3 Fixed Annuity Scenarios

When we were kids most of us dealt with a neighbor who was scary. I mean just plain scary.

We would turn the other way when we saw them and never, EVER made eye contact. They were our version of Norman Bates.

Then one day fate intervened and we were face-to-face with the monster.

Five minutes later they weren’t so scary… like the bird lady in the Home Alone movie!

And, so it goes for selling fixed annuities. Most agents view them as Norman Bates but they are really the bird lady!

Selling Annuities Isn’t as Tough as You Think

There is nothing scary about annuities other than the fact that you have to take the time to become educated in order to have a valuable and relevant discussion with your clients and prospects. Annuities offer many things to clients, from safety to tax-deferred growth to contractual guarantees to minimal or no fees. And, did I mention safety?

There’s nothing to be scared of!

Many clients are still suffering from the last recession. And, most came out of the recession with a new-found appreciation for lower risk options that spread their financial risk. Enter fixed annuities, the safe alternative that blends contractual guarantees to never lose the principal in the bad years and the opportunity for growth in the good years.

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Fixed annuities are not just for seniors. Let’s look at a couple of fixed annuity scenarios to help you understand when a fixed annuity is an appropriate option for you client:

Annuity Sales Scenario 1:

35-year-old female changing jobs and has 401K from previous employer

Her 401K has had minimal growth in the past few years and she’s open to ideas.

Most agents would think this is only something a registered advisor should work with and that couldn’t be more false. Assuming her appetitive for risk matches those of fixed annuities, there are options that would allow her to protect her nest egg and continue down a path of safe and predictable tax-deferred growth.

H9wever, we do firmly believe that employees should always contribute to their 401k to receive the maximum match from their employer.

She would likely look at some sort of Multi-Year Guaranteed Annuity (MYGA) or Fixed Indexed Annuity (FIA).

Annuity Sales Scenario 2:

66-year-old retiring healthcare professional

This client is retiring in 90 days and needs to know what to do with their 403B.

The client will have social security income, a pension from a previous employer and knows the 403B needs to be a source of income.

The solution could be a Single Premium Immediate Annuity (SPIA) due to the client’s income need for their upcoming retirement. This is a strong solution as it allows the client to have an income they are guarantee to never outlive.

Annuity Sales Scenario 3:

58-year-old firefighter, still working

This client has a CD at the bank earning a whopping .05%.

The CD is maturing in the next 60 days and the firefighter is trying to decide whether or not to leave the money in a CD.

What the client doesn’t know is that a Multi-Year Guaranteed Annuity (MYGA) is a great option as it allows for compounded interest and much better returns than traditional CDs. Once the CD matures, the client can simply move the money into the MYGA and begin growing at the contractually guaranteed rate of return.

MYGA’s are a great alternative for clients with CDs.

Fixed annuities are a flexible, low risk alternative for many different types of clients. Knowing when to use annuities will help you build credibility with your clients and, for many, be a unique way to solve a wide range of problems for them.

What once was scary is no more. Give fixed annuities a chance.

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