June is Annuity Awareness Month

June is Annuity Awareness Month

The basics of annuities are very easy.  Safety of principle, reasonable rate of return, and a lifetime income stream that your client can’t out live. The challenge is, how do I know which annuity product will be the appropriate fit?  There are many annuities available today and each one has a specific design and place.

When looking at the FIA space any insurance product will fall in one of four categories:

1.     Accumulation – a favorable return with no risk to principle (we have seen treasuries plus 2% as an average rate of return over the life of an insurance product)

2.     Performance Based Income – guarantees to income with upside potential based on indexed interest growth

3.     Guaranteed Income – pension style income with a guaranteed payout at specific ages with no potential for increase in the future

4.     Legacy or Death Benefit

And here are  just a few reasons why some people should consider an annuity to be a part of their financial strategy:

·         Contractual guarantees – guaranteed minimum interest rates and principal protection

·         Transfer risk to the insurance company – the annuity carrier bears the market risk not the policy owner

·         Alternative product to traditional conservative investment options – addresses interest rate risk and sequence of returns risk

·         Multi-purpose product – optional riders may be available to provide enhanced death benefit guarantees or nursing home benefits

·         Additional retirement income – lifetime income riders can provide guaranteed income that will continue even after the annuity contract is depleted of any cash value


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