Very New To Annuities....Need A Few Questions Answered, Please......

[InsuranceGuy29]

As the title states, I'm very new to this. What are the first steps to getting started with annuities? I have taken the initial course, and the new suitability course, and got those out of the way.

From what I understand, at least in my state, we have to offer the most suitable annuity for the client. No problem. My only question is? How is this determined? I don't want to be contracted with a bazillion companies. Is it simply the best of the annuities that I have to offer?

What are the better annuity companies to get licensed with? Do they all basically have a simplified portal to offer their products, much like health insurance (which is the other line I offer)? What would you recommend as first steps, and anything I'm missing?

Any advice is much appreciated.

 

[Newby]

If you want to be compliant, take the word "best" out of your vocabulary. There is never a best.
Like what is repeated on here over and over, make sure you are leaning on your Upline for their annuity training. Make sure your Upline on these contracts has sold millions of dollars in annuities for many years and has experience to draw upon.
Matching people with a good choice comes down to asking questions about their goals for the money. How soon will they draw from the annuity? Are they comfortable with an index where they will very likely get zero interest some years? Or would they be more comfortable with fixed rates? Where is their money coming from? Have they already paid taxes on it? Or is it tax deferred? Will they want to add small IRA additions each year? (Not all annuities allow that). Will they need to withdraw RMDs? Not all annuities allow that. Are they realistic about how annuities will perform? Or are they looking for market-type of gains? How risk adverse are they? How do they feel about the company's financial ratings? Where is their comfort zone if the rates are better? No less than A+? No less than A? No less than A-? B+? Does it matter at all? How important is it to them to have a familiar company brand they are familiar with vs. one they have never heard of? Are they interested in LTC riders? Have they owned annuities before or is this their first one?
Your Upline will likely teach you how to fact-find to determine an annuity that is a proper fit for your client. Key word, proper fit. NOT best.
What would best even mean? Highest financial ratings? Largest company? Highest fixed rate? Highest participation rate? Highest caps? Newest product? Oldest product? Etc. Best means different things to different people.

 

[Allen Trent]

If you want to be compliant, take the word "best" out of your vocabulary. There is never a best.
Like what is repeated on here over and over, make sure you are leaning on your Upline for their annuity training. Make sure your Upline on these contracts has sold millions of dollars in annuities for many years and has experience to draw upon.
Matching people with a good choice comes down to asking questions about their goals for the money. How soon will they draw from the annuity? Are they comfortable with an index where they will very likely get zero interest some years? Or would they be more comfortable with fixed rates? Where is their money coming from? Have they already paid taxes on it? Or is it tax deferred? Will they want to add small IRA additions each year? (Not all annuities allow that). Will they need to withdraw RMDs? Not all annuities allow that. Are they realistic about how annuities will perform? Or are they looking for market-type of gains? How risk adverse are they? How do they feel about the company's financial ratings? Where is their comfort zone if the rates are better? No less than A+? No less than A? No less than A-? B+? Does it matter at all? How important is it to them to have a familiar company brand they are familiar with vs. one they have never heard of? Are they interested in LTC riders? Have they owned annuities before or is this their first one?
Your Upline will likely teach you how to fact-find to determine an annuity that is a proper fit for your client. Key word, proper fit. NOT best.
What would best even mean? Highest financial ratings? Largest company? Highest fixed rate? Highest participation rate? Highest caps? Newest product? Oldest product? Etc. Best means different things to different people.

Best response

 

[scagnt83]

Do they all basically have a simplified portal to offer their products, much like health insurance (which is the other line I offer)? What would you recommend as first steps, and anything I'm missing?

Any advice is much appreciated.

No. Not in the way they put all options on an enrollment screen to choose from.

Most all have eApps. And all of them give you the info to their products on the agent portal once appointed.

You need to understand the products, know which one fits the situation best, then go to that product/app to take the e-app.

---

However, there is no "1 best carrier" for annuities.

Rates change monthly. The top A+ rated fixed rate today, could be different next week.

You need to first determine what the client needs or wants...

