/Broker Free Resources and Newsletter.
Why are Fixed Annuities Right for Your Client?
That’s a good question.
I can tell you why I believe Fixed Annuities are the best products available for your clients, and I will in just a second. I have to say this first. This is a question you have to think about yourself. To build a strong, successful business you must construct a foundation that is based on relationships with your clients. Those relationships have to be based on meeting the needs of your clients first not based on which commission is higher. I realize that we are all out here to earn a living but in the long run you will see that putting the needs of your clients first will lead to long term relationships, referrals, higher client retention rates, multi product purchases and great testimonials to build your business on.
As an FMO, this is how my firm treats you as an agent and it has been how I have achieved my success. This system works.
Back to the question: Why are Fixed Annuities Right for Your Client?
The answer, in this economy is simple. Security and safety combined with flexibility. Today’s volatile market has many people shying away from taking risks with their money. Fixed annuities are the perfect product for the client who is not interested in any type of risks. Fixed annuity products are not sexy, exciting nor do they trend with the market. In some ways, they are “Plain Jane” boring. However, fixed annuity rates are good, very good. In most cases, fixed annuity products provide a guaranteed income for life and, depending on the type of fixed annuity, they can offer flexibility in payouts.
Talk to your clients. Know what their long and short term goals are. Ask questions to determine how they feel about their money. Are they in a position to take risks? What do they want to see happen with their money after they die? Know your clients needs, get all the information regarding products then guide then to a product that will best fit those needs.
I see Fixed Annuities as the best investment possible for your clients but, of course, I am biased. It is always good to be well rounded and know a little bit about all the options available for your clients. In all fairness, here are some other products that you should be aware of so that you can help your client make the best decision possible for their financial future:
Variable Annuities
Single Premium Universal Life
Life Settlement Investments
Bonds
Traditional CDs
Part One of this 5 Part Marketing Tips Series may have been a bit basic for some of you that are actively selling fixed annuities. Thanks for your patience. If you have any additional information that you think is relevant please feel free to leave it in the comment section.
Don’t forget to sign up for our Free Resources, Fixed Annuity Rate Charts and Calculators and Newsletter here.
Stop back for Part Two of our 5 Part Series, “What Should I Look For When I Chose a Wholesale Fixed Annuity Brokerage Company?”
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[...] ’s where we go back to Part One of our 5 Part Marketing Series. You need to talk to your client and determine what is their specific needs, wants and desires [...]