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The Best Strategies for Selling Annuities

by Precise Leads

March 23, 2018

With Americans living longer than ever, annuities provide a guaranteed source of income that can last them throughout their golden years.

As people live longer and companies shift away from offering pensions, many Americans wonder if they’ll ever have enough money for retirement. That fear isn’t unfounded. Indeed, the World Economic Forum predicts that a $400 trillion retirement-savings gap worldwide will emerge over the next three decades, with the U. S., U. K., Japan, Netherlands, Canada, and Australia accounting for $224 trillion of that figure.

Fortunately, insurance agents and financial advisors offer a product that provides Americans with income during their golden years. An annuity not only offers asset protection and growth, but are also able to give owners the security of a guaranteed source of income after they retire.

Although annuities come in several forms and are sometimes complex financial instruments, agents and advisors can successfully sell these products by using the right strategies. Here are six tips to follow when persuading people that they need an annuity now.

Guaranteed Retirement Income. One of the biggest fears held by Americans is the possibility of outliving their financial assets during retirement. By putting some of their retirement savings into an annuity, they can receive an assurance from an insurance company that they’ll continue to draw income after they leave the workforce.

Tax Advantages. Money stashed into an annuity isn’t taxed during the accumulation phase. If an individual rolls over money from an IRA or 401(k), they can also avoid a taxable event if they transfer the funds directly to the insurance company. Insurance agents should tell their clients that any annuity distributions will be taxed at ordinary income rates, however.

Protection against Market Swings. Retirees or near-retirees have little tolerance for seeing their nest egg slashed by an inevitable stock market downturn, especially if they’re drawing income during retirement. On the other hand, annuities, particularly indexed and fixed indexed annuities, protect an investor’s principal while also guaranteeing upside growth.

Better Investment Returns. A great way to convince people to buy an annuity is to start by asking if they’re satisfied with their current investment returns on other vehicles such as CDs or money market funds. Even if they say they are, agents can show them the generally higher interest rates they can lock in with an annuity. Just like savings accounts, annuities are insured up to $250,000 because insurance companies pay into the Guaranteed Trust Fund, so they are a safe investment.

Find the Right Prospects. Annuities are a perfect fit for retirees or people nearing retirement, but agents shouldn’t limit their prospecting to just that category. People in their early 50s, for instance, who intend to grow their retirement funds in a tax-advantaged product stand out as another lucrative sales market for annuities. But since any withdrawal before age 59 and a half will be penalized, agents should make sure that the client has enough income and savings to tide them over until they begin retirement.

Know the Products. As mentioned previously, annuities come in several types and may be difficult for the average person to comprehend. As a result, agents must first understand the annuity products they sell so that they can explain them in a language that clients can grasp. Before selling a client an annuity, an agent needs to determine the person’s investment objectives and risk tolerance in order to find them the right annuity. Bear in mind that an agent needs to obtain a securities license to sell some types of annuities such as variable annuities.

Remember that buying an annuity is a major financial decision for a client. It’s natural to encounter some hesitation. With these sales tips, however, agents and advisors have some persuasive arguments to ensure that their clients realize the benefits only annuities can provide.

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