Annuities can do different things:
1. Fixed rate for accumulation (MYGA)
2. Indexed rate for accumulation (FIA)
3. Income now (SPIA or FIA)
4. Income later (DIA or FIA)
5. Legacy (FIA or MYGA)

MYGA- Multi Year Guaranteed Annuity:
Fixed rate, guaranteed for a set amount of years. Surrender Period matches the guaranteed amount of years. Basically the CD equivalent of annuities. "you get X% for Xyears and its fully liquid to move after the rate is no longer guaranteed"

FIA- Fixed Indexed Annuity
Rate is based on an Index. Lots of flavors of this product to meet various needs. Can be used just for accumulation. Or add an Income Rider to create a guaranteed income stream now or later.

SPIA - Single Premium Income Annuity
Provides guaranteed immediate income, most often for life.
But can be for just a set amount of years... usually this version is used to fund LTC/Life/Loans/etc. But 99% of the time when someone says SPIA, they mean a lifetime payout.

DIA - Deferred Income Annuity
Same as a SPIA, but starts the income in y2+.


MYGA is an easy sale, especially to replace a CD or Money Market. Very easy place to start with annuities. You can offer a 5.5% fixed rate right now for 5 years.

FIA is the most complicated product to learn and sell. But it can fit a lot of different situations and needs. Potential for better growth vs. MYGA. Guarantees Retirement Income, both accumulation and income, sometimes at a higher rate vs. SPIA. Even can guarantee a certain DB using legacy riders.

SPIA is easy, its a personal pension. Guaranteed retirement income for life. Often the best option for NonQualified Funds because of the tax benefits.

DIA is the same as SPIA, just future income.


You need to know how each one works. Research them. Look at illustrations. Learn pros/cons. etc.

There is tons of info in the forum annuity section that you can find. There probably is not a better source online to learn annuities than this section of the forum. There is over a decade of info and knowledge shared here.

 

[scagnt83]

From what I understand, at least in my state, we have to offer the most suitable annuity for the client. No problem. My only question is? How is this determined? I don't want to be contracted with a bazillion companies. Is it simply the best of the annuities that I have to offer?

Most Suitable, or Best Interest, are not cut and dry.

What does the client need?
What does the client want?
How does this option compare with most other options?

If it does a "suitable" job of meeting their needs, it meets the Suitability Standard.

Suitability is determined mostly at the carrier level. You take an app. They review the situation to determine suitability. The app asks about needs, desires, and current financial situation. The Carrier uses this to determine if it is a "Suitable" sale or not.

Now there is "Best Interest" for Qualified funds, in many states.
This is a higher standard. But very similar. Its not just "does this meet their needs" .... its "is this the best product/solution to meet their needs".

Now, that is a subjective issue. But if you sold a A+ rated MYGA at a 4% rate... when there is a 5% A+ rate available.... all things being equal, that 4% product is clearly not in their "best interest".

Now, maybe the 4% product has a feature the 5% does not. But does that feature warrant a 1% loss? Could you justify that 1% loss to a jury/judge... just for that feature?

But most of this, most of the time, is just a thought experiment. Only really matters if you get sued by a client or their children.

Most carriers are not going to deny approval over best interest (or suitability) unless it is glaring.....

But you the Agent have a greater amount of liability in these situations with Best Interest. So the onus is on you to be diligent in comparing options/carriers/etc. You are the one who will have to defend your recommendations in court if the sh*t hits the fan. Even question if an Annuity is the best product or not. And DOCUMENT this process, so you have it for any litigation that might arise in the future. (you are also legally required to internally document best interest determination)

At the end of the day, ask yourself this: if this was your grandmother who you love dearly and care about..... would you put her in this annuity? Or if it was you personally in the same situation.... would you buy this product for yourself if you had the same set of needs? If you can say yes, then you should be fine.

But as far as carriers are concerned, they want the money, and want to find a way to accept it.

Make sure you dont lock up over 60%-70% of their assets in annuities. Make sure they keep adequate liquidity and adequate income. And make sure you are not causing any major tax issues. You will be fine.

 

[scagnt83]

Do they all basically have a simplified portal to offer their products, much like health insurance (which is the other line I offer)?

You do MAPD, right? That is a great client base to cross-sell to.

Id suggest teaming up with an IMO that specializes in annuities.

Most give you a subscription to Annuity Rate Watch.

This is a 3rd party service that spreadsheets all the annuities on the market and gives you the details of each one. You can filter by product type, riders, ratings, min deposit, etc. They even show the street comp on most products so you know if your IMO is screwing you or not.

This lets you see for yourself what is out there, and if there is possibly a better option than what you are looking at currently.

