Fixed Annuity Products – What Insurance Agents Need to Know
In the world of annuities there are many different types of products obtainable on the market. Today’s volatile economy has put fixed annuity products front and center in the media and in the minds of the public.
What are fixed annuities and how can an Insurance Agent assistance by offering annuities to their clients?
Fixed Annuity – by definition, a fixed annuity pays a fixed, set rate of interest on the money invested in the annuity. Payments paid to the annuitant are unchanging over a designated period of time or over the annuitant’s lifetime. The annuity issuer will pay a guaranteed minimum rate of interest on the annuity account with the possibility that it may pay a higher rate of interest if the market conditions allow.
Annuitant-simply put, is the holder or benefactor of the annuity
Annuity Issuer-usually an insurance company or financial institution
Now, with those definitions out of the way, let’s get down to the what a fixed annuity is as a assistance to an insurance agent and his client. Bottom line, fixed annuities are a conservative investments for clients that prefer little to no risk. Depending on the company that the fixed annuity is purchased by, the rates may vary but are generally higher than those of traditional bank CDs.
As a insurance agent marketing fixed annuities to your client, you can feel assured that these products offer your client safety and security in addition as some flexibility with their investment. Here are 5 specific benefits you can relay to your prospective annuitant:
- higher interest rates (with longer terms yielding higher rates)
- in an unstable market, fixed annuity products offer strong guarantees that reduce risk
- depending on the kind of annuity chosen and the carrier, the client may have some flexibility in payout
- annuities can offer a steady stream of income for life which clients that have no pension may find of value
- whether the fixed annuity is in a retirement portfolio or for college savings, the annuitant has a sense of security that stocks cannot offer
Be sure, as an Insurance Agent, that you work with well qualified FMOs and top rated carriers to assure your client’s best interest is maintained. Doing your homework and building a strong relationship with your FMO and with your clients will consequence in successful long term satisfaction for all.