For adventurous bank insurance sales professionals, the first wave of the baby boomer generation heading into retirement is a chance to boost business and help even more clients.

As boomer customers shift from saving income to spending their accumulated assets, bankers need to recognize how their institution’s annuity offerings meet these growing needs. A deferred or an immediate annuity can provide many advantages for these customers.

As the first wave of boomers crashes onto the retirement shore, the number of people looking to convert assets into income will be overwhelming. Bank sales professionals have unique access to many of these individuals because of their established relationships with customers. The time has come for banks and their employees to take a look at the unique advantages of annuities and how they might be able to help provide reliable retirement income for their clientele.

CD or annuity?

A traditional bank customer often purchases a certificate of deposit because it is safe. Certainly, a CD can be an appropriate investment for boomers approaching retirement because it offers a fixed rate of return while protecting assets from market fluctuations. Such low-risk investment options are appropriate for older investors because they have less time to make up for any investment losses. Besides, banks have offered CDs for many years, so bank advisors feel confident selling them to their customers.

At the same time, bank advisors need to help boomer customers consider all their options for investing their maturing CDs. For many boomers who are making the crucial transition from wealth accumulation to wealth distribution, one of the following types of annuity contracts is a far better product.

Deferred annuities. When retirees don’t have to rely on their assets to produce income for current consumption, it’s certainly most advantageous for them to invest their assets.

A fixed deferred annuity is comparable to a CD in that it provides a fixed rate of return. The annuity, however, compounds interest tax-free, which is a significant benefit over CDs. Annuities also offer a liquidity feature, which typically allows for 10% withdrawals from the contract without any penalties. (There may be Internal Revenue Service penalties for withdrawals before the owner reaches age 59 1/2.)

The owner of a deferred annuity can elect to receive the accumulated value in the following ways:

o Lifetime payment: pays a fixed amount for the remainder of the owner’s life.

o Period-certain payment: provides a fixed payment for a specified period of time, such as five, 10 or even 20 years.

o Lifetime and period-certain combination: guaranteed for a specific period. If the owner dies before the end of the period, payments continue to the named beneficiary. If the owner survives the period, then payments continue for his or her life.

o Other options: Depending on the client’s needs, joint survivor payments can be arranged to include a spouse in the payout, for example, or to provide a return of premium if the annuity owner dies before the payments equal the premium paid.

Immediate annuities. For those customers who already have retired, bank professionals should consider an immediate annuity. An IA provides the guaranteed income stream many retired people need.

Perhaps the most difficult task you will face when helping individuals plan for retirement is determining a withdrawal rate that will not exhaust their assets too quickly. In other words, how do you make your clients’ retirement assets last as long as they do?

Immediate annuities specifically address this need. Although the annuity owner can choose any of the payment options discussed above, an annuity with a lifetime payment option may be the best option for many retirees because it pays a fixed amount until the owner dies, therefore providing a more secure retirement.

Another choice many retirees will find reassuring is a return-of-premium option. One problem many people find with an immediate annuity is once they have handed over their premium, they can’t get it back in a lump sum. The ability to have access to the remaining premium can provide extra assurance to individuals who fear they may need access to their money for emergencies.

A few annuities on the market offer a return of premium even after annuity payments begin. Subtracted from the premium are any payments made to the owner plus a surrender charge, if the distribution is taken within a certain number of years from the date the contract was purchased.

The boomer wave is coming. So, embrace the change for a sales opportunity of a lifetime. Learn how annuities can help your banks’ boomer clients. Then grab your board and hang ten, dude!