IMOs can be great, but sometimes they do have their favorites and can ignore good options. And of course they get paid more from certain carriers/products than others.... so always take recommendations with a grain of salt and do your own due diligence.

You can pay for your own ARW subscription, but most IMOs give it to you for free. The "catch" is the IMO limits your view to only carriers they support. But most IMOs should have the major players that you would need starting out.

---

If you have any contacts who specialize in annuities, doing some joint work at first might be helpful.

Id start out by marketing fixed rate MYGAs to your existing book.

"lock in 5.5% for 5 years before Trump lowers interest rates"

"Musk says DOGE cuts will make interest rates plummet... lock in 5.5% for the next 5 years while you still can"

Lots of money on money markets right now. Those rates will not last forever. Smart money locks in high rates. People who locked in 10y fixed rates in the late 80s and early 90s were very smart.

If they need income, you can pivot to a different solution, or combo, once you are in front of them.

And look for that need. FIAs pay double the comp of most MYGAs. You can often gather more assets for these sales than just a single CD. It can turn into a high revenue situation if you look to fix the income need. FIAs and SPIAs can create a much higher income than a traditional 40/60 equity portfolio.

If unsure, you should be able to take a fact finder to your IMO and they can provide solutions and ideas. If they cant/dont... find a new IMO. If they dont have a fact finder... or at minimum verbally give you a list of what info to ask for.... find a new IMO. And the list should be more than "how much money they have". It should include income, assets, needs, desires, expenses, past, present, future, etc.

 

[Allen Trent]

Id start out by marketing fixed rate MYGAs to your existing book.

"lock in 5.5% for 5 years before Trump lowers interest rates"

"Musk says DOGE cuts will make interest rates plummet... lock in 5.5% for the next 5 years while you still can"

Typical far right Trumper drinking the cool aid. Lol

 

[LostDollar]

If you want to be compliant, take the word "best" out of your vocabulary. There is never a best.
Like what is repeated on here over and over, make sure you are leaning on your Upline for their annuity training. Make sure your Upline on these contracts has sold millions of dollars in annuities for many years and has experience to draw upon.
Matching people with a good choice comes down to asking questions about their goals for the money. How soon will they draw from the annuity? Are they comfortable with an index where they will very likely get zero interest some years? Or would they be more comfortable with fixed rates? Where is their money coming from? Have they already paid taxes on it? Or is it tax deferred? Will they want to add small IRA additions each year? (Not all annuities allow that). Will they need to withdraw RMDs? Not all annuities allow that. Are they realistic about how annuities will perform? Or are they looking for market-type of gains? How risk adverse are they? How do they feel about the company's financial ratings? Where is their comfort zone if the rates are better? No less than A+? No less than A? No less than A-? B+? Does it matter at all? How important is it to them to have a familiar company brand they are familiar with vs. one they have never heard of? Are they interested in LTC riders? Have they owned annuities before or is this their first one?
Your Upline will likely teach you how to fact-find to determine an annuity that is a proper fit for your client. Key word, proper fit. NOT best.
What would best even mean? Highest financial ratings? Largest company? Highest fixed rate? Highest participation rate? Highest caps? Newest product? Oldest product? Etc. Best means different things to different people.

Caveat, consumer, NOT an agent.

I could not have composed that post, but I have been asking questions and struggling with some annuity purchases for over a year.

I can't state with certainty it covers them all, but Newby's post covers most of the consumer facing issues I dealt with in making the purchases I have already made and some more I plan to make this year.

 

[scagnt83]

Typical far right Trumper drinking the cool aid. Lol

Do I believe it? Maybe. Half way. I dont discount it by any means.

Trump cant do it himself. But he does get to replace Powell next year. It will be very interesting to see who he appoints.

He could appoint a Fed Chief who is a dove and not a hawk. But that Chief would have to sway the vote of the Regional Presidents.... who mostly have supported sustained higher rates so far.

A lot has to happen for the Fed to lower rates significantly. But it could happen. Especially if Trump finds a way to exert political power over the regional Presidents. Or if the tariffs hit the market and jobs too hard too fast.... which is the most likely scenario.

Will DODGE cause rates to plummet like Musk claims? I highly doubt it. Especially if they are giving 50% of that savings back to the taxpayers.

 

[LostDollar]

How is an agent or consumer to evaluate the quality of an annuity carrier beyond looking at their AM Best Rating?