How to Sell Annuities: Sales Tips and Detailed Answers

Annuities often get a bad rap.

For some clients, the second you say “annuity,” they’re done. The conversation ends there.

That sentiment is probably attributed to variable and indexed annuities.

We highly recommend fixed annuities for seniors, as there’s no risk involved, and they can protect their money against factors like inflation.

We’ve gathered up some common questions, ranging from simple to more involved in the hopes that you’ll start to feel more comfortable pitching and selling them.

Q: What’s the big draw of a MYGA annuity for the senior market?

A: There’s zero risk involved, so seniors can sleep easy at night knowing their investments are making money. While the interest rate isn’t high, it is enough to preserve assets and to keep money safe from inflation.

MYGA annuities are also very simple to understand. Seniors won’t buy an investment product they don’t understand, which makes this type of annuity particularly great for not only this market, but for anyone wanting to safely protect their money.

Q: How do I naturally bring up the topic of annuities?

A: We recommend using a Fact Finder with your client in a sit-down setting. We use what is called a Client Needs Assessment (CNA).

Question #9 reads: “Are you satisfied with the present rate of return on your investments?”

This will get your client talking about what investments they have. Don’t allow the client to shut you down when they say “Yes, I’m happy.”

Keep the conversation going. “Are you dealing with the bank? Do you know your current rate of return?” Focus on locating where the money is. This will allow you to determine their current risk.

Download Your Client Needs Assessment Template

If you have an office that clients come to, you can even put a picture frame on your desk that highlights interest rates and other product information. Often times, the client will ask you about it before you even bring it up.

Q: What about taxes? How does all of that work?

A: Money that is in savings will not count as a taxable event (taxes have already been paid on that money).

Any money in a money market, a CD, or a savings account can be transferred to the client’s checking account. Then, the client writes a check to the insurance company, and no taxable event has occurred.

Retirement accounts like an IRA or a 401k have not been taxed yet, which makes this is a little tricker. In order to avoid a taxable event, the money needs to be transferred directly to the insurance company (never to the client first). If a check is written, it needs to be made out to the insurance company, not the client. (Very important!)

Q: If my client has money in a CD, they’ll be penalized with an early withdrawal. How do you deal with that objection?

A: Definitely address the issue, but put it into perspective. The penalty is going to be the last 6 months worth of interest, but you’re only being paid 0.5%. That penalty won’t be that much. You’re much better off taking the penalty to start earning over 3% interest.

Q: What do I say to clients who are worried about the safety of their annuity?

A: Many times, the FDIC is hot topic. If your money is in the bank, and the bank goes belly-up, you’re still reinsured up to 250k. 

You get to say that every insurance company pays into the Guaranteed Trust Fund. This means you’re reinsured up to 250k, which is the same safety as a regular bank account.

Q: How do you address the question, “how do you get paid?”

A: You get to tell your clients that 100% of their money earns interest starting on Day 1. The insurance company pays me directly, but none of that reflects your money. You aren’t charged any fees or anything like that.

Q: I feel like my client just isn’t ready to move their money. Is there anything I can do to turn the tides?

A: Try addressing the fact that we’re creatures of habit. We’re used to doing what we’ve always done, but sometimes we have to break that habit to get into a better situation.

Just addressing this with your client can cause a light bulb to go off for your client.

Q: My client is worried about the company being B-rated. How do I handle that?

A: Remind your client that they’re reinsured up to $250k, so their money is safe.

Q: My client understands that you’re reinsured up to $250k. However, what if they have $750k that they want to annuitize while being completely reinsured? Can you set up 3 separate annuities in the same company?

A: You are reinsured up to $250k per person per insurance company. So, if you have $750k that you want to put into annuities, you would need to divvy it up between 3 separate insurance companies. This is the only way to be completely reinsured.

Q: Can I take more than one withdrawal in a year if I have the 10% free withdrawal?

A: Yes, you can split it up into monthly withdrawals if you want, as long as it doesn’t exceed the 10% for the year. Please note that there is a minimum withdrawal. It varies by the carrier, but a good rule of thumb is $100. So, if a monthly withdrawal was less than the minimum, say $40, you may have to switch to quarterly withdrawals.

*This questions refers to one of our newest annuity products. This is a fixed annuity with indexing options. If you haven’t heard of this or want to understand it better, we recommend you read our short Q/A and watch the corresponding training video.

Q: If I opt to choose one of the indexing options, can I still take out the 10% free withdrawal?

A: Yes, you can.

Q: When I say “annuity” my clients shut me down. Any ideas?

A: Try using the word “program” instead of “annuity.” Often times, people think of indexed or variable annuities, and they think that’s what all annuities are like.

We know that fixed annuities are entirely different. Because of the misconception out there, using a different word can help you educate the client before they shut you down.

Q: My client won’t listen to me after I say the words “5-year term.” What do I do?

A: Never start your presentation with the length of the term. Begin with the product highlights first.

Towards the end, your client will wonder what the term is. You get to say, “Your interest rate is guaranteed for 5 years. After those 5 years, we get to evaluate if there’s a better interest rate out there.”

To find out what the current annuity rates are, visit the Annuity Rate Comparison web page, which is routinely updated.

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